Let sunshine bring a profit

Geoffrey Pilgrem on Spanish property
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The Independent Online
In the mid-Sixties, the British began to buy second homes in significant numbers in Spain's Mediterranean and island resort areas. Since then, the main attraction has remained constant: the feeling of well-being generated by 300 or more days of sun a year.

But every year some of some of the other incentives - bargain-price properties, low "rates" and utility charges, more or less voluntary taxes, and good food and wine for next to nothing - disappear. That's the price of post-Franco progress and levelling-up within the EU. Spain's standard of living now equals our own.

For a couple of decades, the running costs of a mainstream villa or apartment in Spain were considered insignificant. It was the norm for British owners to pay a local gestor, a legal administrator, to settle all regular bills, while kith and kin enjoyed the place a few times a year, leaving it locked and unused until the next visit. But times have changed and, increasingly, owners are prepared to let their properties to cover outgoings.

David Scott, an agent specialising in the Nerja region of Andaluca, explains: "I don't sell property as an investment. People buy for pleasure, not profit. But in the late Eighties up to a third of of my buyers began to enquire about rental potential to defray overheads. Now they all ask." And how many actually rent out their homes for part of the year? "They all do," he says. "So I now offer my clients a rental service."

This trend is not to be confused with the professional business of investment in holiday accommodation. And it's only a distant relative of peak season relocation - the practice of some canny ex-pats (particularly in Ibiza) to vacate their desirable villas with pools, move into something basic and pocket a few grand a week in rent.

Clearly, not all resort homes have the same letting potential. What helps? As always, that cliched but brutally accurate phrase applies: Position, Position and Position. Less than an hour from an airport; on or near a golf course; within sight, sound and an easy walk of the sea; close to amenities but out of earshot of late-night hilarity - these are the unsurprising essentials for successful letting. But they are not enough on their own.

Steve Williams of IPC, which sells property in Tenerife and the Costa Blanca, says that a reliable climate is an obvious factor for easy rental. "The weather on Tenerife is good year-round; so a return of 9 per cent on a new two-bedroom home is achievable. The long season south of Alicante helps rentals there, too." And Mr Williams is clear that grouped houses and apartments in small, low-rise complexes return a higher percentage of the purchase price than most individual villas.

Over the last four years a pueblo of a dozen two-bedroom linked houses has achieved occupancy levels for his owners which Conrad Hilton would have envied: 70 per cent overall, hitting 89 per cent in June, July, August, September, at Easter and at Christmas.

The Marbella-based agent Geoffrey Knight reports that gross weekly rentals on well-located, two-bedroom apartments in peak season are between pounds 400 and pounds 600. Three- or four-bedroom villas with pools fetch about double, and returns of pounds 12,000 to pounds l8,000 annually are common (as they are in Ibiza, with real estate prices and cachet similar to that stretch of the Costa del Sol). Rental commissions are typically 10 per cent of gross income invoiced, and 15 per cent to include full maintenance.

One prediction can be made with confidence. The sun will continue to shine on favoured parts of Spain for 300 or more days a year. The demand for civilised self-catering homes under a blue sky is still on the increase - and, luckily for owners, so are the rental rates.

David Scott International 01279 792162 ; IPC Property Consultants 0181 642 4376 ; Geoffrey Knight & Associates 00345 2823059.