New rules for Tourist Rental Properties Costa Blanca | Comunidad Valenciana
30 Sep 2024
In August 2024 new legislation has been adopted for tourist rentals in the Comunidad Valenciana, the region where Costa Blanca is located.
The new rules that came into force in August for the licensing of holiday rental properties have raised a lot of questions from our clients who own holiday rental properties and also from others who are seriously considering investing. The new rules change several things.
Below, we explain the changes in tourism rental regulations and also the 3 options available to owners and investors looking to rent out their property.
As a property owner you can opt for 3 types of rental agreement:
Tourist rental with a licence
Classic property rental with a duration of 1 to 8 years.
Seasonal rental for a freely agreed period.
As estate agents, we are every day in touch with the market, we speak to a lot of people and have insight in the supply and demand. We still see many opportunities to make rental properties profitable. Whether it is a licensed holiday home, a general rental property or seasonal rental.
There definitely are profitable options and we see a strong demand for rental properties.
We know first-hand that there are many people who, before buying a house, rent a house in Spain for a few months to see if they like the area, the lifestyle or just to think about the next step in their life. Moreover, not everyone can afford a second home and there are many people who are willing to pay a substantial rent to enjoy someone else’s property for a few months every year.
1. Tourist rental with a licence
This option to rent out a property has been the most frequently chosen by property owners in recent years. The sharp increase in the number of properties for tourist rental has caused a negative effect in some cities and coastal areas, often due to the behaviour of the tenants rather than the fact that the property is rented out.
A licence is required to rent out a property as tourist accommodation. This licence is issued, in the Comunidad Valenciana, by the Generalitat Valenciana and requires a certificate from the town hall where the property is located. That certificate confirms that the property can be let as a tourist rental (the ´ certificado de compatibilidad de alquiler turístico ´). In addition, the property must meet certain hygiene, comfort and safety requirements.
When applying for the tourist rental licence, the owner indicates the weeks or months of the calendar year during which the property will be available for tourist rental.
The amendment to the ordinance provides more autonomy for municipalities to limit the number of tourist accommodations. Municipalities will be able to impose heavier penalties and have more tools at their disposal to enforce.
The main changes proposed in the new tourist rental ordinance are:
· Renewal of tourist rental licence every 5 years.
· Prohibition of key boxes on public roads and in common areas of buildings.
· Limitation of the stay to 10 days
· If the property is sold, a new licence must be applied for.
Current owners with a tourist rental licence:
· Important: You must provide the cadastral reference of your property to the registry by 31 December 2024.
· The property must meet the minimum requirements.
· Owners with a licence issued before 8 July 2018 do not need to renew their licence every 5 years. In these cases, the owner only needs to make a declaration, and register, that the property meets the minimum requirements specified in the new decree regarding entrances, installations, minimum dimensions and equipment.
How big is the Tourist Rental Market in Spain?
Some say that tourist apartments have caused a shortage in the supply of housing for people who need a property to live in permanently. Although there are municipalities and neighbourhoods where there are many tourist rental properties, official data at national and provincial levels generally show a different picture.
According to official data from the INE (Instituto Nacional de Estadisticas), at national level in Spain, only 1.33% of all properties are rented out as holiday homes. Here are some interesting statistics.
Nationally: 1.33%.
Catalonia: 1.34%.
Barcelona (province): 0.65%.
Valencian Community: 1.81%.
Alicante (province): 2.82%.
Andalusia: 1,76%.
Malaga (province): 4.12%.
(Source: INE data February 2024)
Renew every five years
New is the requirement to renew the registration of the property in the Tourist Register of the Comunidad Valenciana every five years. To re-register the property, the owner must reapply for the municipal certificate on tourist compatibility and also issue the responsible declaration as owner, which also confirms that the owners’ association of the residence where the property is situated has not banned rentals for tourist purposes in its bylaws.
