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Article copyrighted © 2020. Plagiarism will be criminally prosecuted.
By Raymundo Larraín Nesbitt
Lawyer – Abogado
1oth of September 2020
Although I’m guilty as anyone of reporting the negative impact of Covid-19 in the Spanish real estate market, the fact is that it has also opened up a slew of new opportunities well-worth looking into.
I had already reported at large in previous articles how the virus outbreak has created a number of singular buying opportunities for savvy investors with steep discounts (understatement).
Likewise, it has also created unique opportunities on renting out in Spain, specifically long term. In today’s blog I’m going to expand on how the pandemic has opened up new opportunities on renting out long term in Spain.
Before the epidemic hit Spain, long term lets were hard to come by and were largely overpriced. This is because landlords were focused instead on the hugely profitable holiday rental market. However, due to the ongoing pandemic, holidaymakers shunned Spain this summer mainly because of the pesky quarantine requirements back in their home countries. Now that the new reality has sunk in, landlords have swiftly shifted gears and are viewing long term rentals with renewed love & interest.
There is a huge untapped latent demand for long term rentals. Which goes on to explain why landlords have flipped over en masse to long term instead. This huge influx in supply of long term rentals has (greatly) impacted the market, dragging down prices significantly. As Spanish daily El Mundo reported this week, lets have dropped by 50% in Ibiza.
Shrewd tenants can now bag themselves a two-digit discounted rental in prime locations in Spain i.e. Marbella and Balearics. This is nothing to scoff about, as when you sign a long term lease – by law – you can remain up to five or seven years in a property (even eight or ten years, depending on whether the landlord is a physical or legal person and also if a silent renewal is triggered).
Securing a lease contract at a huge bargain price on a prime location for an extended period of time almost sounds too good to be true, but it’s happening right now. This is one of many untold positive consequences of the virus outbreak in our real estate market. I dare say it really is a once-in-a-lifetime opportunity.
The pandemic will be over in a year or two, confidence will return, and the market will rebound strongly, as it always does when it overreacts. The pent-up demand for rentals in Spain cannot be overstated enough.
And when all is said and done, and the dust has settled, your rental contract will continue to go on unfettered for many more years after the epidemic is over, at a huge discount; well-below its true market value.
This (unique) market opportunity is of particular interest to:
- Those looking to relocate to Spain permanently.
- Those looking to sublet properties in prime locations i.e. holiday rentals
- Those who hope to attain a coveted Spanish residency permit before Brexit kicks in 2021.
As the Chinese say, “Crisis is an opportunity.”
If this is not a great market opportunity, then frankly I don’t know what is.
Larraín Nesbitt Abogados, small on fees, big on service
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- Renting in Spain: Top Ten Mistakes – 8th of June 2011
- Let-to-Buy in Spain: The Smart Choice – 8th of April 2012
- Letting in Spain: The Safe Way – 10th of October 2012
- New Measures to Bolster Spain’s Ailing Rental Market – 8th of July 2013
- Tenant Eviction in Spain – 8th of June 2014
- Holiday Rental Laws in Spain – 8th of March 2015
- Urban Rental Law in Spain – Spain’s Tenancy Act – 8th May 2016
- Renting in Spain – Landlord’s Taxation – 8th of January 2017
- Holiday Home Taxation in Spain – 8th of July 2017
- Seasonal lets: an alternative to holiday home rentals – 8th of October 2017
- 7 illegal clauses in Spanish rental contracts – 8th January 2018
- Distinction between long-term and seasonal contracts – 21st February 2018
- Save 70% on your landlord tax bill – 8th March 2019
- Spain’s new rental laws in 2019 – 8th March 2019
- 8 Tips for Buy-To-Let Success in Spain – 21st October 2019
- Of Palm Trees and Plumbing – 11th November 2019
- Rentals climb for the fifth consecutive year in Spain! – 12th February 2020
- Updating a rental in a lease agreement – 19th March 2020
- Renting in Spain? Five clauses you should be mindful of – 21st April 2020
- Rental deposit scheme: how to get your deposit back! – 1st May 2020
- How to formally end long-term lease agreements in Spain (Part I) – Serving legal notice – 16th June 2020
- How to formally end long-term lease agreements in Spain (Part II) – Keys handover – 21st June 2020
Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.
2.020 © Raymundo Larraín Nesbitt. All Rights Reserved.