The Sunday Telegraph article was:-
Counting the Costa
Last Updated: 12:01am BST 12/05/2007
Buy-to-let Britons are learning a painful lesson from their
investment in the holiday rentals market, says Hugh Ash
Already reeling from news that their properties' values are under
threat, British homeowners in Spain are facing a double whammy that
could plunge thousands into huge debt.
A fresh crackdown by Spanish tourism and tax authorities over
unlicensed apartments and villas that are let to holidaymakers
threatens to trap countless Britons, anxious to maximise their
investment in homes on the Costas and the Balearic Islands.
The news comes two weeks after shares in major Spanish property
companies slumped by up to 22 per cent - due to the oversupply of
houses - and soon after the euro interest base rate's rise to 3.75
per cent, which has added to buyers' mortgage burden.
Many of the 300,000 British investors in Spain's overheated property
market have already turned to the lucrative holiday rentals sector
and many more are considering doing so to ease their mounting
financial strain.
But, seduced by the prospect of netting £1,000 a week in high season
for a two-bedroom flat with a sea view, few realise that they face
swingeing fines of up to £20,000 (€30,000) because they are breaking
tourism laws.
The expanding opportunities for buy-to-let investments, which
generate income to repay mortgages, have acted as a hefty inducement
in luring thousands of British people into snapping up properties in
the Spanish sun.
However, the vast majority of flats and villas cannot be offered for
holiday rental, because the tourism authorities do not license them.
And, even if official permission is sought, it is rarely granted.
"There are strict conditions before properties are approved for
rental to holidaymakers," says a spokesperson for the Spanish
Ministry for Tourism. "Nearly all are not licensed, which means
letting them to tourists is illegal."
Property owners also face action from the Spanish and British tax
authorities, who have stepped up their scrutiny of holiday rental
websites if they fail to declare income from lettings.
Already several British investors in Majorca, the second most
popular holiday-home market after the Costa del Sol, have fallen
foul of Spanish law.
Londoner Tania Osbourne is appealing against a £20,000 fine for
letting out her £200,000, two-bedroom flat on a complex in a popular
Majorca resort for holiday rentals, after a Spanish neighbour tipped
off the tourism authorities.
Another British owner was recently fined £4,000 and ordered to
withdraw his apartment from a holiday rentals website. And five
others, who wanted to let their apartments to holidaymakers, have
been threatened with legal action by neighbours.
Tania, 63, from St John's Wood, explains: "I wanted the flat as a
buy-to-let investment and the developer's sales director told me it
had excellent holiday rental potential of up to £800 a week in high
season. So I bought it with a mortgage from a Spanish bank.
"After I'd completed the purchase early last year, I put the
apartment on a holiday rentals website and was overwhelmed with
inquiries from the UK. Very quickly it was booked solid for nine
months.
"But I was suddenly called to a meeting with the head of the
community residents' association. And he spelt it out in the
bluntest terms that the development was unlicensed and we would be
reported if we continued to offer our flats as holiday accommodation.
"We had no idea the development had to be authorised for tourism use
and we were all relying on the lettings income to pay off our
mortgages.
"I immediately pulled the apartment off the website and put it up
for sale. But that didn't stop one vindictive neighbour from
informing on me to the authorities. Now I've been hit by a £20,000
fine - far more than I ever made from the lettings - but I'm hoping
to get it reduced on appeal."
Lawyer Sebastian Stalter, whose practice in Palma specialises in
advising foreign clients about property purchases, warns: "The rules
governing holiday rentals are particularly tough in the most popular
tourism areas, like Majorca and the Costas.
"So British buyers must be extremely careful if they seek properties
for buy-to-let investments, because the experience can be a painful
one if they have not checked out the pitfalls in advance.
"Many developers don't give accurate information about what their
properties can be used for and it's very rare that apartments are
licensed for tourism."
I hope this site is still a closed holiday site?
Does it have the necessary licence? If not the properties are grossly overvalued - as an ordinary residential urbanisation it is of little value to me.
How do you get to the truth in Spain?