International buy to rent investors in Spanish real estate will benefit from new safeguards included in controversial new laws affecting the country’s long-term rentals market
The standard five year rental contract has been reduced to three years, one of several new laws that have swung termination scenarios in favour of property owners after years of problems in removing erring tenants. Would-be buy to rent investors have been wary of long-term contracts, preferring to opt for holiday rentals which are subject to different laws.
Now with new rental term flexibility and the removal of layers of legislation designed to protect tenants, the Spanish Government is expecting a new wave of inward investment from the international market taking advantage of low property prices and a rapidly expanding rental market.
Tenants can now abandon a property without financial penalty by providing the landlord with just one month’s notice, while the landlord can repossess the property for himself or a family member by giving two months notice to quit.
The new laws allow fast-track evictions after court hearings on rent arrears and other breaches of contract and establish a blacklist of bad tenants that can be consulted by landlords and their managing agents. Tenants who fail to pay their rent can now be evicted in 10 days if they fail to provide a judge with reasons for the eviction not to be executed.
Experts estimate that villa or apartment rental yields can exceed 5% due to the lowest acquisition costs for a decade and the number of brand-new, key ready homes available from specialist brokers like Walker Property Spain, who have sales and marketing contracts with Spain’s leading banks, offering 700,000 prime property bargains at an average peak to present discount of 44%.
Said Ben Walker of Walker Property Spain: “The new laws provide landlords and tenants with more flexibility, but generally swing more in favour of the property owner. While there are good returns in the holiday and seasonal rental markets due to Spain’s still expanding tourism sector, the real growth is likely to come from long-term lettings.
“The varied locations of our Spanish bank-owned property allow investors to compare the likely returns of holiday or long-term rentals or, as is beginning to happen, to invest in a mixed portfolio and benefit from improved yields.”
Walker Property Spain provides a comprehensive service to international investors that includes generous purchase funding from leading banks, management and lettings and special Fly to Buy viewing trips covering all the key areas of the Spanish mainland, Balearics and Canary Islands. Investors can evaluate single or multiple purchase opportunities, including completed developments in prime Costa beach or golf locations.