The present and future of holiday rentals on the Costa del Sol

The sad forecast of the summer of 2020 going out of business is no longer taboo. Homeowners whose income depends on vacation rental, who have suffered the loud failure of Easter, are now forced to take on a summer without tourism. The uncertainty about the magnitude of the imminent economic crisis and the trends of national tourism, takes away the dream of entrepreneurs and individuals who manage tourist homes.

The questions that haunt the head are many. We try to analyze the most frequent ones.

Will I make more money with long-term rental?

Although the answer always points to a “it depends”, most owners of tourist rental homes consider that despite the low income estimated for this 2020, it is advisable to keep the rental mode in the short term. In the recent talks organised by AVVA, the possibility of combining tourist rental with long-term rental has been raised, revealing a refusal to combine these two modalities. From the Andalusian Government they warn us that, to change the mode of renting a home, the authorities must be warned and the VFT license “frozen”. It is not certain that licenses can be reactivated after a more or less long period of non-tourist rental. It is not advisable to risk it if the intention is to re-market the property for vacation rental.

What new risks for the owner should be considered?

Firstly, the disinfection of the properties and the cleaning according to the protocols for the COVID-19 will be necessary to ensure the tranquility and well-being of the guests and the health of all those involved in said rental.

Secondly, it is important to review the third-party insurance that the home has, to avoid problems with travelers who can get it while on vacation.

Another relevant issue for those who decide to dedicate the house for a long-term rental is the government decree approved on March 31, which states that, due to the pandemic, the tenant can stop paying 6 months of rent without consequences. While the tenant is protected against eviction, the landlord is in a very disadvantageous situation.

Should I rent through an agency?

The multi-owner, or the owner whose main economic activity is vacation rental, knows that to make a good income, the fewer intermediaries there are, the better. However, that owner is fully aware of the legal and tax requirements and will not encounter any irregularities that may eventually cause him problems.

Recently, from the association of vacation rental homes AVVA, the obligations of those owners who manage homes for tourism purposes have been discussed, revealing 4 points unnoticed so far, unfulfilled by many, that compromise private rent and drive towards agencies.

The natural persons who, not yet providing any complementary hospitality service with the rental of the house, when publishing the advertisement of their rental property on the digital platforms such as Booking.con and Airbnb, use these as intermediaries, and obtain invoices, for which they will have to:

Register in the census declaration of registration in the Census of Entrepreneurs, Professionals and Retainers.

Register in the Registry of Intra-Community Operators.

Submit quarterly the special non-periodic statement-settlement (model 309).

Present the summary declaration of intra-community operations (model 349) with the corresponding periodicity.

These tax complications do not concern those owners who leave the vacation rental of their properties in the hands of agents and management companies. Naturally, it is still mandatory to declare said annual income for this concept in your personal income tax declaration, but the model is simplified.

Should I invest in real estate capital?

Given the circumstances, the instability of liquidity when the stock markets are so volatile suggests the need for “safe haven” investments such as the real estate sector. Buying a home now can be an interesting option to guarantee the value of savings, whether it is a home in the city center or in tourist areas for vacation rental.

Naturally, we are not facing a crisis like that of 2008 – the financial and real estate markets are in a much healthier state than then; banks will continue to finance real estate transactions and “brick” projects. Although in general no significant drop in property prices is forecast, some experts assure a drop in house prices on the Costa del Sol of 10%, due to the lack of demand (directly related to the consequences of COVID in the economy of buyers) and increased supply (sellers who need liquidity or have difficulties in dealing with mortgages, will resort to the sale of property).

In short, the statistics coincide in an optimistic vision of the future on the Costa del Sol. It seems that the real estate sector will create new opportunities, while the profits resulting from tourism will gradually recover to normal levels.

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