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Written by VINCE BARNES
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It has been some time since I wrote anything mainly due to a recent move to Valencia. I read recently in the Spanish press some things which will affect all those who have purchased a property to rent/or use as an occasional holiday home. The articles in question were in the local (to Valencia) Levante and in Spanish. However the two main points were as follows.
Apparently some 16% of homes in Spain lie unoccupied and the government wants to take action. They are passing or have passed a statute which allows the local town halls to charge an additional 50% IBI (Local rates) and Bassura (rubbish collection) on homes that are vacant. More worryingly though is that the government then have the right to enforce rental tenants on the owner so they must rent out that property. I am not sure if this is passed or is just an idea (probably the latter) and possibly as in all things in Spain it will take a long time to implement - however this potentially means you could have bought a holiday home, not used it for a while and it is declared as unoccupied.
The second thing and almost in complete contradiction to this is that the government (and this could just be in Valencia or it may be Nationwide - I am not sure) is cracking down on those who rent their holiday homes without a license. The license is easy to apply for and costs around 200 euros but you must register any holiday home with the tourist board which must meet certain criteria. Failure to comply can result in a hefty fine of up to €90,000 - a lot of money to find you owe the local town hall.
Something more, some of you have probably bought a second home for investment, or even bought off plan to sell on, but find now you are stuck with a house you didn’t want, short term rentals are difficult at best with lots of competition from others who bought in your area for the same reason. Selling it now will mean loosing money and long term rentals are fraught with frustration. A tenant who stays for 12 months has the right to stay for five years. The problem comes when they don’t pay the rent - it can take up to 2 years to evict them, by which time they could have done untold damage. So short of not renting it, renting for 11 months (which in actual fact is no solution because the tenant could insist anyway and the courts would probably uphold their right) or renting it short term.
So there is nothing that can be done if you want to rent long term - you have to take the risk.
Or do you?
Having spent the past 3 weeks looking for a long term rental in Valencia (I actually wanted a 6 month let before I buy) I have come across two possible solutions - something which would protect the landlord. The first is called an ‘Aval Bamcario’ and the second is a “Plan Nacional de Alquiler Garantizado (PNAG)” launched by the Spanish arbitration court (La Corte Española de Arbitraje Económico de Derecho y Equidad). I believe Martin Hayes of Poveda Hayes will be writing in more detail about this subject so I will leave it to him to explain. However Aval Bancario may provide you with some security.
Aval Bancario - Is basically a bank guarantee, the bank will guarantee the payment of the rent for the term of the contract. If the period is 12 months with the option to extend for five years as is the norm in Valencia, then the bank must guarantee these payments for the full term of the contract. As you can imagine, even at 500 per month the bank could stand to lose up to 30,000 - something they will not do lightly. Therefore in order to get such a guarantee the bank processes it as if it was a personal loan.
Therefore you know two things
Firstly a tenant who has an Aval Bancaio is credit worthy and secondly the bank will pay for the term of the contract even if the tenant doesn’t and you can rest assured that if the bank has to pay they will take the action themselves against the tenant.
So there you go - a possible solution to those that are looking for a long term rental for your property but don’t trust the Spanish rental law. Couple this with the Contrato Arbitraje and you have as much security as you need.
For any questions related to property sales or purchase or rentals please feel free to drop me a line
Vince Barnes
It has been some time since I wrote anything mainly due to a recent move to Valencia. I read recently in the Spanish press some things which will affect all those who have purchased a property to rent/or use as an occasional holiday home. The articles in question were in the local (to Valencia) Levante and in Spanish. However the two main points were as follows.
Apparently some 16% of homes in Spain lie unoccupied and the government wants to take action. They are passing or have passed a statute which allows the local town halls to charge an additional 50% IBI (Local rates) and Bassura (rubbish collection) on homes that are vacant. More worryingly though is that the government then have the right to enforce rental tenants on the owner so they must rent out that property. I am not sure if this is passed or is just an idea (probably the latter) and possibly as in all things in Spain it will take a long time to implement - however this potentially means you could have bought a holiday home, not used it for a while and it is declared as unoccupied.
The second thing and almost in complete contradiction to this is that the government (and this could just be in Valencia or it may be Nationwide - I am not sure) is cracking down on those who rent their holiday homes without a license. The license is easy to apply for and costs around 200 euros but you must register any holiday home with the tourist board which must meet certain criteria. Failure to comply can result in a hefty fine of up to €90,000 - a lot of money to find you owe the local town hall.
Something more, some of you have probably bought a second home for investment, or even bought off plan to sell on, but find now you are stuck with a house you didn’t want, short term rentals are difficult at best with lots of competition from others who bought in your area for the same reason. Selling it now will mean loosing money and long term rentals are fraught with frustration. A tenant who stays for 12 months has the right to stay for five years. The problem comes when they don’t pay the rent - it can take up to 2 years to evict them, by which time they could have done untold damage. So short of not renting it, renting for 11 months (which in actual fact is no solution because the tenant could insist anyway and the courts would probably uphold their right) or renting it short term.
So there is nothing that can be done if you want to rent long term - you have to take the risk.
Or do you?
Having spent the past 3 weeks looking for a long term rental in Valencia (I actually wanted a 6 month let before I buy) I have come across two possible solutions - something which would protect the landlord. The first is called an ‘Aval Bamcario’ and the second is a “Plan Nacional de Alquiler Garantizado (PNAG)” launched by the Spanish arbitration court (La Corte Española de Arbitraje Económico de Derecho y Equidad). I believe Martin Hayes of Poveda Hayes will be writing in more detail about this subject so I will leave it to him to explain. However Aval Bancario may provide you with some security.
Aval Bancario - Is basically a bank guarantee, the bank will guarantee the payment of the rent for the term of the contract. If the period is 12 months with the option to extend for five years as is the norm in Valencia, then the bank must guarantee these payments for the full term of the contract. As you can imagine, even at 500 per month the bank could stand to lose up to 30,000 - something they will not do lightly. Therefore in order to get such a guarantee the bank processes it as if it was a personal loan.
Therefore you know two things
Firstly a tenant who has an Aval Bancaio is credit worthy and secondly the bank will pay for the term of the contract even if the tenant doesn’t and you can rest assured that if the bank has to pay they will take the action themselves against the tenant.
So there you go - a possible solution to those that are looking for a long term rental for your property but don’t trust the Spanish rental law. Couple this with the Contrato Arbitraje and you have as much security as you need.
For any questions related to property sales or purchase or rentals please feel free to drop me a line
Vince Barnes
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Spanish Life 
