Buying property to let as holiday rental

[ginandmilk]

Hi,

We're hoping to move over to Tenerife and live in Puerto de la Cruz. Rather than buy a property to live in ourselves, we'd like to buy a property to rent out to others as a holiday let.

I think we'd be better off doing this in South Tenerife as it tends to be more popular, but I can't find any websites that have properties for sale as holiday lets. Whenever I've looked online I can find places to rent as a tourist no problem. That gives me an idea of popularity, but no idea of how much a property costs in the first place! If I look at apartments to buy I have no way of knowing whether or not I can rent it out as a holiday let and I don't want to find out the hard way either.


At the moment we're considering a two bedroom apartment, and as it stands we have approx £70K at the moment. Our annual income from my husband's pension is approx £22,000, so we're hoping that rental income can go towards savings.

Any advice would be much appreciated


Thanks

[DaveK]

I met an English chap in that charity shop in the Valdez Centre, Los Cristianos and discussed the same thing. He had sold his apartment at the top of the market (it's few years ago), put the money in the bank and now rents. He looked at me and said, "At your age I wouldn't buy, renting is the better option."
People here will know the full rules but I am aware that renting out as a holiday let can attract the attention of the Spanish tax authorities. You have to register the property with an approved agency. It's not a chore but the tax on what they see as profit reduces the income. Some owners have been fined thousands of Euros for transgressing. Also many complexes where you could buy an apartment are 'residential' only-not for tourists'. Loud behaviour from strangers, kids having fun in the pool makes other residents suspicious you're not one of them.
You just reminded me that I was offered a two bedroomed apartment in Parque Santiago 2 some years ago for exactly £70,000-a quick sale to beat the divorce lawyers. Was worth at least £150,000, a lot more now. Should have mortgaged my house.
I havn't looked online but there are several estate agents in Los Cristianos and Playa de las Americas with cabinets outside showing properties for sale. Prices for similar apartments vary a lot. I've seen adverts for a quick sale for €90,000 which has the effect of reducing the value of all the other apartments in the same complex advertised at €150,000.
I usually pay £250 a week rent for a decent one bedroomed apartment in Los Cristianos or Playa.
More than that I consider very expensive (although I did pay £300 last year for a superior place in Port Royale).
Long term rentals are much cheaper than tourist holiday lets.
If you were considering living in Tenerife there are rules about residency.
Permanently domiciled in Spanish territory over six months makes you a resident for taxation purposes.
We love South Tenerife. Missus won't have it but I'd sell my house here, use half the money to buy a flat over a shop in UK. Rent long term in Los Cristianos, make sure I wasn't declared 'residencia' by returning home regularly when flights were cheap.
You'd see plenty of the family 'cos they'd like the idea of free accommodation on the holiday Isle.
Still be a a British taxpayer and entitled to NHS treatment (actually who isn't?) and if the EUssr decided they didn't like you in particular or British in general you just return the apartment keys and fly away.
Sorry if I've gone on a bit but that's the way I see it. Pity the wife doesn't.
DaveK.

- - - - - - - - - - merged double post - - - - - - - - - -

Just to confirm about the rental tax, here's a request from a subscriber on this forum:

Anyone know the email address or telephone number of the Adeje tax office where I can report a seial offender for non-declaration of rental income. It wouldnt bother me if it was the odd rental, but this is on a grand scale, and its annoyed me.

[ginandmilk]

Hi DaveK, Thanks for getting back to me.
I've been looking at some of the rules and regs about renting properties for holiday lets, which is why I want to make sure I do it properly. I think I'd have to go on the run if I got fined!
It's a shame the 70K property didn't work out for you, but it is what it is I suppose.
We're hoping to fly our to Puerto de la Cruz again in November. We love the north and really want to live there, but I know that it will be better to buy a property to let to tourists in the south, as the north is much quieter!
I suppose (being sensible) we should await the outcome of Brexit mainly because we need to see how my husband's pension and injury benefit will be affected; (he retired on ill health grounds following an accident at work). The permanent injury benefit might not be permanent anymore if we relocate!
That said, I have a feeling Brexit may take longer than 2 years. I suppose that gives us more chance to save up and learn the lingo!
Maybe Brexit will change your wife's mind and she may come round to your way of thinking?

