To buy or not to buy...that is the question

I was sitting in the town square on Sunday morning, drinking coffee with some friends. It was warm enough for just a top and cardigan so we were really enjoying the sunshine. Sunday is market day here, so all the shops are open until 1.00 pm and there is a real bustle going on. We have a daily food market Tuesdays to Saturdays but on Sunday the streets come alive as much of the town is taken over by stalls selling everything from oranges to suitcases!

My friends have been renting an apartment in a pretty seaside town while they search for a property to buy. The have been renting now for 5 months and are considering renting permanently rather than buying but this will mean they will have to move as they only have a short-term lease on their apartment, which is up to one year. Long term letting requires different regulations and is heavily weighted in favour of the tenant. The duration of the lease is 5 years, during which time the tenant may leave, giving one month's notice. The owner must inform the tenant in writing that they do not wish to continue renting the property one month before the 5 year period ends or the contract will continue for another 3 years.

My friends see advantages in renting. Apart from paying the rent which sometimes includes a community charge if it is in a block of flats, and the usual utility bills, all other expenses fall upon the owner who must, by law, keep the property in good condition, but the owner is not responsible for repairing any damage caused by the tenant. It is the owner who must pay property taxes and insure the building. You can find both furnished and unfurnished rentals, many these days in brand new blocks. Some come with an opportunity to purchase the property after a period of 2 years and the rent already paid will go towards to the purchase cost.

By renting, my friends feel that they have less to worry about with inheritance tax, which is true, as all property is liable to this tax in Spain, whether it is owned by a resident or not. We discussed the question of security, knowing that no-one can force you to move within the rental period, but also the insecurity of knowing that at the end of 5 years you might have to move. Five years may seem a long time, but in fact it passes quickly, especially if you are settled and enjoying life.

The owners of the apartment they are currently renting are only interested in renting the property for short-term lets, mostly to holidaymakers. This involves extra expense as unless you are on the spot and have the time, you will need to employ a managing agent to arrange for cleaning , linen change, etc between lets. Some people advertise their holiday property on websites especially formulated for owners to manage the lettings, others prefer to use trusted local agents to fill their properties and yet others use a mixture of the two. Good properties in popular areas can generate a reasonable income but beware – this income is taxable, whether you are a UK or Spanish resident and must be declared.

I have quite a few friends who act as managing agents for UK property owners, some require a percentage of the rental, others a flat fee for the year. This can be quite stressful work especially during the height of the season in July and August, when there is just a short time to clean a property between one tenant leaving and the next arriving. The managing agent also has to deal with any urgent repairs or other problems on behalf of the owner, make sure the pool is in good order, that the pump works properly and that the gardens are well maintained. It is not a job for the faint-hearted!

Well, only time will tell whether my friends finally decide to rent or buy. For the moment, they are enjoying their rental apartment by the sea, content in the knowledge that should there be any problem, the landlord is required to deal with it efficiently.

Sally

The Overseas Guides Company
http://www.Spainbuyingguide.com