Properties for tourist rental in Spain – how to obtain a license and where to invest?

Are you planning to purchase a property in Spain for tourist rental? We clarify the conditions you must meet to legally rent it and we suggest how to obtain the required license.

Holiday rental in Spain

Holiday rentals in Spain become more and more popular. Additional income opportunities are so attractive for investors that larger cities had to implement certain restrictions in order to limit the amount of private landlords, and thus the incoming tourists interested in short-term rentals of apartments and flats.

According to a research conducted by Fotocasa in 2018, the most significant interest among investors looking for properties for holiday rentals in Spain was recorded in:

• Andalusia (26% of all holiday properties),
• Catalonia (18% of all holiday properties),
• Valencia (13% of all holiday properties).

The main reason for such an investment is, of course, the possibility of another source of income, as well as the relatively high profitability of such a form of renting. Among the most popular types of properties for holiday rental in Spain are apartments, villas, bungalows, studios and flats in Spanish houses.

Short-term and long-term property rentals

If you are investing in a property for rental, you may opt for a short-term or long-term rental. Short-term rental of a property seems to bring more financial benefits to the owners compared to the latter option. Visitors to Spain are often willing to pay a little more for a holiday stay in an attractive location. Of course, the choice of the right location for an investment is a very important aspect here - to a large extent, it is on this location that the income from renting later depends on. People investing in properties in attractive tourist resorts in the holiday season can expect high occupancy rates. Taking into account the relatively high rents in typical tourist resorts, the rental income may turn out to be very attractive. The income obtained in this way during the peak holiday season should usually be sufficient not only for the fees associated with the current maintenance of the property, but also for the additional needs of the owner.

Who can rent a property to tourists in Spain?

The most important conditions for people who want to rent their apartment or house to tourists are:

• having a tourist license to rent a property,
• property rental meeting certain technical requirements.

Illegal rentals of properties in Spain are subject to a fine. It is worth knowing that the terms and conditions of tourist rental, as well as how to obtain a license, may vary depending on the region of Spain. In this article, we will take a closer look at the requirements for investors in the Autonomous Community of Valencia - further on, you will find specific tips on how to get a tourist rental permit in this part of Spain.
 

It will not be easy to rent a property in these parts of Spain

As we have already mentioned, some Spanish cities have taken up the fight against private tenants who illegally rent property through services such as Airbnb and are therefore enjoying significant financial benefits. The main problem for cities such as Barcelona, Madrid and Palma de Mallorca, among others, seems to be a surfeit of tourists who, encouraged by the occasional price of private apartments, are visiting the most popular Spanish locations in large numbers. In 2018 alone, Spain was visited by more than 82 million tourists! For many of them, renting private premises is a much better option compared to hotel accommodation. Limitations in terms of the number of days of short-term rental, exclusion from rental of premises located in the city centre, or the need to have a license, are just a few of the solutions implemented by popular Spanish cities.

Here are some of the restrictions on short-term rentals in Spain that have been imposed by cities and regions.
 

Madrid

The Spanish capital has regulated the maximum number of days per year for which property owners can rent a property to tourists without a license - currently it is a maximum of 90 days. A longer lease term requires a special permit. In addition, it is stipulated that in this case, the premises for holiday rentals must have a separate entrance. This makes it impossible to rent a single flat located in an apartment building or a townhouse. Of course, the city authorities have also ensured that investors do not circumvent this restriction in any other way. In such a situation, the owners of the entire residential property could rent particular flats to visitors. In order to avoid this situation, Madrid has introduced a provision that in these cases such properties will be subject to the same requirements as hotels.

Barcelona

The regulations for holiday rentals in Barcelona are extremely restrictive. Owners of such properties must have a license, but they cannot rent it for more than 120 days a year. In addition, tourists making use of the rental offer are required to pay tourist tax. Some restrictions also apply to the services through which you can book an apartment or a flat for a stay in the city. If they publish illegal rental offers, they will be fined.

Restrictive regulations result mainly from the fact that the capital city of Catalonia has been struggling with the excess of tourists for several years. In 2014, the granting of licenses to rent private property to tourists ceased. A few years later, the city authorities also banned the establishment of new hotels in the city centre and nearby districts. Barcelona has been struggling with the effects of mass tourism for a long time. Due to the huge number of visitors, the city is becoming less and less friendly to its inhabitants. Too many tourists also indirectly affect the Barcelona property market. Rent prices are very high, and owners see greater financial benefits in renting the property to tourists, who are often willing to pay a little more. For this reason, some districts of the city are depopulated - Barcelona residents find it harder and harder to find a place to rent at an affordable price. Despite the fact that tourist rental permits are no longer granted, many people have illegally rented premises. The city authorities have taken action to combat these practices. The number of persons verifying the legality of the rent was increased and residents were given access to a portal where they could report premises that were rented without a permit.

