Government Guaranteed Rental Scheme in Valencia Property

Government Guaranteed Rental Scheme and 100% Mortgages Boost Valencia's Buy To Rent Market.

Added: (Thu Nov 23 2006)

Spain's Ministry of Housing has set up a Public Rental Agency with a view to invigorating the Rental Market in Spain.The government is guaranteeing full market rents to property owners willing to rent their properties for a period of 5 years under this Guaranteed Rental Scheme. Together with 100% mortgages now on offer to non residents who are under 35 from Banco de Valencia, Buy To Rent property investment is becoming increasingly attractive especially when one bears in mind that capital appreciation in Valencia is still in double digits.

Guaranteed Rental Scheme

The scheme works as follows : property owners entrust their properties to the Housing Ministry to be rented under the government's Guaranteed Rental Scheme. Rental periods are for 5 years after which time the property owner can recover his/her property or rerent the property for another period of 5 years. The government for its part guarantees to return the property in the same condition that it receives the property in. Soft loans are also available to property owners who wish to renovate their properties prior to renting them under the scheme (5 year loans up to €20,000). The government scheme insures the property against wear and tear, non payment of rent and even malicious damage.Appointed agents are entrusted with the task of finding tenants. The costs associated with the rental are deducted from the rent and are in the region of 10% of the rental. The rent is paid into the property owners bank account during the first 5 days of each month. Payments start once the first tenant has been found and are indexed linked.If the tenant moves out before the 5 years are up, payments continue and the appointed agent will seek a new tenant at no additional cost to the property owner.

The only downside for the property owner under this Guaranteed Rental Scheme is if he/she decides to sell his/her property before the 5 year rental period is up. If this happens the property owner must find a buyer willing to buy the property with the sitting tenant and see out the remainder of the rental period after which he/she can recover the property or rerent it under the government scheme for another period of 5 years.

Banco de Valencia is also offering 100% mortgages to non residents who are under 35 for periods of up to 35 years. Banco de Valencia is also offering 80% interest only mortgages. The size of the mortgage is based on the banks valuation of the property and as these valuations are up to 10% above the purchase price, good buy to rents can be gotten for relatively small money up front and around €500 per month.

Here you have a link to Kyero where one of our clients presently has a buy to rent property advertised:

http://www.kyero.com/property/375515

The property is situated near the Football Stadiuum in Valencia, one of the cities top areas. The property was bought for €213,360 and is being financed via a 35 year mortgage from Banco de Valencia at Euribor + 0.75 fixed for the first year at €1,016 a month. The rental is €700 per month.

The football stadium is being moved to the other side of the city, construction beginning next March. The present stadium is due to be demolished in 2009 and 7 blocks of shops, offices and apartments will be built in its place with the pitch being preserved as a park.

There has never been a better time therefore to purchase quality buy to rent apartments in Valencia city. The arrival of sailing's America's Cup next April showcasing the city to an expected global tv audience of 300 million viewers makes the buy to rent argument all the more compelling.

I will leave the final word to The Sunday Times property columnist and Spanish Property Insight Consultant Mark Stucklin : Property in Valencia city could be one of the best investments in Spain

Article by Dermot Quinn, Valencia Property Hound Ltd