Property News from Spain

"Is the electricity going to go up or is it going to go down?" That's the question that everyone is asking because as of June 1 the electricity bill will be changing.  The experts agree that it will not go up but it will go down for those who make a little effort. The Government insists that it was looking for a solution to help change the way that we consume electricity so it can be more efficient and sustainable.

Let's see what this actually means in real life. Will the changes affect everyone? Yes. But not equally or immediately. Those who will notice it first are those who are in the regulated market compared to those who are in the free market. But do you know which market you are in?. It is important to know the difference between the two: what changes is the price that you are going to pay for the energy. In fact, your bill will tell you the answer to that very important question. You will need to identify the company name of your energy supplier. Don't just trust the logo as some companies are in both markets and use the same logo. Here is a table to help you identify in which market your supplier is. If your supplier is not on the list you may need to speak to your company and enquire.

In the past, the entire electricity market was regulated and prices were set by the government.

The market began to be deregulated in 1997. Within this process, 2009 was a very important year:

Since then, consumers have been able to choose who they are going to pay their bill. At the moment, they can choose from almost all companies which sell electricity.

The market liberalisation process is not yet complete, however, and the regulated market still exists. The two markets share two of the three basic parts of each electricity bill:

Access fees: these are set by the government and are used to pay the costs of maintaining the electricity grid and transporting the electricity to your home.

Taxes: Special tax on electricity and VAT.

What is different with the bill is the price charged for producing electricity. 

The 10.7 M households that are in the regulated market - PVPC - had up to now six rates. As of June 1, everyone contracting less than 15 kW will go to a single rate. And they will be billed more or less depending on what time of day they turn on the light or turn on the washing machine.

To do this, the day will be divided into three time-bands:

Peak: It will be the most expensive. It will be between 10 am and 2 pm and 6 pm and 10 pm, from Monday to Friday.
Middle: It will have an intermediate cost. Between 8 a.m. and 10 a.m., 2 p.m. and 6 p.m. and between 10 p.m. and 12 p.m., Monday to Friday.
Low: It is the cheapest of the three. It will be established between midnight and 8 a.m., Monday through Friday. On weekends and national holidays.

At peak hour it will be 2.5 times more expensive than the middle tariff and that in turn will be more than 1.5 times the low tariff, according to calculations by the specialized energy consultancy Ingebau.

So does that mean that to save electricity we will have to put the washing machine on at 2 in the morning? Yes. If you don't do anything to change your consumption, the impact on your bill will be neutral. This is designed to shift consumption to periods in the day when there is less demand and ultimately to renewable energy supplies.

These changes are included in the Government's commitment to a green economy, in which the electric car will play an important role. As a result, they are laying the path so that these vehicles can be recharged during the night when the electricity will be cheaper, and as a result, reducing the demand on the network during the working hours of the day. More and more appliances can be programmed these days to be charged at specific times. Also instead of ironing on a Friday, you can iron on the weekend, it will be cheaper.

Additionally, the new bill will allow you to contract two suppliers (up to now only one was possible). One for the peak period and another for the middle or low. For example, a consumer could increase his or her contracted power at dawn to charge an electric car, the cheapest time of the day.

If you do not communicate anything to your company, a single power supply will be maintained, the one you currently have contracted.
In the new bill, the fixed price for power goes down and the variable part goes up, that is, the actual consumption we have every day. All these changes will be automatic for those who are in the regulated market. 

But what about those who are in the free market?

Those 16 million households will have to consult with your company and study the prices and packages that are offering. Remember you can always change company.

The invoice that we will be sent out from June 1 will have a new design for those in the regulated market:

It will only have two pages with simplified content to make it much easier to understand. It will incorporate a QR code that will take you directly to the CNMC rate comparer so that everyone can choose the one that best rates according to their needs.

If you want to check prices in your postcode this is the link:

https://comparador.cnmc.gob.es/

If you like to sleep to the sound of the waves or take an early-morning sunrise walk along the waterfront or simply enjoy having your breakfast on a balcony while looking out to sea, then you should start looking at the properties with sea views up for sale in Spain. There is no need to spend a fortune to enjoy a little coastal life, be it for a holiday home or a retirement home in the sun there is something for everyone...

