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Idiot's guide to setting up a holiday rental in Costa Calida

 
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Joined: 21 Jan 2020
Posts: 3

PostPosted: Fri Jun 05, 2020 5:45 pm    Post subject: Idiot's guide to setting up a holiday rental in Costa Calida Reply with quote

My wife and I had planned on putting our UK property on the market a month ago to finance relocation to Spain. We'd set a date of 1 September 2020 to make the one way trip and booked a three month rental accommodation in Camposol, during which we'd look to purchase a property in the Camposol/Mazarron area for a holiday rental and a property for ourselves to live in further inland.

That was all before the COVID-19 pandemic put a huge spanner into all our lives, but we are still hoping to go ahead with our dream once we see how things pan out in the months or years ahead. Thankfully our only outlay thus far was to purchase a domain name (with a free limited period single page web builder offer) https://villascostacalida.com/

Of course the other elephant in the room is the end of the transition period, which was the purpose of us setting that date to give us time to gain residency, bank accounts, NIE, driving licences, and then the tourist licence etc, whilst it would be easier to do so. Hopefully there will be an extension whilst the virus is taking up everybody's attention.

I've been scanning this forum and noting down snippets of info here and there, but I'd love to hear some firsthand experiences from anyone happy to spare us some time in relation to the rental property. I'm asking in here rather than the 'newbie' section because so much of the information is regarding UK and French properties, and I'd really love some specific experiences so that we can make the decisions around such a large life change.

Obviously this would all be pre-COVID, and I hope that is a situation we can all return to before too long.

With our budget we would be looking at a two bed, one bathroom rental property, aimed at a 2+2 family, or perhaps 4 adults at a push if the right property became available. Rental value for such would seem to be around 200 Euros low to 400 high per week. So my first question which I'm finding difficult to find is to what percentage of the year might we expect it to be booked up, and would that seem a likely value? Wed need the rental income to be roughly half to three quarters of our yearly income.

What booking sites work best for the Spanish Costas, and are there any pitfalls? I note that some sites take the payments on your behalf and pay you after the stay, while others ask that bookers pay you when they arrive. Are some sites best to avoid?

I note that Dateblocker is a popular resource for online booking, but are there other 'auto' alternatives for when the property can be booked instantly on booking sites but also via our own website?

Ref the title to this topic. I've been unable to find a single resource that would be specific to our planned future, but if anyone knows of one I'd love to be told where it might be, and hence the reason for these questions!

Thank you

Phil & Carol
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costa-brava



Joined: 20 Sep 2010
Posts: 615
Location: costa brava spain

PostPosted: Tue Jun 09, 2020 12:27 pm    Post subject: Reply with quote

Welcome to LMH
I think you'll find it is the best single source for information but you do have to pick through the posts and threads. In the past I found it helpful to do a google search for the info I wanted plus laymyhat. I found that quicker than picking through various threads.
For holiday rental law in Murcia try here.
https://www.spain-holiday.com/rentalbuzz/murcia-holiday-rental-law and you'll also get some idea of the market.
Some other LMhatters with stuff in Murcia can give you a better idea on the length of the season. Here in Costa Brava it is very short. Twelve weeks is a good year but the weekly price is about double what you're expecting.
If you go for an apartment you have to be 100% sure there isn't a clause in the constitution of the residents association banning holiday lets.
I'm afraid your "outlay" on the website is largely irrelevant. Go-daddy are offering several similar names for 10 dollars. You will need to advertise in one of the big platforms which will cost 300-400 euros a year or 15-20% of your bookings.
Don't be misled by the rental prices you see in the internet. After advertising, maintenance, income tax, local tax, utilities etc, somewhere between 30% and 50% gets eaten up. This is where the length of the season is critical.
But as I sit here as a UK citizen and Spanish resident of over 30 years I don't have a scooby doo where I now stand with regard to Brexit madness. Please don't sell your UK home this year. In fact please don't sell it till you have thoroughly researched your dream.
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costa-brava



Joined: 20 Sep 2010
Posts: 615
Location: costa brava spain

PostPosted: Tue Jun 09, 2020 12:35 pm    Post subject: Reply with quote

Sorry Avpics
I need to clarify. If I wanted, for example "camposol" I would google "camosol laymyhat.com" and that gives you several contributions on LMH going back several years. It is much quicker that trailing through our wonderful forum.
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Joined: 21 Jan 2020
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PostPosted: Tue Jun 09, 2020 4:19 pm    Post subject: Reply with quote

costa-brava wrote:
...
I'm afraid your "outlay" on the website is largely irrelevant. Go-daddy are offering several similar names for 10 dollars. You will need to advertise in one of the big platforms which will cost 300-400 euros a year or 15-20% of your bookings.
Don't be misled by the rental prices you see in the internet. After advertising, maintenance, income tax, local tax, utilities etc, somewhere between 30% and 50% gets eaten up. This is where the length of the season is critical....


Thank you very much for the reply, and that search idea is a great help as it's quite time consuming wading through the false positives. I only mentioned the website to highlight the fact that we'd like to be able to take direct bookings as well as via a big platform but would love to have that via a date booking database that works autonomously with the two. The 'maths' will certainly be a focus over the months ahead. I have a royalties income, and both my wife and I can work on a self employed basis, rather than the oft-heard 'I'll get a job out there' so it's a matter of working out incomes and costs.

