To think buying this Spanish apartment is a great idea?

[UpHereforDancng]

For background, two years ago me and my family stayed in a gorgeous two bedroom apartment with a huge terrace and great views in a beautiful seaside village on the Costa Brava, 45 minutes from Barcelona. The British owner lived nearby so we got to know her.

It was one of our favourite holidays and we wanted to return this year. When I checked in early Summer if it was free she said she'd moved back in (probably because of the first lockdown) but that every person who had rented it the previous year had wanted to come again this year. We booked somewhere nearby instead but concluded her apartment and location was better.

Late last week she contacted me to say she was selling and would I like to buy!

We own a flat underneath us which we rent out. It's recently been valued at £100K more than her asking price, yet we've calculated the Spanish rental income from April to October (which she says is pretty much 100%) would be just over double, before expenses, compared to what we get for our UK flat, and that's with taking away three weeks in August when we'd be staying there.

Also, if we sell we could pay off a £70K mortgage left on the UK flat plus £14K in credit card debt and never have to pay for a holiday apartment again.

Shall I buy it?? Considering it was in high demand during the pandemic I'm leaning towards a Yes!, but it's such a huge and costly decision.

If you rent in Spain you will be liable to pay a lot of tax on the income if you are not a Spanish resident. Have you thought of that? (Not trying to put you off but you mightn’t gain as much as you’d hope for).

Are there Brexit implications OP? If not, I’d go for it

We don’t know how Brexit will affect things. I imagine that could be why she is selling?

You'd need to think about how much it would cost to pay someone to manage it for you, deal with changeovers, cleaning etc.

I think you need professional advice from a reputable accountant/financial adviser with a knowledge of the Spanish tax system. Not asking Randoms on Mumsnet.

Tbh, I'd sell the flat and pay off your mortgage anyway. Then wait to see what Brexit/Covid does before buying property abroad.

I'm unclear whether you want the Spanish place as a rental income or holiday home.

As a holiday home for the sake of using it for 3 weeks in August I wouldn't bother. If you don't have your mortgage or cc debt, and you'd be freed of landlord insurance, repairs etc on the current rental flat then you wouldn't surely need the rental property income.

Can you get independent proof of the rental income? It’s very easy for the current owner to say “yes, yes I’m always overwhelmed with bookings” but not be truthful.

Have a look at the foreign office guides for post-brexit transition rights for people overseas. They’ve got loads of stuff on the .gov pages. And ask the vendor which solicitor she uses in Spain and maybe get advice from them too.

Post-Brexit the tax for non-residents increases from 19% to 24%.

She is British but has lived in Spain for years and is buying a bigger apartment inland. She's also offered to do handovers for us.

I'm aiming to get professional advice but Mumsnet is brilliant for pointing out things you may not have thought of and, in particular, anecdotal advice!

@HDready

Can you get independent proof of the rental income? It’s very easy for the current owner to say “yes, yes I’m always overwhelmed with bookings” but not be truthful.

This is what I thought, too.

You need to speak with a lawyer experienced in overseas properties and the tax liabilities. Brexit is going to be a nightmare for property owners overseas if they don’t have residency/EU passport. You will also need to look at your wills as things in Spain are likely to be very different when you die.

Sorry to be a moaner but things are just not that straightforward anymore.

What she offers and what she actually ends up doing are two different things. I wouldn't want to rely on someone I barely know and don't employ to ensure handovers for my renters.

Is someone currently living in the flat in the UK? Do you need that sale to buy the Spanish place or could you get the funds to gather in the short term to buy the Spanish place? You may not be able to get tenants out of your UK flat in time - IF they don't agree to move out, it could take you up to 12 months, plus the time to sell it.

We own a property in Spain and although we love it I would advise you against it for the following reasons
Taxes, you get taxed a lot in Spain
Brexit
Rental is not guaranteed, even if it’s been good 1 year it might not be the next.
Bureaucracy
Circumstances change
Admin

I wouldn't buy a Spanish holiday rental now. We have no idea what impact Brexit will have beyond tax increases and next summer might still be in the midst of a pandemic so unless you can forgo the rental income for a year easily I'd wait.

As you already have another flat you are experienced in owning more than one property so that is a good thing - you understand the pitfalls. My anecdotal advice as someone who owns a few properties (for very boring reasons and am selling also) I would say only do it if you can EASILY afford it. And can continue to easily afford it (say when the initial lump sum profit is gone). I don't mean the buying cost but all the tedious ongoing things like maintenance and insurance and indemnities and bills and service or estate charges or..... fill in the blanks. Also make sure there is a good support network of people to do things to the apartment - plumbers etc. I do emphasise the easily. If you are doing sums on the back of an envelope trying to marry it all up (I don't know if you are, but just putting another view!), then I would say no. Especially if you are relying on the sale of your flat first.

Yes getting rental proof from her would be a good idea.

Our tenant is entitled to 6 months notice but he's looking to buy elsewhere now anyway and an estate agent said you can start viewing in three months, so I'm hoping she's might wait, or he'll move out earlier.

Our two week Spanish holiday apartment cost us just over £3000 this year, so not having to pay that again is a big factor for us.

Thanks for all your advice so far - I've just emailed our solicitor to see if he can recommend a professional to advise on this.

Is it that specific apartment you buy or not at all, or now the seed has been planted will you consider other places too?

In terms of the market I'd be very wary of buying now and rather wait -
The reality of Brexit is still filtering through to British EU property owners - especially those a bit older who bought property with plans to retire to the continent & now can't, so need to sell up
The reality of covid on the global economy is still being mitigated by government action, especially in Europe, and I think we haven't even begun to feel the long term economic effect yet. This will filter through to property especially investment properties.

If you're thinking about it as an investment and another place will do, I'd do a lot more research and probably wait to see the fallout from covid and Brexit.

If you're flush and just love the flat, don't really care if you don't make any money on it, then go for it.

I live in Portugal and used to be involved in holiday rentals, for our own apartment, and those owned by friends and family. I wouldn’t be buying here now with brexit looming, and in the middle of a pandemic.

And I wouldn’t rely on the current owner doing changeovers

The fact that she is staying put and is going to do the changeovers makes me a bit more suspicious tbh. Why is she selling exactly?

Losing control of who lives underneath you in the uk is a massive thing that impacts all year round.

@UpHereforDancng

Post-Brexit the tax for non-residents increases from 19% to 24%.

She is British but has lived in Spain for years and is buying a bigger apartment inland. She's also offered to do handovers for us.

I'm aiming to get professional advice but Mumsnet is brilliant for pointing out things you may not have thought of and, in particular, anecdotal advice!

At what cost? What happened when she isn't there? Can you trust her not to book it out and keep the cash when it isn't rented (quite common)

Why is she approaching past renters?
Has she tried to sell and failed?
How has it been valued (big thing in Spain)

Oh and of course was it built legally in the 1st place.

You have €14 grand in credit card debt and spent €3000 on holiday accommodation alone this year?

We've holidayed in that area for yeas and this was by far the nicest and best located apartment. We sort of pined for it a bit this year, even though our apartment was beautiful.

@Cavagirl and @puptent no I wouldn't call us flush, or only in the sense that we own two properties and will be mortgage free if we sell and buy the Spanish one, plus save £3000 a year on a holiday apartment.

Based on the owner's rental charges from April through to October (because of the Easter holidays and the warm weather in Autumn), we calculated a rental income of £27,600 (taking off the three weeks we'd stay there each August).

Post-Brexit tax is 24% so that would leave £20,976 (before expenses).