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Creating income off your property investment in Ibiza!

Ibiza presents some great investment opportunities. Unlike the rest of Spain, the housing market has steadily increased over recent years with the higher end of the market remaining strong and the middle and lower end currently booming.

A very attractive prospect is that there is a chance to create income off your investment you just need to rent out your property.

Yearly, eighty percent of the islands income is generated by the tourism sector. This is a higher overall income percentage compared to other tourism destinations. Tourists come to Ibiza to enjoy the sun, sea, luxury and fun the island offers. During the season, the requests for villa rentals are thriving. Having purchased a property on the island, this can be an alternative and lucrative income stream, promising a prospherous return on your investment.

Understandably, the Balearic government have put in place legislation to protect both property owners and holidaymakers. If you intend to buy in Ibiza with the idea of renting to tourists there are a few things you need to keep in mind.

What is very important is that touristic licences are not given out easily. If the property you have purchased already has a touristic licence, you will be in no danger to loose it. However, if you are intending to construct a new house on a piece of land or are buying a property with the intention of obtaining the licence, you need to consider the following:

Firstly, only detached and semi detached properties are allowed to obtain tourist licence. At this point, apartments are not covered by the Estancia Turistica en Viviendas (ETV).

Before you even start to think about buying a property to rent in the summer, you need to be sure that all the paperwork is in place. If your intention is to rent to tourists then one of the most important pieces of paper is the Cedula – which is a certificate of habitation.

Once you have the property the next step is to get the tourist licence. The home must have no more than six bedrooms and accommodate a maximum of 12 people. There must be at least one bathroom for up to five people, two bathrooms for six to eight people, three for nine to 11 people and four for 12 people. In addition to that a public liability and property insurance is a must have.

At this point we advise enlisting the services of a good gestoria or lawyer to help wade through the paperwork. In a nutshell, there are two rather tiresome forms along with all the key information about the property that must be submitted to the Island Council Tourism Department. Calling on the professionals takes away all the stress (and man hours) involved.

Once the application has been made, you will receive a preliminary rental number you can start renting to tourists while you wait for the inspectors to come.

Short summary of the steps:

  • If you are an individual or a company you can apply for a licence to promote short-term rentals (holiday rentals).

  • You can’t rent a house with more than six bedrooms and a bathroom is required for every three guests. The villa must be a detached property on its own plot, as it is not possible to obtain a tourist license to rent out an apartment.

  • The paperwork involved means you should enlist the help of a gestoria who knows what is required and can speak Castellano or Catalan.

  • You will be required to fill out the registration form DRIAT (Declaració responsable d’inici de l’activitat turística) and also the ETV questionnaire, which works on a points system. Again your gestoria can do this on your behalf.

  • You require property floor plans and your identification documents.

  • There is a one-off tax to register your property – a fixed fee per person based on the number of people the property can sleep, plus a fee for the gestoria. The cost is usually around 1500€.

  • You also need to provide the address, capacity, m2 of each room along with building features, type of property etc, and a description of common areas.

  • Once registered you can rent and will be required to declare your income annually.

  • Once you have applied, the next step is for an inspector to come to check the information is correct and the property complies with the legislation. This however can take a year or very often more, but once you have applied you can start renting it the next day.

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