Donnymatt

I and my wife will be coming into some inheritance in the near future and we are considering buying a little place as a holiday let rather than leave the money in the bank as the interest rates are terrible and it will be an income before we eventually move to Spain.

We are looking for some advice we have done some research but I bet their is something we have missed or overlooked can anyone tell us what's to be expected.

jonboy

I guess that to know what you have missed or overlooked we need to know what you have researched and the result of it.

MikeJ

We used to rent out our holiday home when we were not using it and we were amazed at the lack of respect that renters have for the owner's property and possessions. We had numerous things broken, including the door locks on one occasion. We had things stolen - not big things but irritating small items just disappeared. We had children's' scribbles on the wall and other violations to many to mention. In the end we decided that the income we were getting (and we only wanted to cover the house costs) were outweighed by the trepidation we felt every time we returned as to what we would find. So now we make the place available only to family and friends.
On the other hand, if you have a property you just want to rent out for income and have no personal attachment, you have furnished it with inexpensive goods and take a decent 'breakage deposit' then you can make some money at it, and we know a number of people who do just that.

mikelincs

I suspect that you will have really zero income over the year unless you are in an extremely popular area, and have a high spec place, but as has been said, holiday renters can be very disrespectful of other peoples property, and may will run up huge utility bills, often leaving lights and aircon on even when they are out for the day, remember you will still have to pay taxes and have a valid licence for the property to be used as a holiday let. I would save your money and put it in some sort of ISA in the UK, there are plenty of ways of investing money where the investment is safe, and you ahve a guaranteed income.

Horlics

I'm in Javea and know several people who do very well from letting their holiday homes, they get a better return on their money than I do for renting a property in the UK.

If you choose well you can beat the yield on letting in the UK by 2 or more % and have a holiday home to use (whereas I can't use my UK property because it is permanently let).

The big question over which is the better property investment depends on growth in the value of the property while you own it. It seems to me that most people believe UK property will out-perform Spanish property and I lean towards agreeing, although nobody knows for sure, of course.

Mike's pointed out that there are other ways to invest, and of course there are, but the wise person would go for a mix, so if you have money in ISAs then perhaps property is a good balancer.

MikeJ

One thing to consider - in the UK you can relatively easily release your capital when you want to stop renting and use it for living. But the chances of reselling an investment property in Spain, in the current climate, are vanishingly small. You would have to resign yourself to passing it down to the next generation. Of course things might change in the future and all those millions of empty properties might get sold and you might again be in a sellers market!

missile

Have you thought how you will manage the property? The only person guaranteed to make money from your investment is the agent.

Horlics

This is simply not true. I could sell mine within a month. Yes, there are properties that take years to sell, but if you make the right choice you can buy something that you can shift when you want to.

All I am saying Mike, is go and buy a remote place in the campo, or a grotty flat in a development of grotty flats where half are for sale or bank-owned, and yes, you are right. But there are other ways of doing it.

But yes, ease of disposal is a conseration, although IMO a manageable one.

Horlics

Well, yes and no. My friend rents for between 28 and 35 weeks of the year (for the last 4 years) and her income pays 80% of the mortgage after cleaning fees, etc.

But yes, an agent, if used, is guaranteed.

mikelincs

so still not making any sort of profit then.

Moses2013

Like anywhere it's location location, be it UK or Spain. If you are planning to retire to Spain, will the place you are buying be your retirement property, or will it be a pure investment and where is it located? Like MikeJ, I would never want to rent out my personal holiday home to people I don't know. There are some excellent investment opportunities in Spain, but it can also all go wrong, especially if you pick the wrong property in the wrong location. Some people aren't bothered about investing in property and just keep the money, or buy something nice with it. If you have a big garden in the UK and depending on location, you could build a granny annexe and rent out, or invest in another property in the UK.

Horlics

Ummm. When she finishes paying the mortgage she'll fully own a property 80% the cost of which has been paid for by other people. So yes, very clearly making a profit. Obviously.

Horlics

I agree with all of this, so it leaves the question, how much do you want a holiday home that you will share with other people. When we started looking at properties we quickly decided that we would not let it out and that if owning it depended on having income from it we would not bother. That left us discussing how much time per year we would use it and we decided that if it was less than 12 weeks we wouldn't bother.

If you could see it as a pure investment that it becomes a question of where do you think you will make most money and which location is likely to be less hassle. My view, taking all things into consideration, for someone who lives most of the time in the UK, the UK is the better option.

mikelincs

Also what you need to be absolutely sure of in Spain, is that the property is totally legal, otherwise you may just find out that the home you bought is, when you return to is, just a load of rubble. There any many thousands of homes built for, and bought by expats that were built illegally, with no legal paperwork, a good solicitor should sort that our, but NEVER use the solicitor recommended by the agent, they work fro the agent, and therefore the seller, and may well NOT tell you about the fact that the property is an illegal build. There is as much corruption in the real estate business in Spain as in the local government in Spain.

snikpoh

.... and don't forget that you now need a licence to rent it out - plus annual reviews for things like gas certificates?