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I met an English chap in that charity shop in the Valdez Centre, Los Cristianos and discussed the same thing. He had sold his apartment at the top of the market (it's few years ago), put the money in the bank and now rents. He looked at me and said, "At your age I wouldn't buy, renting is the better option."
People here will know the full rules but I am aware that renting out as a holiday let can attract the attention of the Spanish tax authorities. You have to register the property with an approved agency. It's not a chore but the tax on what they see as profit reduces the income. Some owners have been fined thousands of Euros for transgressing. Also many complexes where you could buy an apartment are 'residential' only-not for tourists'. Loud behaviour from strangers, kids having fun in the pool makes other residents suspicious you're not one of them.
You just reminded me that I was offered a two bedroomed apartment in Parque Santiago 2 some years ago for exactly £70,000-a quick sale to beat the divorce lawyers. Was worth at least £150,000, a lot more now. Should have mortgaged my house.
I havn't looked online but there are several estate agents in Los Cristianos and Playa de las Americas with cabinets outside showing properties for sale. Prices for similar apartments vary a lot. I've seen adverts for a quick sale for €90,000 which has the effect of reducing the value of all the other apartments in the same complex advertised at €150,000.
I usually pay £250 a week rent for a decent one bedroomed apartment in Los Cristianos or Playa.
More than that I consider very expensive (although I did pay £300 last year for a superior place in Port Royale).
Long term rentals are much cheaper than tourist holiday lets.
If you were considering living in Tenerife there are rules about residency.
Permanently domiciled in Spanish territory over six months makes you a resident for taxation purposes.
We love South Tenerife. Missus won't have it but I'd sell my house here, use half the money to buy a flat over a shop in UK. Rent long term in Los Cristianos, make sure I wasn't declared 'residencia' by returning home regularly when flights were cheap.
You'd see plenty of the family 'cos they'd like the idea of free accommodation on the holiday Isle.
Still be a a British taxpayer and entitled to NHS treatment (actually who isn't?) and if the EUssr decided they didn't like you in particular or British in general you just return the apartment keys and fly away.
Sorry if I've gone on a bit but that's the way I see it. Pity the wife doesn't.
DaveK.

- - - - - - - - - - merged double post - - - - - - - - - -

Just to confirm about the rental tax, here's a request from a subscriber on this forum:

Anyone know the email address or telephone number of the Adeje tax office where I can report a seial offender for non-declaration of rental income. It wouldnt bother me if it was the odd rental, but this is on a grand scale, and its annoyed me.

Well somebody's going to be in a whole heap of trouble!

[fixer]

Basically its illegal to rent out a property in a residential complex and on touristic complex it has to be done through the the licence holder to be legal!

[Ecky Thump]

Basically its illegal to rent out a property in a residential complex and on touristic complex it has to be done through the the licence holder to be legal!

We were also going on the lines of buying a apartment to rent out in Tenerife and with us having the use of it at other times, but we decided to buy another property in Largs, Scotland and let it out to a long term tenant, we now get a very decent return on our outlay and all 100% legal with no worries of another countries intervention...it certainly gives us a very good holiday fund and no problems with inheritance laws or taxation.

[delderek]

Hi,

We're hoping to move over to Tenerife and live in Puerto de la Cruz. Rather than buy a property to live in ourselves, we'd like to buy a property to rent out to others as a holiday let.

I think we'd be better off doing this in South Tenerife as it tends to be more popular, but I can't find any websites that have properties for sale as holiday lets. Whenever I've looked online I can find places to rent as a tourist no problem. That gives me an idea of popularity, but no idea of how much a property costs in the first place! If I look at apartments to buy I have no way of knowing whether or not I can rent it out as a holiday let and I don't want to find out the hard way either.


At the moment we're considering a two bedroom apartment, and as it stands we have approx £70K at the moment. Our annual income from my husband's pension is approx £22,000, so we're hoping that rental income can go towards savings.

Any advice would be much appreciated


Thanks

This would be a good place to start, it lists many, not all, official touristic apartments in Arona. But for a two bed on a decent touristic complex, you will need another one hundred thousand pounds on top of your 70 grand.

http://www.arona.travel/portal/turismo/lloc_d10_v6.jsp?codMenu=1105&codMenuPN=1088&codMenuSN=1098&codResi=1&language=en

[warbey]

.
.
I would use the time to explore living in the South. You may find you don't like it so it could become a liability.

I too have considered having property in Tenerife and decided against it as I think age and infirmity must be considered.

Hospital appointments rarely coincide with Our plans.....

Best of luck...

[Ecky Thump]

.
.
I would use the time to explore living in the South. You may find you don't like it so it could become a liability.

I too have considered having property in Tenerife and decided against it as I think age and infirmity must be considered.

Hospital appointments rarely coincide with Our plans.....

