EVICTION AND COMPLAINTS

Eviction

Under what conditions can an owner regain their property and evict a tenant? Failure to pay the rent, damage to the property, using the property for immoral purposes, subletting unless agreed in the contract and causing a serious nuisance to the neighbours are some obvious reasons.

Assuming the contract and law states a rental period is finished, a landlord will also have difficulty evicting someone who chooses to stay. Common abuse takes place with holiday rentals where tenants have signed up for one month and then simply remained in the property without paying any further rent.

In all cases a court order must be obtained against the tenant. Six months later, a landlord is able to obtain an eviction order, but the tenants have lived rent-free for that period. The court will issue a judgment against them for the amount of rent owed, but by then they will have simply moved on. Spanish landlords are reluctant to go to court due to this delay and often take matters into their own hands by forcefully evicting a tenant.

Complaints

Occasionally a landlord may have to deal with a complaint from a tenant. Acknowledge, investigate, make a decision, reply and take remedial action if applicable. If it is valid put matters right, informing the tenant and giving an expected timescale. Otherwise, state no action is required and give the reasons. Complaints may come from sources other than a tenant. In fact they may be about the tenants.

A tenant of a property can also complain to a Tourist Office in the province or town where the property is located, provided the property has been registered in the first place. The Tourist Office will often side with the landlord provided all the necessary procedures have been adhered to. Complaints from longer-term tenants are usually addressed to the Oficina Municipal de Information al Consumidor (see Chapter 12) which is the consumer information office, directed by regional government to deal with consumer problems such as rents.

BUSINESS IS BUSINESS

Renting property is not democracy in action. It is a business. It is important for an owner to strike the right tone in a relationship with a tenant or letting agent. It should not be arbitrary or dictatorial. The customer may always be correct but the owner has to be in charge and how the tenant, agent or tour operator is handled will largely determine what happens to a property.

The owner sets the tone. The tone may vary depending on the tenant market. If the business is well run, it will be because the owner knows how to run it smoothly and how to communicate, giving a clear set of guidelines and expectations. Let people know what is to be done for them as a landlord and what is expected of them in return.

What tenants are told about a property is part of an education programme. Some landlords want their tenants to know that they are dealing with a large, powerful concern. In some cases the landlords do not even want the tenant to know who the owners are. They prefer to have the tenants think they are dealing with a management company. This way there is an organised management programme and the tenants have to fit into it. Everyone gets treated the same way. Other landlords want their clients to know they are dealing with a friendly individual who will look after all their needs at the drop of a hat, particularly if they are paying top dollar for a luxury villa with a pool in the summer season.

Setting the tone in any business involves dealing with people. Property problems are almost invariably people problems. Apartments do not break their own windows or doors. Buildings do not draw on the walls, or put holes in the carpets. Tenants do not do this, either, unless they think that they can get away with it. Properties do not cause problems. Buildings just sit there, quietly minding their own business. Sure, houses and other types of property are quite capable of producing anxiety. Roofs leak, sewer and other pipe lines break, paint wears off and lawns need periodic cutting. Then there are fires, floods, blizzards, earthquakes, tornadoes, hurricanes and all the other possible calamities beyond the property owner’s control. But tenants are the main source of problems that an owner will encounter.

TIMESHARE

Timeshares still remain a popular method of gaining access to a holiday property. You simply buy the right to occupy a property for a set period each year – usually just two weeks. One attraction is the lack of responsibility of home ownership as maintenance and so on is delegated to a management company for an annual fee. Timeshares are most frequently available in big developments, apartment and resort complexes.

The main principal of timeshare is that it gives a quality accommodation for less than the equivalent hotel rate. Their popularity remains high in spite of the fact that timeshares are notorious for scams and rip-offs. Because of their poor reputation other names are now used for these schemes, such as ‘vacation ownership’ or ‘holiday ownership’ or such like, but the basic concept is still the same. Nearly all the problems associated with timeshares arise from the way they are sold. Touts go around buttonholing tourists on every street corner. Show some interest? Then an immediate presentation (intensive sales pitch) at an up-market club (windowless prison with no escape) with a meal (cheap red wine) takes place. Freedom is obtained by immediately signing up for a timeshare and paying a vastly ‘reduced’ deposit with a credit card.

One reason for it being an industry with a bad reputation for miss-selling is its vague legal status somewhere between ownership and renting. This is changing. Spain and most of Europe introduced new timeshare regulations in 1999. The highlights are:

• Restrictions on high pressure selling tactics in public places and tourist spots.
• Introducing a cooling off period of ten days during which the buyer can withdraw from the contract with no penalty.
• Written information to be supplied in the mother tongue of the buyer.
• Contract disputes governed by local law.

In the UK the product is now regulated by the Financial Services Act which means clients obtain protection and are able to sue their financial advisor if they believe they have been given inappropriate advice.

Value for money?

The average timeshare buyer is a well educated home owner, with two cars and no children, who takes at least two holidays and two short breaks per year. The average price for a timeshare is about 12,000 euros for an apartment sleeping four for a purchase period of 20 to 99 years.

Timeshares are poor value for money. The major attraction is low upfront costs but set against the actual value of the property it is around 12 per cent for a two-week period. A developer selling 26 such slots will make 200 per cent profit, less marketing overheads. On top of this there are management fees, the equivalent of community charges in an urbanisation, but without an owner’s control of costs.

Timeshares have very little resale value; owners rarely get back the price they paid for them. To combat this the market has developed a points system valuing a property according to the property itself, the number of weeks purchased and the time of the year purchased. Points can be used to swap one property for another owned by the same company. Some large organisations allow points to be spent on travel products other than accommodation.

LEASEBACK

While timeshare has its critics, leaseback, a system found in large up-market developments, does not. It is a clever scheme in which it is possible to buy a property at a substantial discount of around 40 per cent in return for agreeing to occupy it for only a few weeks each year and to lease it back to the developer for the rest of the time to be let to holiday tenants. The developer also retains responsibility for maintenance and managing the property. This arrangement lasts for a period of ten years after which the owner gains full, unrestricted ownership. The owner, not the developer, is registered in the escritura at the full price, not the discount price.

For someone aged around 50 wanting a holiday home and ten years later a permanent retirement residence, this is a good option. It is much better value than timeshare and outright occupation.

CO-OWNERSHIP

Co-ownership is an arrangement whereby ownership of a whole property is shared between several people, who divide up the time they use it each year at fixed times (rather like a timeshare). The names of all individuals involved are entered in the escritura as joint owners. These schemes are offered by developers who stay in charge of ongoing property management for a fee.

Other co-ownership arrangements can be set up privately by groups of people who, by banding together, can afford to take on a much larger property than they could ever pay for on their own. The financial share of ownership need not be equal. If any co owner wishes to sell, the others normally have right of first refusal. The property can be owned by a company in the form of shares.

FURTHER READING AND INFORMATION

Harry King, Buy to Let in Spain. Oxford: How to Books. The Spanish way of doing it!

Liz Hodgkinson, The Complete Guide to Letting Property. London: Kogan Page. The English way!

Robert Irwin, Buy, Rent and Sell. Maidenhead: McGraw Hill. How they do it in the USA.

Timeshare: www.rci.co.uk and www.keyworldinvest.com