Is buy-to-let a good investment in Spain?

Financial crisis increases renting over buying

SPAIN -- (by Fuster & Associates) Buy-to-let is an incredibly popular investment method in the UK but it has still not fully caught on in Spain. This has been due largely to the Spanish rental laws which have historically been extremely rigid as well as the propensity for the Spanish to purchase their homes rather than rent which has held back demand. However, this could be set to change with the Spanish press revealing that the government is considering further changes to rental laws in order to provide flexibility. There are also currently very attractive rental yields with residential property offering 5.3% annual yields, well above returns available on government bonds and savings accounts. On top of this the current economic situation in Spain with low wages and a relatively high earnings to property price ratio mean that more Spaniards are being forced to consider the rental option. This rise in demand coupled with further changes in the law which would provide security against defaulting tenants could be the catalysts for a buy-to-let boom.

Castle, anyone? No? A fortress, then!

Drastically reduced
from €2.3mm to €1.9mm

SPAIN – You can buy your own castle, or even a fortress, if you have a spare €600,000 to €10million. No doubt as one of the results of the crisis but also because it costs a great deal of money to maintain one, castles are – while not exactly two-a-penny – for sale all over Spain. This country does not have the equivalent of a National Trust, as in the UK, so owners and heirs find it difficult if not impossible to keep them up. Interest has arisen in the last couple of years, mainly from international investors. While most have been in private ownership, several are held by companies and some, a small minority, by the State.

‘Regularization’ of 300,000 homes in Andalucía is a ‘scandal of incalculable consequences’

Marbella

SEVILLE – A new decree on the legalisation of otherwise illegal homes in Andalucía has been called a ‘guarantee of savage urbanism’ by the environmental pressure group Ecologistas en Acción (Environmentalists in Action). These homes were built on what was officially classified as ‘non-buildable land’ (SNU, Suelo No Urbanizable), and the new decree is ‘a fiasco that will have serious legal, territorial, environmental, social and economic consequences [that attempt against] the general interest of the citizenry’, according to the NGO. When the Junta de Andalucía asked SNU for it opinion on the proposed decree, Ecologistas en Acción sent in their own proposals which would eliminate the principal attraction to building on agricultural land, which would be extremely profitable to developers. The Junta never replied nor consulted them again. Below we have summarised the main arguments presented by the SNU.