This new requirement means that if the municipality where the property is located changes the regulations, it will not be possible to renew the licence for tourist rental after five years, nor if the owners’ association changes the bylaws in the meantime and a ban on tourist rental is adopted in the complex where the property is.
Ban on key boxes on public roads and communal areas
With the new regulations, the key boxes we see in many streets and front doors of buildings are banned. It will no longer be possible to place a key box on public roads or in common areas of buildings.
The owner who rents out his property as a tourist rental is obliged to receive the tenants on arrival (or have someone else to do this).
Tourist rental: stay of up to 10 days
Since the Ordinance came into force, tourist rental accommodation cannot be rented out for stays of more than 10 days.
Since the owner of the tourist accommodation is obliged to comply with the mandatory traveller register, it would also not be a solution to make 2 consecutive bookings with the same guests in different names. The authorities can easily check whether the accommodation has been rented to the same persons for a period of more than 10 days.
When a property is sold, a new licence must be applied for by the new owner.
Until now, it was possible to apply for a change of holder of a tourist rental license. For example, when the property is sold, the new owner until now could easily change the license. Now, a change of owner is no longer allowed. The new owner will have to apply for a new tourist permit. This means that if the property is in a municipality or residence where tourist rentals are no longer allowed, a new licence cannot be obtained.
Other requirements for tourist rental properties
While not all of these requirements are new, it is important for owners to know that tourist accommodation must have a building evacuation plan on the front door or emergency instructions in multiple languages, It is further mandatory to have a lift in buildings from 4 floors upwards, a separate entrance for tenants in the case of ground-floor accommodations, and further, 24-hour telephone availability is mandatory.
Other obligations include power sockets in all rooms __with a voltage indicator__, hot water, an equipped kitchen, a washing machine, a list of emergency and useful telephone numbers in a visible place, fridge and heating in at least the living-dining room, internet connection (unless there is no internet coverage in the area), a first-aid kit and detailed information on the nearest medical centre.
And now?
What options do I have as an investor in a property without a tourist rental licence?
Are you wondering if it is attractive to invest in a property on the Costa Blanca to rent it out? Absolutely. There is a huge shortage of available rental properties across the whole of Spain and Costa Blanca is a highly sought after area. There is a lot of demand, including for properties for just a few months.
If you can’t or don’t want to rent out your property as a holiday home, there are 2 options. General rental or seasonal rental.
2. ‘Classic’ house rental
This is the option for homeowners who want to make their property profitable by letting with a classic rental. In other words, the property is rented out to people who will live in the property permanently.
The clearest advantages and disadvantages with this type of rental agreement for the investor are:
Disadvantages of classic rental:
If the property is rented out as a home, the tenant can stay for up to 5 years if they want to. The lease is renewed every year unless the tenant gives 30 days’ notice that they do not want to renew for another year. In the fourth year, the landlord can give the tenant 4 months’ notice not to renew the contract.
If neither party gives notice after 5 years, the contract is compulsorily extended by annual instalments up to a maximum of another 3 years.
As a landlord, you cannot enjoy your property
The laws in Spain are very protective of tenants. If the tenant stops paying the monthly rent, it is not easy to get the possession of your property back. You can take out insurance against non-payment and, as a landlord, you are free to choose your tenant and can demand a certain economic level from the person you decide to rent your property to.
Well-managed tourist rentals usually generate more income than annual rentals.
Advantages of classic rental:
Property rental income from long term classic rentails is treated more favourably for tax purposes than tourist rentals.
You don’t have to manage cleaning and arrivals of tenants.
You know in advance what income the property will generate in the coming years.
Often the rental income covers fixed costs, including the mortgage, and meanwhile the rental income pays for the property the value increases every year.
No rental licence is needed.
If you want to rent out your property, you must contact a lawyer in Spain who specialises in Spanish rentals to comply with the regulations and make sure you have a rental contract that protects you as the owner.
