Sun Park - Guranteed Rental - Beware

[Leo1866]

If you are holidaying in Playa Blanca you will probably notice various Estate Agents offering Apartments for sale at Sun Park with the inducement of a guaranteed rental income.

Sun Park is a very nice and well maintained complex, however, if you are tempted to buy an apartment, be very cautious in respect to the guaranteed rental income schemes, which seem to be good to be true.

We bought an apartment in 2007 at Sun Park from Paul Carroll of Ultimate Holmes, with just such a guaranteed rental income. However, the guarantee proved to be worthless, as in April 2007, Paul Carroll disappeared, as did Ultimate Homes, and we have not received a penny of rental income.

When we finally managed to make contact with the Director of the Sun Park Senor Pedro Coll, he denied all knowledge of any guaranteed rental scheme, despite the hotel accommodating guests in our apartment!.

Therefore if you are buying an apartment, make sure you use an independent Spanish lawyer, and an Independent translator, and find out who will be paying you the guaranteed rental income, and whether they have the financial means to be able to pay you the rental income promised

I would hope the guaranteed rental incomes offered by Atlantico Homes, Cactus, and Volcanoe Estates are genuine, however, I suspect that once the initial three year term expires, whilst you can enter a further rental scheme known as the Community of Exploitation, there will be no guarantee in respect to the rental income. The terms of the Community of Exploitation are that you will recieve a percentage of the profits equal to the number of the apartments you own at the end of the financial year and a voucher for a fortnights stay at Sun Park Self Catering. If you do not join the Community of Exploitation, then you can not let the Apartments yourself, and will have to pay for Electricity, Water, Local Government Rates, and a Community fee of 88 Euro per month.

I am not saying do not buy an apartment at Sun Park, but just be sure you know what you are getting yourself into.

[Leo1866]

Just an update for any potential buyers. Once the guaranteed rental contact expires, and you have to join community of exploitation if you want to rent the apartment out legally to tourists, the return you will expect to receive for a year is just under 2000 Euro, however, that is before the Community of Exploitation pays the Community Charge, Electricity, Water and local taxes, leaving you with nothing but a tax bill to the Spanish Government on 2000 Euro! So if you need the rental income from the property to pay the mortgage you will be in big trouble.

[Hotpot]

It would be good if advice of this quality could be pinned on the forum main board.

Like many another location, Lanzarote has suffered a decline in property demand -- just compare the number of realtors now with the situation five years ago, when everyone, or so it seemed, was suddenly an 'estate agent', and many properties had half a dozen or more 'agents' whether their owners were aware of the fact or not. Well, it was easy enough to nick somebody else's online listing, give the impression you had a host of clients, and hope that would attract a prospective seller direct to you and so launch your business properly.

The market down-turn thankfully saw the demise and departure of these fast-buck merchants, but it's also inevitably seen the disappearance of developers and other agencies which though giving every appearance of having been around for years are just as likely to perform a vanishing act.

Playa Blanca's absurd over-development has inevitably meant too many properties chasing too few buyers and now that the UK £ has to all intents and purposes been devalued -- a Euro that cost 69p in 2005 is now around 90p today, with no prospect at all of the exchange rate 'softening' because it suits the UK to have sterling weak rather than strong for its export market -- holiday demand is also down. Simply put: Lanzarote is an expensive place to get to nowadays thanks to costlier air fares and an expensive place to stay in if you're looking for value for money for your GBP.

Neither of the above is Lanzarote's "fault" and neither detract from the island's quality as a destination. But for increasingly cash-strapped Brits, now about to confront a staggering 20% hike in their annual energy costs as all the utility companies follow each other in the hunt for higher profits, this particular destination is no longer the magnet it once was.

Little wonder, therefore, that some developers / some agents are coming up with the "guaranteed rental" wheeze that's long been familiar in Spanish timeshare developments. But a wheeze is all it is. Any guarantees are meaningless. And the longevity of the 'guarantor' has no certainty whatsoever: a promise made yesterday by a developer or agency which is free to vanish tomorrow is no kind of promise at all.

I'm sorry to learn of the poster's experience but it's by no means uncommon and, sadly, may become even more common if more people are persuaded into believing that guarantees of future income have any kind of credibility.

As ever, the best guarantee of future income is secured by those who run their own little rentals businesses, who put their own work and effort into it and develop a roster not only of repeat bookers but new business arising from recommendations of existing, satisfied customers.

A property developer, no matter what it promises, isn't going to accomplish that.