5 steps to renting out property in Spain
Do you rent out your house in Spain or have you ever considered it as an option? Some people buy Spanish property specifically to rent it out and get a return on their investment. Others come to the decision due to changing personal circumstances. Whichever route you take to rental, you should keep in mind our 5 steps to renting, to make sure it goes as smoothly as possible.
Step1: decide on the length of the let
The let you select will very much depend upon what you still want from your property. If you have in mind occupying it yourself for portions of the year then short term or holiday lets will be your preferred option. Alternatively, if you have no intention of living there yourself and would prefer continuity then a long-term let is for you.
If your rental contract is for less than 5 years then it must be renewed annually up to a maximum of 5 years. If it is a seasonal contract of less than one year’s duration renewal can be agreed at intervals to suit the two parties.
Your contract should include:
• The identity of the landlord and tenant
• Details of property including address and registration
• How long the rental period is
• How much is being charged
There are other conditions of the let you will need to consider.
Step2: will it be empty or furnished?
If you already have furniture in your property that is not particularly precious to you, you might prefer to rent it out as it is. If you do decide on a short-term let then you may well want to keep a storage space for your own use when you’re in Spain. If your property is big enough this might even be a bedroom or small room.
Make sure that if your property is furnished that it includes the basic elements that your tenants will need. You should draw up an inventory and have it checked at regular intervals.
An empty property can be more attractive to a long-term let. It has the advantage that you are not expected to equip it specially and removes the need for an inventory. You may still wish to build in routine checks, however, to ensure that your property is being kept in a reasonable condition.
It is usual practice to ask for a deposit. This helps safeguard against any damage to your property and will be refunded at the end of the let if your tenants leave your home in good condition.
Step3: obtain an energy efficiency certificate
Anyone who wants to rent out their property in Spain for longer than four months must have an energy certificate (Certificado de Eficiencia Engergética). However, don’t worry if you have tenants already and do not have one of these; you will only need one if your tenants move out and you must look for more.
If you do need a certificate then you will have to engage an inspector who will look at the insulation of the property and the type of appliances you have. The inspector will give you a grading from A to G and make suggestions for improvement. These are voluntary and the inspection process is not a matter of pass or fail.
The whole process is intended to provide your potential tenant with more information about what the bills are likely to be. The certificate is valid for 10 years although you can request a re-test if you have made improvements that should raise your grading. An average-size property for rental is likely to command a €300 to €400 fee from a properly authorised inspector.
Step4: find your tenants
There are opportunities for you to advertise and rent out your property yourself if you prefer. However, this can be difficult if you are a non-resident and don’t want to spend too much time on the rental process. In this case you might prefer to choose an agency to handle the rental for you.
Some agents will just find tenants for you whilst others will do everything from contracts through to inventories and even regular checks on the condition of your property during the tenancy. You will need to choose to suit your pocket and your circumstances.
Whatever you do or whoever you choose to do it for you, make sure that the credentials of your tenants are properly checked out and that agreements have been signed. The law has changed more in favour of landlords over the past couple of years and there are measures you can take as long as you have fulfilled your side of the bargain.
Step5: be tax compliant
Once the tenancy is established you need to be aware that you are liable to pay rental income tax in Spain. This tax is payable quarterly by the dates 20th April, 20th July, 20th October and 20th January.
You should have an agreement with your tenant about payment of bills. Generally, utility expenses are paid by the tenant. Any expenses that you do agree to pay can be deducted from income when it comes to paying rental income tax.
Just be aware, different autonomous communities do have different rules for renting out properties. In some regions you need do nothing more than pay your taxes, in others you have to register your property as a rental one. Make sure that you know what your region requires and that you follow the rules.
There is demand out there for rental property. Follow our five steps to make it work for you.