CLICK HERE TO SEE PROPERTIES

If you have a property in Spain or you are looking to buy a property in Spain and want to rent it out long-term or even short-term, being insured is, without a doubt, the only way to sleep peacefully at night and the best way to free yourself from the worries of rental default and property damage.

The best insurance is the one that covers non-payment of rent (Seguro de Impago de Alquiler), but there are policies that cover much more than that. They offer amongst other things advice to the owners on any problems related to the tenancy or the tenants and even problems they may have with the community associations.
It is in essence legal defence insurance that protects the owner against any problem that may arise with the rental of their property, from non-payment to a disagreement with the tenant over who should pay for repairs or problems which may arise with the community or neighbours. legal fees are normally covered in full, in addition, in the event of the tenant not paying the rent, the insurance company will forward you the unpaid monthly payments while the case is being handled whether it be an eviction or a negotiation.

The insurance company will try to mediate with the tenant from the first month that they stop paying, warning them of their contractual obligations. And, in situations where it is not possible to reach an agreement, they will set in motion the legal procedures necessary, allowing the landlords to take a step back and avoid this unpleasant process.

Additionally, insurance companies will also serve as mediators for any problems that may arise between the tenant and the neighbours. This really takes the pressure off and gives you added peace of mind, especially if you are not living in Spain. Insurance companies which centre on this service are professionals and specialised in rentals, so rest assured any necessary procedures will be carried out as quickly and reliably as possible. A claim for non-payment can mean a significant outlay of cash in addition to the lost income from unpaid rent and especially so if you are not present in the country, so having rental insurance can be an important safety net, especially if the property is mortgaged and you rely on the monthly payments to meet your mortgage requirements.

Not all rental insurances are equal, so make sure you check carefully what is and what isn't included and the checks that are made before giving the green light to a tenant. Before taking out the policy, the insurance company should study the tenant's solvency status. It is always better to carry this out before signing the rental contract, as it will be easier to ask the tenant for all necessary documentation beforehand and, if the study is rejected, to find a solution by including additional documentation or perhaps a guarantor.

Rental default insurance policies in Spain usually cover the following:

• Upfront payments of rent due, normally up to 12 months. This starts to be paid when the claim is processed, this will have a retroactive effect.
• Legal defence and claims if the tenant breaches the contract.
• Criminal liability defence
• All lawyer's fees, solicitor's fees and fees included in any management related to the rental.
• Protection against vandalism to the property.
• In the event of an eviction, the costs of a lock and locksmith are included.
• The insured will also normally have a phone line at his or her disposal to resolve any legal queries related to the property.

The price of rental default insurance in Spain varies depending on the services included in each policy, as most companies offer flexible policies with add-ons that can be adapted to the individual needs of each property owner. For example, you can choose the number of months rent you want the insurance to cover: usually, insurers offer up to a maximum of 18 months coverage, although most customers opt for 12 months as it reduces the cost and gives ample coverage for most cases. However, policies are available from around 4 months coverage for short seasonal stays too.

On average, the cost of rental default insurance will generally be between 3% and 5% of the annual rent.

For rental default insurance to be approved, a study of the tenant's solvency will be carried out. Tenants may not spend more than 40% of their net income on rent and one of them must be a permanent tenant with a probationary period or have been with the same company for more than one year. Guarantors can be added if the tenant's income or seniority is not sufficient.

If the tenants are salaried employees, the minimum documentation requested by the insurance companies will normally be the following:

• last two payslips
• employment contract
• ID
• The application form signed by the tenant/s - giving the insurance company permission from the tenant to officially check the documentation.

If the tenants are self-employed, as a minimum, they are asked for:

• Their last income tax declaration (IRPF)
• Their last two payments to the Social Security
• ID
• The application form signed by the tenant/s - giving the insurance company permission from the tenant to officially check the documentation.

And if the tenants are pensioners:

• Pension certificate issued by Social Security
• ID
• The application form signed by the tenant/s - giving the insurance company permission from the tenant to officially check the documentation.

So, if you want to rent out your property or start a buy-to-rent business in Spain and be sure to receive your monthly payments, this route may well be the best solution to provide security and peace of mind for short and long-term rentals. You are effectively bringing on board a property partner who will help you manage your property from a legal perspective and give you financial coverage when necessary.