Complete Guide to Investing in Tourist Use Housing: What Every Investor Should Know

The real estate market is constantly evolving, and one of the most attractive and profitable options today is tourist use housing developments. However, there is significant confusion in the market. Many buyers approach these properties thinking they are a “second home” that they can simply rent out occasionally. This is far from the reality.

At ZAR 2010, as experts in the commercialization of these assets, we want to clarify that purchasing a property in a tourist development is a financial and real estate investment operation, with a legal and tax structure radically different from traditional residential home buying.

You are not just buying bricks and mortar; you are acquiring a productive unit within a hospitality business. Understanding the rules of the game is essential for the success of your investment. Below, we break down the specific peculiarities of this model point by point.

1. Legal Nature: An Exclusive and Distinct Use

The fundamental starting point is understanding what is being purchased. Although the property physically looks like a conventional apartment, urbanistically and legally, it is not a residential dwelling.

These developments are built on land designated for tertiary or hospitality use (similar to a hotel or an apartment hotel). This means the exclusive purpose of the property is economic tourist exploitation.

• Traditional Housing: Its primary purpose is to serve as a home or residence (permanent or seasonal) for its owners or long-term tenants.

• Tourist Development Housing: Its primary purpose is to be ceded to third parties for temporary tourist accommodation in exchange for a fee, providing services typical of the hotel industry.

This difference in “use” is the cornerstone of all the limitations and obligations explained below.

2. The Management Company: The Mandatory Engine of the Investment

An unnegotiable legal characteristic of full tourist developments is the principle of “unit of operation” (unidad de explotación).

Tourism regulations in most Spanish regions require that, to guarantee service quality and activity control, all accommodation units within the building or complex must be managed by a single operating company.

What does this mean for the investor?

It means that you, as the owner, cannot manage the rental of your apartment on your own. You cannot list it on Airbnb personally, nor can you handle key handovers to tourists. You must, by law, cede the exploitation of your property to the management company designated for the complex.

Duties and Rights of the Management Company

The management company is not a mere intermediary; it is the holder of the tourist activity license and is responsible to both the administration and the clients. Their duties include:

• Professional Marketing: Dynamic pricing management (revenue management) to maximize income based on season and demand, and positioning on booking platforms (Booking.com, Expedia, etc.).

• Hotel Operations: Comprehensive management of reservations, guest check-in and check-out (often with a 24h reception), customer service during the stay, and incident management.

• Maintenance and Cleaning: Professional cleaning of the unit upon every guest’s arrival and departure, management of linens and towels (industrial laundry), and both preventive and corrective maintenance of the property.

• Regulatory Compliance: Traveler registration (communication to police), liability insurance for the activity, and compliance with safety regulations.

The Trade-off: Profitability for the Owner

In exchange for this comprehensive management, the company is contractually obligated to remunerate the investor. Different exploitation models are defined in the management contract:

1. Guaranteed Fixed Rent: The owner receives a fixed monthly or annual amount, regardless of the actual occupancy of their unit (the management company assumes more risk).

2. Variable Rent (Revenue Share): The most common model. The gross income generated by the property is shared between the owner and the manager according to a pre-agreed percentage (e.g., 70% owner / 30% manager), after deducting direct operating expenses.

The manager must provide transparent periodic settlements, detailing income, occupancy, and expenses.

3. The Critical Point: Limitations on the Owner’s Private Use

This is undoubtedly the most difficult aspect for many buyers to grasp, and it is where ZAR 2010 places the most emphasis to avoid misunderstandings.

The fundamental premise is: You buy the OWNERSHIP, but you cede the USE for its exploitation.

If the property’s purpose is professional tourist exploitation (as seen in point 1), the owner CANNOT make private use of their property whenever they want.

Educational Explanation: The Hotel Analogy

To understand this, imagine you buy a room in a luxury hotel. You own that room, but you cannot simply show up on a random Tuesday at 10 PM, open it with your key, and stay the night. That room might be occupied by a hotel guest or blocked for an imminent arrival. You have ceded that room to the hotel so it can generate business.

The same applies to tourist housing. If the owner could occupy the property randomly, it would break the “unit of operation” and make professional reservation management impossible.

How is the owner’s enjoyment regulated?

The owner’s right of use does not disappear, but it is strictly limited and regulated in the management contract. The standard practice is:

• Reserved Periods: A limited number of days per year is established (e.g., 15, 30, or 45 days) during which the owner can enjoy their property.

• Seasonal Restrictions: Often, the owner’s use is restricted to mid or low seasons, leaving high seasons (Summer, Easter, etc.) exclusively for commercial exploitation to maximize profitability for everyone.

• Notice Requirement: The owner must book their days of use well in advance through the management company, just like any other guest, to block the calendar.

In short: For the remainder of the year not contractually reserved for the owner, the property must be mandatorily available to the management company. The owner cannot “close” the property and leave it empty when not in use; it must be available to be rented.

4. The Essential Tax Requirement: Being a “VAT Taxable Person”

The third pillar is the taxation of the purchase. Acquiring a new-build property in a tourist development has a different tax treatment than a standard home.

A private individual acting as a final consumer (a family buying a house to live in) generally CANNOT purchase this type of product.

Why? The Concept of Economic Activity

As explained, this investment involves dedicating the property to a “hospitality” activity (rental + hotel services provided by the manager). In the eyes of the Tax Agency (Hacienda), this is not a simple residential rental (which would be VAT-exempt), but a VAT-taxable economic activity.

Therefore, the person buying the “asset” to carry out that economic activity must act as a business owner or professional for tax purposes.

The Obligation to Register

To formalize the purchase, the investor must become a VAT Taxable Person (Sujeto Pasivo de IVA). This involves:

1. Census Registration: Registering with the Tax Agency (usually via forms 036 or 037) under the corresponding economic activity heading (typically “Rental of Real Estate”).

2. No Need for a Corporation: An individual (natural person) can register as a sole trader/self-employed person specifically for this activity, without needing to create a Limited Company (SL), although many investors prefer to use corporate vehicles.

The Great Financial Advantage: VAT Deduction

This requirement, which initially seems like a barrier, is actually one of the greatest financial benefits of this investment:

By purchasing as a business owner to allocate the asset to a VAT-taxable activity, the investor has the right to DEDUCT and RECOVER the VAT paid on the purchase.

• For a new-build property, VAT is 10%. On a €300,000 purchase, we are talking about €30,000 in VAT.

• If you buy as a private individual for personal use, those €30,000 are an unrecoverable cost.

• If you buy as an investor (taxable person) for tourist exploitation, the Tax Agency returns those €30,000 to youafter the corresponding filings.

This drastically reduces the capital required for the investment and boosts the financial return on the operation.

Conclusion: Smart Investing with ZAR 2010

Investing in tourist housing developments is a sophisticated product that combines the security of a real estate asset with the yields of a hospitality business, optimized by a powerful tax incentive (VAT recovery).

However, it is not a product for those looking for a traditional holiday home. It is a product for investors seeking profitability and convenience, delegating operational management and accepting the rules of the tourist market.

At ZAR 2010, we perfectly understand these peculiarities. We not only select the best developments in high-demand locations but also advise our clients throughout the legal and tax process to ensure the investment is structured correctly from day one.

If you are an investor looking to maximize your capital with security and transparency, [contact the ZAR 2010 team]. We would be delighted to show you our portfolio of tourist assets and analyze your case personally.