Balearics Show Strength In Recovery
The most recent, Notaries’ Association, quarterly housing market report, recorded a rise in Spanish property sales averaging 13.3% and an average increase in house prices of 1.3%. The figures are encouraging, and although subject to some regional fluctuations, are especially good news for the Balearic islands where a table topping rise of 28% was seen. Property sales increased in all regions of Spain with the exception of La Rioja, where they fell by 2.7% and Navarra where a dramatic decline of 20% was recorded. The closest rival to the Balearics was the Catalonia region where house sales rose by 25%.
Coastal areas such as Alicante, Malaga, the Balearic and Canary Islands have shown the strongest growth, attributed largely to foreign interest, with Santa Cruz in Tenerife seeing the number of overseas buyers rise by a staggering 40% year-on-year. Malaga, Alicante and Barcelona led the way in sheer volume of house sales, whilst demand was high in Madrid, Mediterranean coastal areas and the islands. House prices rose by 8% in the Canary Islands, whilst Madrid saw a rise in property value of 5%. and the Balearics along with Catalonia saw an increase of 3%. The Balearic islands are showing a growth in the market which is 8% higher than the Spanish national average, confirming that the islands will remain a constantly sound investment and provide a key element to the recovery of the Spanish property market.
After a boom summer for tourism many Balearic property owners will be considering the possibility of preparing their property for rental to third parties during 2017. To rent directly to holidaymakers a tourist liscense is required. Balearic licensing laws are widely considered complicated and restrictive compared with those in other areas, but, as long as certain criteria are met and with proper guidance, rental can be a viable and highly profitable option. To obtain a licence the proprietor or owner’s lawyer must present floor plans and any other relevant paperwork to the local tourist authorities. The property must be a detatched or a semi-detatched house with a minimum ratio of three people per bathroom. Once approval is given, the license can be granted immediately and corresponds to the house, not the owner.
It must be renewed after 6 years, and as part of the touristic licensing agreement the householder will be required to supply a number of services similar to those of a hotel. The owner will also be obliged to charge the customers VAT, file income tax declarations on a quarterly basis and pay the tax back to the state. Terraced houses and apartments can not be granted tourist licenses but can be classed as a short-term rental under the terms of the Spanish Tenancy Act. In a short-term let of this type, no tourist services can be offered, the property can not be advertised through a Tour Operator and VAT cannot be charged. The property must have a carefully drawn-up contract which will satisfy property inspectors that it meets the criteria of the Spanish Tenancy Act and is not being used for any other purpose. In all cases it is crucial, of course, that professional advice is sought, that any income from rental is declared and that the relevant income tax paid.
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