Landlords In Spain Get New Protection Availability

Spanish property investors must repel pirate tenants


There has been a substantial increase in Fly to Let landlords in Spain experiencing problems with bad tenants and the eviction process due to ‘pirate tourism’ according to Paragon Advance España.


The company, which is part of the Paragon Advance group which offers tenant referencing and rent warranty in Spain, says research shows that defaulting tenants and evictions have tripled in the past two years as owners look for a solution to create income by letting their property as an economic alternative to hotel accommodation or resort to long term lets to locals.

Bryn Cole, Managing Director of Paragon Advance España who have offices just outside Marbella, the Costa del Sol and Madrid, said: “The majority of expats living in Spain have opted to retire there and are living either off their English savings or pensions.

The effect of the recession has hit them through the weakness in the pound and the dramatic fall in interest rates, meaning that a person who is paid a pension in the UK and then has to convert it, has seen it fall dramatically, giving them less money to cope with a far more expensive cost of living than it was six months ago.

“Owner occupiers are now moving back to the UK and being forced into letting out their homes in order to be able to pay the mortgage and, for those investors who jumped on the Spanish property market, buying off plan, only to see it go into freefall before they could offload their investment, they have had their fingers burned and are having to let long term and ride it out.”

Many expat landlords are unaware of the different mechanisms in place to secure rental income and often fail to implement them in their rental agreements which can leave them unprotected if the tenant does not, or cannot, pay the rent.

In order to assist these landlords, Paragon Advance España offers a rent protection and legal expenses warranty which offers a standard loss of rent cover for up to €2000 per month for up to six months cover, although rents of over €2000 can also be covered, and legal expenses cover up to €15,000.

By using the route of arbitration, the timescales involved are dramatically reduced as Javier Iscar de Hoyos, General Secretary of the European Association of Arbitration (AEADE) explains.

He said: “It can take around 18 months through the usual law system and, in the meantime, the landlord still has to pay the mortgage, utility bills and has no redress over the defaulting tenant during this time. If the landlord should refuse to pay and, for instance, the electricity is cut off, the tenant can prosecute the landlord.

“We have invested time and effort in ensuring that a more specialised system of arbitration takes root in society, providing fluidity, security and trust in contractual relationships between landlords and tenants.

“More than 80 percent of proceedings dealt with in 2008 were from the property sector in which the number of arbitration cases rose by 83 percent. During this time, the average dispute resolution took less than four months.

“With regard to tenancy arbitration, thanks to the special system created by AEADE to facilitate disputes in that sector, the time frame was limited to an average of 25 days, with more complex cases being resolved within six months.”

Taken from FCC Paragon... http://bit.ly/1axu67

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