Best of luck...

Concerns about term health care has got to be a stumbling block for those that are not prepared.

[ginandmilk]

That's something else we'd thought about doing - renting out our property here. OH is loathe to do it because he'd find it too stressful if anything went wrong, but surely an agent would deal with this sort of thing anyway? Obviously there's a cost, but in some ways it would be a lot less hassle because we already have a property which we could return to if need be and we wouldn't need to deal with Spanish bureaucracy either.

I'm guessing you've used an agent? If so, do they pretty much take care of everything?

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Hi Warbey, thanks for your reply.

One of the main reasons why we want to live in the north is because we like the greenery. I know the trade off is the weather, but for us it would still be worth it as it really wouldn't be much of a compromise.
The reason we're considering buying somewhere to let in the south is because it attracts more tourists. We don't want to buy a property to live in for ourselves as we'd hate to be in a position where we'd want to come home but couldn't because we couldn't sell our house.
Like you say, old age and infirmity and all that.

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You're right Ecky Thump, we need private healthcare insurance and even though we're nowhere need retirement age, we both have pre existing conditions.
At some point, when my Spanish is fluent enough I would probably want to get a part time job so I can pay into the system, but we're going on the assumption that I won't be able to get a job just to be on the safe side if you know what I mean.

[Angusjim]

That's something else we'd thought about doing - renting out our property here. OH is loathe to do it because he'd find it too stressful if anything went wrong, but surely an agent would deal with this sort of thing anyway? Obviously there's a cost, but in some ways it would be a lot less hassle because we already have a property which we could return to if need be and we wouldn't need to deal with Spanish bureaucracy either.

I'm guessing you've used an agent? If so, do they pretty much take care of everything?

- - - - - - - - - - merged double post - - - - - - - - - -

Hi Warbey, thanks for your reply.

One of the main reasons why we want to live in the north is because we like the greenery. I know the trade off is the weather, but for us it would still be worth it as it really wouldn't be much of a compromise.
The reason we're considering buying somewhere to let in the south is because it attracts more tourists. We don't want to buy a property to live in for ourselves as we'd hate to be in a position where we'd want to come home but couldn't because we couldn't sell our house.
Like you say, old age and infirmity and all that.

How much of a return are you expecting / needing to get back on your property investment per year ? I personally think your £70k will not get you much of a property if anything at all to do tourist rentals. I would suggest you contact an agent in South there are plenty to choose from. One who will give you a good HONEST and forthright opinion on your proposal is Andy Ward but I fear you may not like what he will tell you, but it will be the truthful & honest not two words that you will hear about a lot of agents https://tenerifeestateagents.net/about/

[ginandmilk]

Thanks Angusjim,

Although it's summer pretty much all year round over there, I'm guessing (and it's a wild guess) that we'd probably be able to rent it out for roughly 12 -16 weeks a year. I got that figure by looking at tourist lets and seeing what dates their properties were available - which were quite often!
Honest and truthful is what we need even if we don't like what we hear. Bad news is better than lies.
I have heard of people buying 'rooms' in hotel complexes, the main risk would be if the hotel goes bust so do we. That said this is all very new to us, which is why I thought I'd make some enquiries on here first, rather than just turn up and be able to expect to buy somewhere and rent it out.
The reason I'm saying 70K is again to be on the safe side, although we just don't know what Brexit will throw at us. We have roughly 70K equity at the moment, but if there's another housing boom we could end up with significantly more. If there's another crash (which at the moment is looking more unlikely) then we won't be going anywhere for the foreseeable!

[Angusjim]

Thanks Angusjim,

Although it's summer pretty much all year round over there, I'm guessing (and it's a wild guess) that we'd probably be able to rent it out for roughly 12 -16 weeks a year. I got that figure by looking at tourist lets and seeing what dates their properties were available - which were quite often!
Honest and truthful is what we need even if we don't like what we hear. Bad news is better than lies.
I have heard of people buying 'rooms' in hotel complexes, the main risk would be if the hotel goes bust so do we. That said this is all very new to us, which is why I thought I'd make some enquiries on here first, rather than just turn up and be able to expect to buy somewhere and rent it out.
The reason I'm saying 70K is again to be on the safe side, although we just don't know what Brexit will throw at us. We have roughly 70K equity at the moment, but if there's another housing boom we could end up with significantly more. If there's another crash (which at the moment is looking more unlikely) then we won't be going anywhere for the foreseeable!