All that, of course, is now dependant on so many factors now out of our hands Crying or Very sad
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costa-brava



Joined: 20 Sep 2010
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Location: costa brava spain

PostPosted: Tue Jun 09, 2020 4:53 pm    Post subject: Reply with quote

I forgot to mention one critical factor. The expenses and taxes for the purchase of a property amount to somewhere between 10% and 12% of the purchase price depending on the property etc. If you buy a new property you also have to allow a couple of thousand euros for the connection of utilities, light fittings and appliances. New homes are not normally in a move-in state. If it's a few years old it's usually just a case of changing names and bank accounts and most sellers leave all appliances and often the furniture.
Also check out community costs. If you buy an apartment or a town-house in a complex there will be an owners' community to administer buildings insurance, lifts, cleaning, swimming pool, gardens etc. Lots of properties don't have this and some have quite low costs while others are around 1000 euros per year.
The real bitch that all renters hate is a peculiar tax called "ganancias imputadas. It's really incredible. For the weeks and months that your property is not occupied there is a small but significant "capital gains" tax. For these bare weeks you cannot claim the general running costs like utilities etc as expenses. You can only claim these costs against the weeks that the property has been rented.
It sounds like you plan to be based in Spain. With Brexit in motion you will be treated like an American or Russian and I think will need to show that you can be self supporting. I really don't know how it's going to be but I have a feeling that a couple of hundred thousand in the bank will be considered more self supporting than a holiday rental flat. You need to check these things out. Perhaps there is another LMHatter who has more up to date details on this.
It's a bit like doing the driving test. The best person to ask for advice is someone who's just done it.
But please, please don't give up your UK address till your really sure.
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brendan



Joined: 16 Dec 2008
Posts: 676

PostPosted: Sat Jun 13, 2020 8:53 am    Post subject: Reply with quote

I think you should really question whether buying a second property is the best use of your money.

I had 2 properties, an apartment and a villa, which I ran as vacation rentals for years. They were very successful and gave me a good income stream. Ill admit that the income was not all declared to the Spanish taxman.....this was back in the days when you could easily hide income in overseas accounts etc. So about 50% was declared....a fair amount imo considering how unfair and voracious the Spanish taxman is. Those days are over now.

Both of the properties are now used as long-term rentals which has resulted in a considerable cut in income but they are absolutely hassle-free. Having said that, I would strongly advise against going into the long-term rental market in Spain.

Im about to sell the apartment (apartment in Estepona, anyone?) and the villa will be sold next year. Im at an age where I dont want any hassle whatsoever and would prefer to have the money in the bank.

I feel that you may be overestimating the income stream from a holiday rental especially when you factor in the hassle factor.

If I were you, Id rent in my preferred area for a year or so before making any big decisions or buy if you wish but dont buy a vacation rental unless youre absolutely sure itll be successful and profitable. Living in an area and getting to know local conditions is the only way to know whether its wise or not.
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costa-brava



Joined: 20 Sep 2010
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Location: costa brava spain

PostPosted: Sat Jun 13, 2020 10:04 am    Post subject: Reply with quote

ditto ditto ditto to Brendan's comments
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costa-brava



Joined: 20 Sep 2010
Posts: 615
Location: costa brava spain

PostPosted: Sun Jun 28, 2020 3:38 pm    Post subject: Reply with quote

Brendan wrote:
"Im about to sell the apartment (apartment in Estepona, anyone?) and the villa will be sold next year."
I meant to get back to you Brendan. If that is your intention you will recall that the costs in buying totalled about 10% on top of the declared price. When you sell they deduct the original declared price and the costs to arrive at the gain or loss you have made. It is absolutely crucial that you have documental evidence of the taxes, notario and gestor etc. Also any bank cost if you took out a mortgage. Most of these papers are often clipped to the back of the copy you were given of the escritura. You are also allowed to deduct any building works you did if you can still produce the receipts. And you can deduct the costs of selling like estate agent and "plus valia sobre terrenos".
If one of the properties has been your family home you can usually get a substantial reduction in taxes if you use the money to buy a new family home within 3 years. My son got this in 2005 even though his new home was in Canada.
So now is the time to dig out the old paperwork.
Good luck.
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brendan



Joined: 16 Dec 2008
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PostPosted: Sun Jun 28, 2020 4:40 pm    Post subject: Reply with quote

Many thanks CB. Just juggling with all that stuff right now!
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costa-brava



Joined: 20 Sep 2010
Posts: 615
Location: costa brava spain

PostPosted: Mon Jun 29, 2020 11:09 am    Post subject: Reply with quote

One other important thing, Brendan, that is best to sort out in advance (no cost) is your residence status. If you have worked or had a business and done your main tax declaration IRPF you will be considered to be fiscally resident in Spain. If you have lived on the earnings from holiday-lets and/or money from home you may be resident but not tax-resident. It affects how much you walk away from the table with the day you sell.
If you are not tax resident the buyer is obliged by law to do a retention and place it in a separate bank account or with a gestor. This is to cover two separate taxes that you have to pay. They cover it plus a bit and comes out at about 5%. If the buyer is getting a mortgage his bank will insist on about 6%.
If you have been doing your taxes in Spain over the last years (not in the UK) you simply apply to the Agencia Tributaria and they post a certificate to you. Estate agents and accountants etc. tend to overlook this until you arrive at the Notario and then it's too late. The Notario will insist on the retention if you don't have the certificate. It also affects spouses even if they have not been working or declaring but they can get the certificate too. Remember the declaration you do for your rentals doesn't count; it is a question of where you have been based for tax. You will still have to pay these two taxes but they may just total 3 or 4%. If the money is retained you should get the difference returned to you after the taxes are paid but you usually need to chase it up. It's a pain in the butt.
Also make sure you understand the implications of the "cabida" in my other post. It can be a doddle if you're ahead of the game or a stinker if you're not.
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