Mallorca

On Mallorca, the rules for renting property vary depending on the part of the island. If one wants to rent their own property, they need to have a proper permit - otherwise the owner of the property is facing a fine. It should also be noted that holiday properties in this part of Spain can be rented up to 60 days a year in the typical tourist regions.

As for the capital city of the island - Palma de Mallorca, the situation there is slightly different. The city authorities have decided to completely ban the rental of apartments in the city centre. On the other hand, it is allowed to rent property in the suburbs or in the vicinity of the airport.

Tourist rental properties on Costa Blanca

The large amount of holidaymakers makes it very difficult, and in some cases impossible, to obtain permission to rent a tourist property in the aforementioned regions of Spain. The whole process may be much simpler on the Costa Blanca coast - a place that investors planning to invest in a property for holiday rent should definitely consider. This region, although becoming more and more popular with holidaymakers, does not struggle with as big problems as the listed resorts. A lower number of tourists means that obtaining a license to rent a property in an attractive location is easier than it might seem. We especially recommend purchasing property in the Autonomous Community of Valencia, where resorts such as: Alicante, Benidorm, Calp, or Altea are located.

How to obtain a rental license in Valencia? Step-by-step

An investor who wants to use the property for short-term tourist rental must obtain a tourist license. Only then will the rental be legal. It should be noted here that the process of obtaining a rental permit will slightly differ depending on whether you want to register as a private tenant or a company - if you plan to use more than 5 properties for rent, you are obliged to register a business activity. In this article we will focus on the tourist license for private persons. Here is how this whole process in the Valencia region on the Costa Blanca looks like step by step.

1. First of all, you should apply to the City Hall for a document allowing you to rent an  apartment in our building - Compatibilidad urbanistica que permita el uso turistico

2. Fill in the application form Declaracion responsable referente a viviendas de uso touristo

3. The application must be submitted to an administrative authority located in the province in which the property is located or in the Registro Territorial de Turismo in Alicante or Valencia.

The application may also be sent by post to the address indicated:

• Registro del Servicio Territor1ial de Turismo Valencia

Pl. Alfons el Magnánim 15

 46003 Valencia

• Registro del Servicio Territorial de Turismo Alicante

C/ Churruca 29

03003 Alacant/Alicante

The application shall be accompanied by the following documents:

• a copy of the identity document,
• a document confirming the right to use the property,
• the list of properties that one wants to use for tourist rental.

In order to make sure that all formalities have been duly completed, we recommend consulting our real estate agency tripinvest.

4. Once you have registered your property, you will receive a license number, a location code and the property will be placed in the correct category. From now on, you must use all of these signs in promotional material on booking sites and other places where you will be placing your lease offer. 

If you are planning to rent a private property in Spain, you should also be aware of the rules and regulations that apply to you as a member of a particular housing association. This applies to people who want to rent an apartment or a flat as part of a larger residential building or the so-called urbanisation. Some landlord's associations may prohibit the rental of tourist premises in a given building.

What technical requirements does a rental property have to meet?

It is worth starting with the fact that there are three types of tourist rental properties in Valencia and each of them corresponds to a different standard of premises - Standard, Prime Minister, Superior. Each property for rental must meet specific requirements in terms of equipment, square footage and available amenities.

Check which requirements must be met by a property in a specific standard.

Amenities that should be included in each type of property:

The required internal equipment:

The minimum size of individual rooms:

It is also worth mentioning that people renting a property to tourists in Spain should have an energy performance certificate (EPC). The person issuing the certificate should be a qualified technician. Additionally, the certificate should be registered with the AVEN - Valencian Energy Agency.

It is also the responsibility of the owner of the property to insure against theft or various accidents.

Tax on renting property in Spain

Investors who want to reap the financial benefits of renting a property in Spain must be aware that such income is also subject to taxation. There are two deadlines for paying property rental tax in Spain. If you live there permanently or stay more than 180 days a year, you have to pay tax in May. However, property owners who are not permanent residents pay the tax in December.  

Here are some of the documents you need to present in order to properly settle with the tax office in Spain:

• An ID card,
• A notarial deed of the property,
• A property tax (IBI),
• Costs related to the rental of property,
• Revenue from the property rental.

What rights does the owner of the property have?

The rights of the property owner have also been regulated. Under Spanish law, the landlord has the right to demand a deposit from the tenants in the event of damage to the property's equipment and the arrival of more guests than announced. The deposit can be up to a maximum of 250 euros. In case of cancellation of the reservation by the guest, the owner of the property also has the right to enforce the return of part or all of the previously paid amount. Additionally, if the guest does not appear on the date of the reservation in the apartment without prior notice to the owner of the property, the owner may cancel the reservation and refuse to refund the previously made payment for the stay.

Which property to invest in?

Are you looking for a property in Spain that you could use for rent? We have a wide range of apartments, flats, villas and many other properties on the Costa Blanca coast. Our specialists will advise you on which location to invest in, in order to earn as much as possible from tourist rental. We will also help you to find the best property offer that will fully your expectations and financial possibilities. Feel free to contact us!