Andy is you man. If I were you I would give a LOT of thought its not all its made out to be I rent out half a dozen properties in Scotland and sometimes it breaks your heart and your bank balance.Good luck with what ever you decide but be VERY VERY careful.

[ginandmilk]

Thanks Angusjim,

I've had a quick look at Andy's website, very informative. One bedroom apartments in hotel complexes seem to be more 'lettable' than I thought, which comes as a pleasant surprise. I suppose the most sensible way of going about is to await the outcome of Brexit as no-one knows what will happen with regards to expats and finances, especially new expats if you know what I mean. I suppose the bonus of this is that we should have considerably more than 70K, although there's the exchange rates and whether or not the OH's pension would be taxed to death. Fingers crossed it won't be but you just never know.

[fixer]

In Cristiansur in Loscristianos a one bed will cost aprox 160,000 euros you need aprox 10% for cost and taxes so not cheap the hotel chain will only give you aprox 4000 euro a year! was 3500 in 2004! need any further info email me at fixer@fsmail.net been there dont have good contacts for lawyer ect. David

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In Cristiansur in Loscristianos a one bed will cost aprox 160,000 euros you need aprox 10% for cost and taxes so not cheap the hotel chain will only give you aprox 4000 euro a year! was 3500 in 2004! need any further info email me at fixer@fsmail.net been there dont it have good contacts for lawyer ect. David

[ginandmilk]

Thanks Fixer, so much to think about! It's hard not to get carried away sometimes, especially when it's so cold and miserable over here, but we have to play the long game and consider allsorts of tedious stuff and they tend to be the most important bits!

I explained to the OH earlier that we wouldn't walk away with half as much as he probably thinks we will, and I realise that all necessary costs will eat heavily into any money we do make. That said, any money we do make would go towards savings and we wouldn't be relying on it as income which is a huge bonus!

[warbey]

.
If, as you say. the North is better for you, why not look at accommodation in that area.?

If you will be there for some months, nearer is better and I believe any investment is better with adequate supervision.

One bad let could cause a lot of expense and with someone else in control < ? ? ?

Somewhere in the North would be an option surely with benefits to you too.

Please keep us posted.

[Ecky Thump]

That's something else we'd thought about doing - renting out our property here. OH is loathe to do it because he'd find it too stressful if anything went wrong, but surely an agent would deal with this sort of thing anyway? Obviously there's a cost, but in some ways it would be a lot less hassle because we already have a property which we could return to if need be and we wouldn't need to deal with Spanish bureaucracy either.

I'm guessing you've used an agent? If so, do they pretty much take care of everything?


You're right Ecky Thump, we need private healthcare insurance and even though we're nowhere need retirement age, we both have pre existing conditions.
At some point, when my Spanish is fluent enough I would probably want to get a part time job so I can pay into the system, but we're going on the assumption that I won't be able to get a job just to be on the safe side if you know what I mean.

We do use a agent in the UK and the cost to us is 10% of the net rent, to be honest with our present tenants, there would be no need as they are good ones, but be prepared for someone who can be trouble. Taxation is very simple and we do it by 'self assessment'., just remember to keep ALL your receipts for outgoings and don't let the agent have too much of a free hand on any tradesmen that are called in for repairs, as they can ofton have a 'special relationship' with their friends, which is beneficial to them and not you, Angusjim will be able to give more advice on this.

With agents in Tenerife, your profit/income is limited by their greed, and I'm not sure what they do for their money...someone who lets out in Tenerife will be able to give you a true picture of how things work, but for me, letting out in the UK gives me control of both my incoming and outgoing finance and leaves us a decent income with not too many worries for the future.

[fixer]

Exploiter a word use by Agents who let out on the complex this does not apply to all but some are robbing BBBS

[Angusjim]

We do use a agent in the UK and the cost to us is 10% of the net rent, to be honest with our present tenants, there would be no need as they are good ones, but be prepared for someone who can be trouble. Taxation is very simple and we do it by 'self assessment'., just remember to keep ALL your receipts for outgoings and don't let the agent have too much of a free hand on any tradesmen that are called in for repairs, as they can ofton have a 'special relationship' with their friends, which is beneficial to them and not you, Angusjim will be able to give more advice on this.

With agents in Tenerife, your profit/income is limited by their greed, and I'm not sure what they do for their money...someone who lets out in Tenerife will be able to give you a true picture of how things work, but for me, letting out in the UK gives me control of both my incoming and outgoing finance and leaves us a decent income with not too many worries for the future.

Don't use agents do it all my self I really don't see the need to use them, if I were not local then yes I would use but better off with 10% in my pocket