The buy to let market in Spain - making the most of your Spanish investment property

Buying Spanish investment property to rent out is the sole intention of many buyers. Others, however, want to retain the use of a holiday home for a few weeks each year and let it out the rest of the time so it generates income as well as equity. Buy to lets in Spain retain a strong market for both holiday rentals and longer-term lets.

Buy to let property in Spain has two distinct types of buyers

Those looking to buy this type of Spanish investment property fall into two distinct categories. Pure investors will normally be more experienced in dealing with Spanish investment property. However, a growing number of people are entering the overseas market with unrealistic dreams of making millions in a short space of time from a sector they know little about. They should exercise caution and realise property is a long-term investment and not a get-rich-quick scheme.

Those seeking to maximise income from their holiday home tend to be newcomers to Spanish investment property. They are also more likely to make decisions they will later regret. To avoid making costly errors when entering the market for buy to lets in Spain you should:

Find out what the up-and-coming locations are for Spanish investment property.

See what the rental incomes are like for different property types and how this compares to the costs of purchasing a buy to let in Spain.

Investigate which types of Spanish investment property are in most demand as holiday rentals and why.

Golf holiday rentals and other specialised properties

Many foreign purchasers think that holiday rentals is the only way to make money from Spanish investment property but buyers are increasingly looking to diversify.

Holiday rentals suffer from the fact they are largely dependent on the seasons with lower occupancy rates in the winter. Buy to let golf properties result in more rental weeks annually and investors near major golf courses can expect good occupancy rates throughout the year.

Skiing holidays in the Sierra Nevada mountains, near Granada, offer investors yet another buy to let opportunity in Spain. The resort is growing in popularity although returns are limited during the summer months.

Looking to lease your Spanish investment property? Look to the long-term

The Spanish rental market can be divided into two sections - one for holidaymakers and other non-nationals, and one for Spaniards themselves.

The Spanish property boom of recent years has meant a sharp rise in property prices and a corresponding upturn in rental costs. This, alongside the relatively low wages Spaniards earn, means more and more are opting to stay at home longer before buying in their late-20´s/early-30´s.

Many investors who purchased Spanish property a few years ago with a view to a holiday rental are increasingly moving towards the long-term rental market. It offers more peace of mind knowing your apartment or villa is in the hands of just a few people who have an interest in its maintenance. A guaranteed rental income over a long period of time also helps!

Temporary workers from out of town or abroad, retirees hoping to escape the cold winter and students are among those also looking towards longer-term rents.

What you need to know about rentals in the Spanish property market

You need to do your homework first of all. The maximum length of a rental contract is usually eleven months although a renewal clause is likely to be included in the contract. Longer contracts guarantee you more rights under Spanish law.

You might want to consider being more flexible about the length of contract you offer during the winter. Demand is obviously lower then so you need to make the necessary adjustments to counter this.

From Spring onwards you can anticipate a more profitable income but should also consider the property lying empty the following winter. Consequently think carefully about extending the contract beyond eleven months if you want to maximise the income you generate through your Spanish investment property.

Buy to let mortgages

Spanish buy to let mortgages are available although this is a fairly new concept in Spain. Income from future holiday rentals will not be considered when banks review your ability to pay and a larger-than-usual deposit (normally in excess of 30%) will be required.

Managing your Spanish investment property for holiday rentals

Our property management service will help to take the hassle out of managing your bookings. Customers can book and pay online with instant quotes and instant availability checking. We will notify you each time you get a new booking and once you choose to accept the booking our robot secretary will take care of the rest.