Recently we have advised a non-resident client based in Belgium regarding a buy-to-let operation he was wished to develop in Spain.
His investment plans were to purchase an apartment in a town of Cantabria (Spain) by the sea, and later to lease the property to tourists for short term and vacation purposes.
The problem started when we analysed the property chosen and we discovered that it didn’t meet the Cantabria legal requirements for touristic leases. In particular, the bylaws of the urbanisation where the apartment was located, specifically forbade short-term lets of any apartments in the urbanisation for the purposes of holiday stays.
Buy to let property in Spain: long term lease vs touristic lease
Therefore, considering that the most likely scenario was that the community of owners would not change the bylaws (for that purpose unanimity of votes is required), the only option of our client if he finally had bought the property, was to lease the apartment for non-touristic purposes, on a regular, long-term lease (renting a property for a habitual residence). In that event, his investment would change radically since a regular lease is much less profitable than a touristic lease.
Working together with the client offering our advice and studying the legal background of the potential apartments to purchase, he finally found a suitable apartment for his investment that fulfilled the regulations in this regard.
Uncertainty demands expert local advise
The market for touristic apartments has grown exponentially in recent years in Spain and with it, regulations have been changing and adapting to the circumstances very quickly, causing a lot of uncertainty especially regarding the fact that such regulations vary according to the region and even the town’s by-laws.
It is critical for the success of purchasing a property in Spain for the purposes of buy-to-let, to study carefully the impact of any applicable regulations relating to touristic leases since it may well be that the investment returns expected could be severely reduced by any such regulations. Caveat emptor applies!