Selling an apartment in Dublin to buy one in Spain instead?

SharkMX

Is this a good or a bad idea. Are there any pitfalls in this plan.

Sister has a 1 bed rental apartment in Swords. She had tenants in it for the last 10 years and their rent was €800 per month because she knows them very well. They just moved back to Spain a couple of months ago and have bought a seaside apartment on the Costa del sol for €200k.

Sister went to an an agent to rent hers again last month and it turns out that the exact same apartment a couple of doors down is €1850 per month and she can only put her rent up 2% since last year she increased it from 750 to 800. She is a bit annoyed by this to say the least.

Now her plan is to sell the one on Swords for about 230k and buy one in Spain for 230k and rent that during summer and go there herself the odd time it might not be rented outside the peak season. Having many times stayed in on the costa del sol I know for a fact she will get €150 to €200 a night in July and August and maybe half that for another 4 months or so around the summer. She should make about 10k for it just in July and August alone which is the same as a whole year with the apartment in Dublin. Then whatever else for the rest of the year plus holidays.

We have another friend who did this years ago but never really thought of this an an option before she shouldn't put the rent up.

I get the odd holiday for free myself if she does it, so I like it, but any flaws with this plan?

rowantree18

I'd do it purely not to give the system.the satisfaction of being forced to rent something you own at half the market value.

yagan

Is she intending to manage the letting in Spain herself?

DubCount

There are 2 decisions to be made here. First is selling the Swords apartment. This is a complete no-brainer for me. RPZ legislation that prevents increasing rent to market value will mean this apartment is not a viable investment property at the moment. The easiest way out of this is to sell up. An alternative is to take it off the rental market for 2 years (live there herself etc) and then she can reset to market value. Selling is the best way forward IMHO.

Second, there is buying an apartment in Spain. This will come with requirements to have local management of the property (cleaning on change-overs, key holding etc.) and compliance with Spanish taxes as well as Irish taxes (if she is resident in Ireland). If thats OK with her, then why not. Maybe there is a better return on the money from the sale than property. She should consider all options here.

893bet

https://www.boards.ie/discussion/2058349634/selling-an-apartment-in-dublin-to-buy-one-in-spain-instead

200 a night is grand in July and August. The level of cost associated with managing and clean after short let’s like that should not be underestimated.

hottipper

need to check first

HarryHeart

She could rent to Ukrainians for two years. (800Euro) No need to register with the Residential Tenancy Board. The rent can then be reset full amount.

mulbot

Uncle of mine has 2 places in Torreveija, and one in Lanzarote, where I'm currently at. He gave up on Irish property years ago, he rents this place in Lanzarote, all year round more or less, the places in Spain, one they use for themselves, the other rented long term,. I'd say the only negative about mainland Spain (apart from the late Spring into Autumn) maybe that you possibly don't get demand to rent, in a tourist capacity anyway because you don't get year round warm sun, but if that's not an issue, then definitely go for it.

NiceFella

There is new EU wide legislation being enacted this or next year on short term letting of properties. You will need to be properly registered with local government in Spain if you decide to buy there. The thing is, there will definitely be numbers capped on properties that are allowed to offer this service. No guarantee you'll be able to put it up for short term rental. If that doesn't work out renting on the local market would be a total disaster for you and you'd have to sell up. Something to consider.

SharkMX

https://www.boards.ie/discussion/comment/122082421#Comment_122082421

Definitely not. There are lots of agencies there who manage and clean it etc. Its very common over there. It will be hands off for her unless she wants to black out dates in the calendar for her own use.

yagan

https://www.boards.ie/discussion/comment/122085128#Comment_122085128

Well that sounds ideal then. I guess once local taxes on letting are factored in then the only thing I'd also factor in is the potential for it to become her retirement apartment in the long term.

Caranica

Bear in mind she could have a significant capital gains tax bill here if she sells.

SharkMX

https://www.boards.ie/discussion/comment/122084178#Comment_122084178

The estate agent says he is 100% sure that if it goes on the market the council will buy it and even if they dont it will sell within a week. He said it has to go on the market though or the council wont bid on it, so she cant go straight to the council.

We have a friend who has a company managing an airbnb in Spain and we were chatting to him last night. He said its easy peasy and so is getting accountants to sort out your tax for you in both Ireland and Spain. He said he used to go over himself every few months outside the summer, but now he just lets it and uses the money to go other places for holidays.

He said the only downside was that everyone you know will keep asking for peak dates all the time so what he decided to do was tell them its not even available to him anymore and that ended that. But he said dont even tell friends and relatives if you buy it.

Ive already told her there are better returns but she has this idea in her head now and the profit in Ireland vs the profit in Spain is doing her head in. She likes the idea of having somewhere to swan off to in the winter to be honest. She might get bored of going there, but sure she can cross that bridge then. I'll probably rent it off her for a few weeks a year. I'll just give her cash and she can give it to me half price. The brother will do the same. They like Spain for hols too.

SharkMX

According to our friend. Lets say €200 for peak because different months will be different prices. The way he said it works is agency gets 15% to 20% depending on how many days they get it booked for in the year. Agency hires cleaners and cleaning money comes from the person renting. 1 week minimum rentals.

Knock that plus the apt fees like pool and maintenance charge and whatever you call their version of council fees, i cant remember.

Then there are accountant fees.

The remainder is taxed between Ireland and Spain depending on your personal tax rate.

SharkMX

I think she is just afraid they will change the rules again and she will be stuck again.

Ireland is just toxic for letting property at the moment and thats probably not going to change.

But even leaving it empty for two years or only getting €800 per month for two years is just throwing money away having capital tied up in that apartment.

SharkMX

Theres always horror stories about legislation or rules that are coming down the line.

