A decision like replacing the lift, renovating the façade or refurbishing the stairs is an important one for a Community of Property Owners as it generally results in hefty shared costs. However, did you know that there are ways your community can earn extra money and allocate it to offset these shared costs? In our article today we explain how your Community can earn extra money, read on to find out how.
Firstly, for legal purposes, you need to know that this topic is covered in article 17.3 of the Horizontal Property Act (LPH). Jesús Santidrián, lawyer and director of Expansion for Mediterráneo in the Madrid area clarifies some points.
How many votes does my Community need to rent out communal areas and earn extra income?
“A Community that wants to rent out its communal areas will need the favourable vote of three-fifths (3/5) of all the property owners, which must also represent three-fifths (3/5) of all the owners’ shares as is provided for in article 17.3 of the LPH” explains Santidrián.
Where can I present this initiative?
Your proposal must be included in the agenda. In order to be able to rent out any communal area of the building it must be expressly agreed to be included in the agenda of a Meeting of property owners, submitted to a vote of the community and achieve the majority mentioned above.
“When the agreement is legally adopted, the President of the Community will have the necessary authorisation to implement the lease. Conditions might be set, such as minimum prices or maximum periods of time” adds Santidrián.
To rent out communal elements, they must not have a specific use in the property and usable profits must be produced for all the residents.
Which areas of the Community of property owners can be rented out?
The Horizontal Property Act does not impose any restrictions in relation to renting out communal areas, provided that it has been passed by a majority at the meeting of property owners.
Renting out parking spaces
Sometimes Communities have free parking spaces that don’t belong to any of the owners. If you live in the city centre it could be worthwhile renting out a parking space to people who work in the area. However, don’t forget that someone from outside the community would have access to the garage and appropriate precautions should be taken.
Installation of solar panels
If you install solar panels,the energy generated could be allocated to communal elements of the building such as the lift, garage or lighting in the passageways. Or to the community’s communal consumption such as hot water or heating. Another alternative is to allocate the energy produced to individual properties. This option is completely compatible with the above and requires the installation of individual meters in each home. Your Mediterráneo Fincas Administrator will explain all the benefits of installing solar panels in your Community.
Sell or rent the porter’s lodge
Some communities still have the familiar porter’s lodge, even though the position of porter has become obsolete and disappeared over time. If this is the case in your development and your porter’s lodge is empty, this is a good moment to rent or sell it and gain some extra income for the Community.
Placing adverts on the façade
One of the more interesting options that can provide an extra injection of cash is placing advertising hoardings on the facade or roofs. The communal elements that are most suitable for this kind of installation are dividing walls, roofs, and in the case of scaffolding installation, the main facade.A building’s location is key to its appeal, a building on the main road is not the same as one on a side street.
If you are interested in this kind of advertising for your Community, contact your Mediterráneo Property Administrator and they will advise you on how to proceed.
- Rent communal areas by the hour or day
Communal areas liketennis courts, the football pitch or the social club can be rented out by the hour for events, competitions or matches. Remember that someone must be responsible for handling payments, shifts etc.
As you can see there are many ways that your Community could generate extra income. The majority of these options depend on the state of the building and its strategic location to gain an exponential increase in income. Both you and your neighbours should be clear about which option best suits your needs and vote for it at a meeting.
Do Communities pay tax on the rental income?
For tax purposes, communities of property owners do not have legal personality and would therefore be exempt from paying tax. However, in this case, the beneficiaries are the owners of each property and they must, therefore, include this financial increase in their tax return.
The Property Administrator is responsible for informing the Tax Office of any extra income generated for each owner from renting out communal areas. The income to be declared will depend on the percentage participation of each owner in the building.
Don’t forget to obtain administrative authorisation
It goes without saying that you will need administrative authorisation to be able to rent out and install any type of sign or telephone device on this communal element in order to gain some extra income. Permission from the community is useless unless you obtain authorisation from the competent authorities. Don’t forget!
We hope that his article has been useful and please contact your Fincas Mediterráneo Administrator if you have any queries. You can now do this through the App which is free to download by following this link.