Holiday rentals on the Costa Blanca have always been a hot topic, but in recent weeks the discussion has become more explosive due to new legal regulations. With the recent decree that came into force and local adjustments introducing stricter regulations for rental licences, many property owners are facing new challenges. Andreas Schaich, a real estate agent with decades of experience on the Costa Blanca, gives us valuable insights into the effects of these changes and what investors should consider now.
What are the most important adjustments in the neighbouring municipalities?
The new decree on the future regulation of tourist licences was issued on 7 August 2024. The content is causing a lot of discussion, as many of the changes are difficult or impossible to implement in practice. A transitional period has therefore been agreed. Rental agreements that have already been concluded will therefore be exempt from the changes. This transitional period is to last until the end of 2024. After that, all new contracts would have to comply with the new requirements. As with any new law, there is still no experience of how this will work in practice. There are currently concerns from all sides as to whether the decree will remain in place and whether it can be implemented in practice. I personally believe that many points need to be adapted. Even the politicians who called for and passed these changes are of the opinion that many changes will probably follow. It is therefore impossible for us as brokers to make a serious statement at this point in time.
However, the aim is clear: there should be certain areas or entire regions in which no further tourist rental licences are to be issued in future. This is always limited in time and must be decided regularly by those responsible in the city or municipality. A good example is the city of Denia. Denia is currently in the process of not issuing any further tourist rental licences in the city centre.
I can summarise the most important changes here:
What exactly is meant by this is still very unclear. For example, this is a point that is still being clarified.
These are just a few of many points. We will publish the exact text of the decree with a machine translation on our Facebook page.
What impact do these regulations have on rental licences
on the Costa Blanca on holiday property investment in your opinion?
The effects of the changes cannot yet be precisely predicted. As with all new laws in previous years, there will certainly be changes, adjustments and loopholes that arise in practice. In my personal opinion, the municipalities will carefully weigh up the protection of the local population against the income from tourism and will therefore not arbitrarily restrict the rental licences. This is all the more annoying for those who have been renting out recently and do not have their rental licence renewed. Many properties are financed and the rental income is used to service the loan instalment. It is also important to point out that permanent letting is possible at any time.
Are there certain areas on the Costa Blanca where the demand for holiday rentals is high but cannot be realised for the time being due to the new legal framework?
As already mentioned in the example of Denia, there are no cities that do not issue new rental licences across the board. The cities of Valencia, Alicante, Benidorm and now Denia have suspended the issuing of licences only in certain areas and for a certain period of time.
In your view, what role does holiday letting play in the increase
of property prices in the popular coastal regions of the Costa Blanca?
I don't think the letting licences will have a significant impact on property prices. There is still the possibility of permanent letting and therefore the opportunity for an investor to generate a return. Enormous rents are also currently being paid in the permanent rental sector, as there are hardly any rental offers for permanent rentals. If you also take into account the fact that you save on the letting agency and the wear and tear on the property is significantly lower with permanent letting, you can almost compensate for the increased income from tourist letting.
What should potential investors consider when buying a property for holiday rental on the Costa Blanca?
Until the new decree has been implemented in practice, I would advise all buyers to purchase a property that can also be rented out on a permanent basis. This includes properties with a good infrastructure (bus connections, supermarkets, doctors, etc.). The properties should not be too old and should not have a large renovation backlog. You can always get a good rent for young properties or high-quality renovated properties. The only disadvantage I see with long-term rentals is that I can't use my own property myself during this time.