I think the rest of the world have Ireland to look at now as a lesson for how much you can mess up your entire property sector with bad populist decisions like rent controls and investor unfriendly legislation. So cant see anyone else ever making the mistakes Ireland is now famous for.

But if you buy in a tourist complex in a tourist area I dont think they are going to kill the golden goose.

thomas 123

https://www.boards.ie/discussion/comment/122085184#Comment_122085184

If he’s that confident slap a few tens of thousands on the asking price.

holliehobbie

https://www.boards.ie/discussion/comment/122085203#Comment_122085203

Plus water and electricity charges!

SharkMX

https://www.boards.ie/discussion/comment/122085146#Comment_122085146

No fear of that. Its barely worth what she bought it for in the first place. Luckily the mortgage is finished on it though.

SharkMX

He says he knows what they will pay already. But he doesnt know what other people will bid if it goes on the market. When the bidding is over he takes that to the council and they say if they will bid or not at that price.

Marcusm

https://www.boards.ie/discussion/comment/122084595#Comment_122084595

those rules relate to registration, transparency across platforms and data protection. A decision as to whether to limit rentals is a national competence under the principle of subsidiarity. The EU will not be limiting the number of rental properties.

CelticRambler

https://www.boards.ie/discussion/comment/122085234#Comment_122085234

But if you buy in a tourist complex in a tourist area I dont think they are going to kill the golden goose.

Tread carefully in that regard, because there are quite a number of locations in Europe where it's been decided that the golden goose of excessive tourism does need to be killed. These are generally very specific, very localised areas, but you (your sister) might happen upon a selection of apparently good value appartments coming on the market precisely because owners closer to the action are cashing in while they can.

From what I've read and the limited contact I have with renters down there, Spain isn't in any hurry to discourage tourists just yet, but there are environmental problems in Spain (particularly water-related) that are sometimes driving local change faster than any overtourism/rent-control campaigns.

3DataModem

https://www.boards.ie/discussion/2058349634/selling-an-apartment-in-dublin-to-buy-one-in-spain-instead

There are two other options on the existing place:

1. Leave it empty for two years, then reset the rent to market rate.
2. Substantially renovate it (not paint and floors, I mean move a wall for example) and reset the rent to a new market rate for the improved accomodation. Very difficult in a one bedroom, probably impossible unless you convert it to a studio.

Also, bear in mind that the low rent cap is forced on any new buyer of the place, and will keep the selling price lower than it would be otherwise. A lot of investors won't touch it.

Regarding Spain: be very careful to ensure you are able to Airbnb / Holiday rent any place you buy. It is not that straightforward, depending on where in Spain you are buying. You may need a licence, you may need permission from the block "president", etc.

NiceFella

https://www.boards.ie/discussion/comment/122086987#Comment_122086987

The EU won't, but local governments will. That's the point. Airbnb has destroyed the local rental market in many places in Europe. Barcelona banned it completely. Even in Dublin you can't get a place to rent but literally thousands of listings on Airbnb. Local government will decide if you get a registration number or not. Simple as that.

yagan

Anyone arguing that local Spanish governments won't penalise landlords in the future, especially non resident ones only has to think of the circumstances that led someone with a Dublin rental to consider selling up and trying Spain.

If it were me and there's no mortgage involved I'd chose something that I'd be happy to retire into in the long run. I'd consider the Dublin as having funded a future retirement option, so we're way ahead already.

Having said that I lived in an arid part of Australia for years so heat has lost its novelty for me. I'd be just happy to have a bolt hole for when our grey weather and winter darkness get too much.

TokTik

https://www.boards.ie/discussion/comment/122088803#Comment_122088803

There are over 1000 AirBnBs available in Barcelona at the moment. Ban doesn’t seem to be working

yagan

https://www.boards.ie/discussion/comment/122089082#Comment_122089082

I don't think it's a total ban, isn't there caps with dedicated inspectors?

Plus a 1.000 isn't a lot in a city with 5 million in the metro area.

Edit to add I've used online short term letting agents in Barcelona long before there was an AirBnB. It's just we tend to focus the entire discussion around AirBnB when in the fact that short term model was already mature in many Spanish destinations.

NiceFella

https://www.boards.ie/discussion/comment/122089082#Comment_122089082

It's not an outright ban but it is as good as. How many of them can you rent for less than 31 days??

TokTik

https://www.boards.ie/discussion/comment/122089238#Comment_122089238

The search criteria I entered was for 1 week.

bullpost

https://www.boards.ie/discussion/comment/122085633#Comment_122085633

Sell it and buy a different property in Ireland to rent out?

NiceFella

https://www.boards.ie/discussion/comment/122089765#Comment_122089765

If you already had a STL license it wasn't taken away under the regulations. As I understand it, they don't or rarely issue new ones. It's like trying to get a taxi plate license here.

SharkMX

Decision made. She has found a place she likes in Spain and her apartment is going on the market on Monday.

yagan

https://www.boards.ie/discussion/comment/122115141#Comment_122115141

Excellent.

She sticking with the initial idea of short term letting during peak season and then using it personally at other times?

SharkMX

https://www.boards.ie/discussion/comment/122115367#Comment_122115367

She is going to let it fill up first and then take a few weeks herself where demand is slack. Myself and the brother and her friend have all said we will take 2 weeks each next year for half price and hand her the cash. Theres storage with this one too so we can all leave stuff there if we plan going multiple years. Its actually very close to where our friends have bought.

She had an offer accepted. Now has to sell her apartment in Ireland. If all works out she will even have change out of it all.

yagan

https://www.boards.ie/discussion/comment/122115441#Comment_122115441

That sounds ideal, especially the storage options.

Now you lot will have to study español, don't want to be lumped in with the Costa del Blackpool set.