Beware the unscrupulous estate agencies that are letting property on the sly, and stealing the proceeds

Sunday Times Home Section, 8 April (Easter Sunday) 2007

The holiday home that pays for itself from tourist rentals sounds great in theory — which is why all those people trying to sell you property deploy the argument with such enthusiasm. But matters are not always that straightforward, especially in Spain.

Indeed, one of the biggest problems you face as the owner of a holiday home — apart from the oversupply of rental properties on many of the costas — is finding a letting agency you can trust to pass on your full share of the rent.

Take Trudie Day, 47, who was renting out her flat in Puerto de la Duquesa, on the Costa del Sol, through a local agency. “I did the cleaning after each client myself, because I live close by, so I knew exactly when the apartment was rented,” she says. “Even so, they didn’t pay me all the rent they owed me, and told me to prove it when I challenged them. I live in Spain, but still got conned.”

Helen Dalton, 38, from London, owns a flat along the coast near Marbella. She, too, used to employ a local agency. It was only after the business closed down that she noticed her property had often been used without her knowledge.

“Little things like towels and sheets went missing,” she says. “Eventually, it became obvious that other people were using our penthouse when we weren’t there. We changed the locks, but they broke in and changed the locks too. I arrived one holiday to find that I couldn’t get into my own home.”

Dalton was so fed up that she now lets out the flat to a long-term tenant — even though they pay per month what she used to receive in a week during high season. “I’ll never get involved in tourist rentals again,” she says. “You just don’t know who has the keys to your property.”

Jane Moore, a solicitor with Murphy Lawyers in Marbella, has come across many cases of absentee landlords being ripped off. “I’ve heard of rental-agency staff using client properties without permission for all sorts of things, including family holidays,” she says. “If you don’t live locally, it’s hard to know what is going on in your property.”

Thanks to the internet, you can get round the problem by renting your property out yourself. Various websites allow you to advertise to a wide audience, take bookings and publish availability, all for a fixed fee.

“You save the 20% or more that rental agents take, and you know exactly who is in your property,” says Ross McGowan, sales director of one of the largest sites, Holiday Rentals, which claims to have more than 22,000 properties on its books. “If you treat it like a business, and dedicate time to it, it can be very rewarding.”

All this requires effort, however, and many owners of holiday homes still prefer to use a rental agency. The challenge is to find a good one. “Ask for client recommendations,” advises Moore. “Check rental agreements carefully, making sure that the rental agency’s responsibilities are described in detail. Keep an eye on your utility bills, so you know when the property is occupied, and check them against bookings.” Also important is clear and detailed documentation — if your agency is reluctant to provide it, then alarm bells should start to ring.

Long-term letting may have been the solution for Dalton, but even this is not without problems: rental law in Spain is skewed in favour of the tenant, and it can take years to evict nonpayers, especially if they have children.

Vince Barnes, 42, a professional musician from Newcastle upon Tyne who lives in Valencia, has had his share of troublesome tenants at his property in nearby Gandia. “I’ve had enough of being a landlord in Spain,” he grumbles. “Short-term rentals are a pain in the neck, and when I switched to long-term lets, the tenants paid only four months out of nine, did €2,000 [£1,350] worth of damage and left me €3,000 [£2,030] out of pocket, not to mention all the time and aggravation.”

Many rental agencies recommend using an 11-month rental contract rather than the long-term variety (12 months or more) that gives tenants so much protection. Even in such cases, however, landlords must still follow the normal eviction procedures against tenants who don’t pay the rent.

Owners should resist the temptation to change the locks or disconnect the utilities; this is against the law and could lay them open to legal action.

Word of the cushy deal tenants get from Spain’s rental laws must have reached the UK. A growing number of Britons are reportedly taking advantage of the law to live rent-free in Spain, some of them in luxury apartments in glitzy hot spots like Puerto Banus. The Spanish press recently claimed that more than a quarter of delinquent tenants in Spain are foreigners, many of them British, living rent-free in popular tourist areas. Now even the squatters are moving to Spain.

© Mark Stucklin (Spanish Property Insight)