Sell in UK and buy in Spain
 

Hello all,
My partner and I made the move to Spain (valencia) a year ago and we are happy here. We currently own a Buy to Let property in the UK (worth approximately 220k and has a 120k mortgage so approximately 100k equity). With recent rate rises the rent we receive doesnt cover the mortgage anymore and we started struggling with cashflow.
I was wondering if selling up and buying an outright rental property in spain (100k could get us a 2/3 bedroom flat in the suburbs of Valencia) and rent it out at least that will give us a positive cashflow compared to the current situation.
Does this seems a no brainer to you or am I missing something here?

Thanks all.

Re: Sell in UK and buy in Spain
 

Bailing out of the UK Buy to Let market is probably a good move anyway IMHO regardless of what you do with the £100k, it looks to becoming a very tenant biased situation with the new government taking shape. We are seriously considering selling ours in the UK, paying the CGT and bailing out and sticking the equity elsewhere for a gentle return.

Re: Sell in UK and buy in Spain
 

I can't comment on the UK situation as I have been in Spain for a long time and am out of touch with the UK - but think I have read landlords are bailing out for various reasons.

You need to consider your capital gains tax situation and currency conversion costs (including rate) and what actual amount of €s you have to reinvest.

Then you need to ensure you buy a good investment here - I would be careful with a 3-bed property do you want families or multi-occupancy letting?
I assume you understand all the on costs etc of a purchase here as well as possible community hassles.

If you can get good reliable tenants who pay then you will have a regular €uro income (not subject to exchange rate fluctuations) and with good tax allowances so yes then it is probably a good idea.

I think you need to do some detailed realistic cash flow forecasts based on sensible sales/purchase/tax/rental income projections.

Re: Sell in UK and buy in Spain
 

Thanks, I think you are right. With the arrival of this new government it will be wise to exist the BTL market all together especially if you still owe debt on the properties.

Re: Sell in UK and buy in Spain
 

Stick to long term lets. Tourist lets need special licences in many areas. Long term lets have big tax advantages.

Re: Sell in UK and buy in Spain
 

Thanks for your reply.
Hmm, I didn't think that the type of the property is important, I was just going with the mindset that 3 bedrooms is better than 2.
I am thinking long term rental rather than holiday let just because the spanish government is cracking down on Airbnbs.
is there a difference in renting to families vs singles
thanks

Re: Sell in UK and buy in Spain
 

Yup, all amateur LL should quit BTL market. It's a running business not a stamp collection hobby.
Even old Gov was going to ban S21, so new gov is just continuing with it. It was actually old gov that did massive damage to BTL for private LL.

If you know how to run business, then you know how to adjust to changes and not just panic from reading tabloids.

If LL is running cash-low from interest rate changes, then it just shows how amateur LL burn money by entering into business they know nothing about.

Re: Sell in UK and buy in Spain
 

The main problem in Spain is that once you have a tenant the onus to pay rent is not easily controlled. If your tenant refuses or can't pay ( due to unemployment/ long term illness) there is little you can do to evict them and the average time to get an eviction order is 2 years. It is consideredly harder than in UK where people get housing benefit.Many Spanish feel a certain resentment now towards foreign landlords and feel little moral guilt about avoiding paying.

Re: Sell in UK and buy in Spain
 

A lot of people invest in BTL because they see it as investment for their pension they are worried to not have enough money when they retire and do their best while they still fit to work.
what is damaging the rental market is the professional BTL investor rather than Amateur because they are motivated by greed.
I will give you an example. When our mortgage gone up we didn't increase rent on our tenants because we think rent is just too high for people now and they will struggle if we increase it anymore. If it was a Professional BTL like what you call them I am sure they will not hesitate to increase the rent until they are back in profit (without thinking if this was ethical or not) that's the difference I am afraid from what you call professional or amateur BTL.

Re: Sell in UK and buy in Spain
 

Yes, even more difficult to evict families if they default.

Re: Sell in UK and buy in Spain
 

Yes, that is exactly what I was alluding to.

Re: Sell in UK and buy in Spain
 

The only tenants (over many years) that I have had who did not pay the rent were English - but hey any tenant can be a problem if their circumstances change - I have heard there is insurance to cover this problem.

Re: Sell in UK and buy in Spain
 

OT but do you have any experience of BTL market in the UK as a business rather than as an amateur (to use your words) ?

Re: Sell in UK and buy in Spain
 

You seam to confuse business with charity. You can only run one or the other, but not as both at same time.
BTL investment as pension is outdated old school concept. One has to keep up with changing times.

Professional BTL investor is motivated by profit, thats fundemental for any business. Supply and demand always dictate price, and if one doesnt grasp this basic concept, then there is no hope for them.
Amateur BTL investors are usualy in bad position due to poor planning and not understanding how invesment needs to be run.

You are just going to move bad business model from UK to ES and repeat same mistake.

Re: Sell in UK and buy in Spain
 

Everyone starts as amateur but then grows to become professional. Anyone being stack as amateur is doom to fail, sooner or later.

This might help you understand difference. https://fs.blog/amateurs-professionals/