3. Seasonal rental
The third option for renting out a property is seasonal rental. For many people, owning a property in Spain is not just an investment. It is also a major attraction to enjoy the excellent climate and culture.
For those who cannot rent out their property for tourist purposes and do not want to be subject to the restrictions of classic long-term rentals, there is the option of seasonal rentals.
In our opinion, this is an attractive option as it allows the property to be rented out for longer periods when the owner is not using it, while at the same time enjoying the property when it is not rented out.
This type of rental also has its advantages and disadvantages for the investor:
Disadvantages of seasonal rentals:
Seasonal rentals cannot be marketed, promoted in tourism supply channels or by any form of marketing. In other words, this rental offer cannot be advertised on portals such as AirBnB, Booking, nor anywhere else. .
During the periods when the property is rented out, the owner cannot enjoy the property.
Seasonal rentals will generate a higher income than renting out the property long term with a classic rental agreement, although it is still generally lower than the income that can be earned from a well-managed tourist rental.
Advantages of seasonal rentals:
The duration of the contract is for the agreed period only.
When the property is not rented out, the owner can enjoy it.
You do not have to arrange weekly cleaning and tenant’s arrival.
You know in advance what income the property will generate during the season.
Often the income from this type of rental also covers fixed costs, including the mortgage, and the property pays for itself or almost on its own because the value increases every year.
No rental licence is needed.
The ban on advertising the property as being available for seasonal rental can be the biggest hurdle for owners wishing to opt for this rental regime. For landlords who already have a regular clientele for their property, this restriction may not pose as many problems and opting for this regime in these cases can be attractive for both the investing landlord and the tenant.
Important: a property cannot fall under two regimes at the same time.
A holiday home cannot be available for seasonal rental and as a holiday home at the same time.
During the period when the property is registered as a ‘tourist rental’, the property cannot be rented out as a seasonal rental.
This means that if during the period when the owner registered the property as ‘tourist’ when applying for the rental licence (e.g. from 1 May to 1 September), and it is rented out for more than 10 days with a seasonal contract to tenants during this period, the authorities may initiate a procedure to proceed with the deregistration of the property in the Tourist Register of the Comunitat Valenciana.
A hybrid solution whereby the property is available for part of the year as a tourist rental for stays of up to 10 days and another part of the year as a seasonal rental seems possible. The important thing is that the rules are complied with at all times. The latter will take some serious effort though and the big question will be how to deal with the ads for offering the property as a holiday rental while not being allowed to advertise for seasonal rentals.
If you want to rent out your property, you must contact a lawyer in Spain who specialises in Spanish rentals to comply with the regulations and make sure you have a rental contract that protects you as the owner.
As mentioned earlier here above, our team of estate agents is in touch with the market on a daily basis, we speak to a lot of people and have excellent insight in the supply and demand. We definitely believe there are opportunities to make rental properties profitable. Whether it is a licensed holiday home, a general rental property or seasonal rental.
If you want to know more about our services, do not hesitate to contact our team - we are here to help you!
We look forward to hear from you!
This informative article was prepared by Tom Bruijnzeel. All information in this article is for information purposes only and is not legal advice or recommendation to invest. If you want to rent out your property, you should contact a lawyer before renting or offering your property.
The information and views expressed in this article are based on information freely available on the website of the Official Gazette of the Generalitat Valenciana, Legislative Decree 9/2024, Law 29/1994 on Urban Leases, the National Institute of Statistics (INE) and other freely available sources.
Tom holds a Master’s degree in Dutch law from the University of Rotterdam and a degree in Economics and Business Administration. He is fluent in Spanish, French, English and, of course, Dutch, with a full knowledge of business German. In 2013, he launched nardia real estate in Spain. The website www.nardia.es is for anyone who is considering investing in a property in Spain or already owns a property and has questions about property tax in Spain, the correct registration of a house in the Land Registry in Spain or the tax due when selling a house in Spain.
If you would like to get in touch via Linkedin: linkedin.com/in/tombruijnzeel
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