Buy with rental guarantee

We are increasingly seeing cases of Belgian investors buying tourist flats in Spain and Portugal with a rental guarantee.

These investors buy a flat in a resort, after which they give an operating or rental company the right to rent out the flat for a certain period of time. After purchase, they can only occupy the flat for a limited number of weeks per year. In return, the investor receives a guaranteed rental return on the purchase price.

An example. You buy a flat worth €250,000 in a golf resort located in the Algarve. The operating company of the golf resort will assume the rental activity for the next 10 years. You can occupy the flat for a maximum of 1 month per year, with the remaining 11 months provided for tenants. The rental is only through the operating company, you are not allowed to rent to third parties yourself. In return, the operating company will give you an annual gross rental yield of 6% on your purchase price. This does not seem like a bad deal, but it is advisable that you ask yourself a few questions.

The rental guarantee

You are often offered a rental guarantee to persuade you to buy. The first question is whether the operating company is effectively able to rent out the flats. In other words, is the operating company adequately organised to market the resort in the long term? After all, the danger is that once the rental guarantee expires, you will not be able to rent out the flat. Moreover, the rental guarantee may be factored into the purchase price and you may overpay at the time of purchase. In effect, you then advance the rent.

Therefore, it is interesting to know how long the operating company guarantees the rent and under what conditions they will manage the flat. Is the rental guarantee an additional option? Perhaps you will receive a discount on the purchase price if you do not wish to use the rental guarantee? Does the operating company cooperate with tour operators or other service providers? Are there any special conditions attached to the rental guarantee? These points give an idea about the long-term rentability of the flat, which safeguards the value of the investment.

Also: is the projected rental yield net or gross? If gross, what are the annual costs?

Read more about the annual cost of a property in Spain.

New construction projects on plan

If it is a buy on plan, there are two additional concerns. The first concerns the financial guarantees from the construction promoter. Any payment you make to the construction promoter must be covered. This way, you protect your upfront payments in case of bankruptcy or late completion by the construction promoter.

Read more about the bank guarantee in Spain.

The second point concerns the construction promoter's experience with lettings. After all, when you buy a new building on plan, you will be working with the construction promoter for several years. If you give exclusive management of your flat to an operating company, it is important to know what references the construction promoter can provide.

For example, we assisted a client in a case in Spain where the construction promoter was set up in 2018 with an initial capital of 3,000 euros. The construction promoter is also going to operate for 10 years. No bank guarantee was submitted. Taking into account the unclear financial situation, you understand that a purchase on plan in this situation carries risks.

The advantage of a new construction project using this formula is that in certain cases, you are eligible for a VAT exemption.


In Spain and Portugal, properties must meet a set of minimum requirements in order to be rented out to tourists. In Spain, for example, a project with a mainly recreational use must comply with the local respective tourism rental or hotel legislation. Tourism is regulated by the autonomous regions, so legislation differs in each region.

In Portugal, such a formula also needs a licence, the so-called licença de utilização turística. Houses with this permit have a recreational use. Residential use is therefore not easily possible. An additional element is that Portuguese transfer taxes are slightly higher, at 6.5%.

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