Rentals climb for fifth consecutive year in Spain!

Raymundo Larraín Nesbitt, February, 12. 2020

Article copyrighted © 2020. Plagiarism will be criminally prosecuted

By Raymundo Larraín Nesbitt
Lawyer - Abogado
12^th of February 2020

Spain has one more year pulverized its own records; for the fifth year in a row rental prices climbed 5.1% YOY. But that’s not all, the price per rented square metre has reached unprecedented levels since 2007! Source: El Mundo daily. Given how rental yields have soared year-on-year across the board over the past five years, this has translated into a 50% increase, which is quite substantial. The average annual rental yield in Spain equates to 5% of a property’s value.

As we published back in October 2019 (8 Tips for Buy-To-Let Success), Buy-To-Let in Spain has proven a very successful investment for savvy investors. Scores of landlords make large amounts every tax quarter. You can realistically expect to rent out nine months a year in Spain as a holiday rental, with huge landlord tax breaks of 70%, or more, on (rental) income tax. This lenient tax relief also extends to non-resident landlords.

The rental money can be used to offset overheads and maintenance expenses, including mortgage repayments. No other investment is giving a 5% yield/year safely.

But that’s not all, it only gets better!

Besides soaring rental yields, you also need to factor in the capital appreciation of property (the increase in value of real estate over time). Properties in Spain have seen their value increase over the previous five years at an average rate of 5% pa. Source: Moody’s

Pro-tip: When you combine both soaring rental yields and capital appreciation, you reach the conclusion that Spanish real estate is giving a safe two-digit return year on year. In plain English, that's over a 10% yield every year safely. This is ideal for retirees who are afraid of sharp stock market fluctuations and seek a save investment in bricks for their pension pot.

At Larraín Nesbitt Lawyers we can represent you buying properties and dealing with their non-resident taxation. We can also put you in touch with other reputed professionals that will assist you to choose and make the most out of your property portfolio, maximizing your ROI.

"Leave nothing for tomorrow which can be done today." – Abraham Lincoln

Self-taught American lawyer, strategist and politician who would rise to serve as the 16th US President. He resolutely ensured a pro-Union victory, strengthened the federal government, modernized the economy, brought about the emancipation of slaves and preserved the Union. A true statesman that would always put ahead of any consideration the best interests of his people, by tearing down divisive walls and fostering at every opportunity union. Likely the greatest American of all time, towering above the rest.

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Larraín Nesbitt Lawyers is a law firm specialized in taxation, inheritance, conveyancing, and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form to book an appointment.

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Rental-related articles

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
Changes to Spanish Rental Laws – 8th January 2019
Save 70% on your landlord tax bill – 8^th March 2019
Spain's new rental laws in 2019 – 8^th March 2019
8 Tips for Buy-To-Let Success in Spain – 21^st October 2019
Of Palm Trees and Plumbing – 11^th November 2019

Please note the information provided in this blog post 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.