Licences for renting a property to tourists

LoadingFavourite

This topic contains 12 replies, has 7 voices, and was last updated by Profile photo of Anonymous Anonymous 9 years, 2 months ago.

  • Author
    Posts
  • #53131
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi all,

    I’m doing a piece on renting out property in Spain to holiday makers. In some areas you need a licence, in others you don’t. I would like to talk to anyone who has come up against the licence issue. If you have some information to share please send me a PM ASAP – have to write it in the next couple of days.

    Mark

  • #74810
    Profile photo of Anonymous
    Anonymous
    Participant

    Anyone? I need to talk to someone today…..

  • #74816
    Profile photo of Anonymous
    Anonymous
    Participant

    Mark
    The markets in free fall as reported in the Telegraph so perhaps they are a little pre-occupied.
    Next it will be the Sun.

    Frank 8)

  • #74944
    Profile photo of Anonymous
    Anonymous
    Participant

    Sorry – bit late with this!

    The most important detail to consider is to whether a property is in a designated touristic or residential development.

    A Royal Decree (by Nacional Parliament) of 1982 (RD 2877/1982 of 15th in October of 1982 (Nacional Official Bulletin of 9th in November), clarified the differences between touristic apartments and holiday houses.

    According to that Royal Decree:

    For touristic apartments, it is legally required the existence of proper furnishing, installations, services and equipments for immediate use and in order to their exploitation, an administrative licence is needed ( the marketing company needs to obtain it before the initium of touristic exploitation). (Supreme Court Decision of 17th of September 1993). The group of touristic apartments of every touristic development are all marketed by the same company. They must be sold as touristic apartments.

    Holiday houses are units of residencial houses, intended and sold for personal residencial use but that, of course, by title of ownership rights can be rented out. These are regulated in provision 17 of same RD of 1982 and defined as individual units of apartments, bungalows, villas, houses and similars and, in general, any dwelling which, regardless its furnishing conditions, equipment, installations and services, are offered for renting with touristic or holiday purposes.

    To simplify matters as regards Lanzarote, if you own on a Touristic complex (Licensed with the Dept of Tourism) there must be a sole agency who runs all the letting on the site. This can either be the community itself or an outside agency. Either way the sole agency must have 50% +1 of the properties under its control in order to operate as the sole agency. The site must be licensed by the Dept of Tourism and owners can only rent out through the sole agents. If there is no sole agency because they cannot achieve 50% +1 then no one is allowed to rent. In the sales contract (when you purchased the property) it should have been clear that it is touristic and that you are under legal obligations according to that classification) If it wasnt, there can be a fraud involved.

    If you own a property on a residential site then you are entitled to rent out your property long term with no restrictions, and to holiday let it to family and friends providing you agree the terms directly with your guests. There is no case law on what constitutes family and friends. Since the law was introduced well over a decade ago there has not been a single case brought against a private freeholder for contravention of the family and friends concession or for short term holiday lets in the Canaries. You have to ask why not. The answer is because the authorities know full well such an action would fail.

    The Canarian government was cajoled into passing the Letting Laws by the large tour operators who threatened them because they feared the free and entirely legal competition from private individuals seeking to use their own property as they see fit. But the locals are Canarian (not stupid) and they soon realised that this law was ill founded and passed a revision which includes the concession to family and friends so as not to contradict the constitutional rights of its citizens. This revision was implemented in 2001.

    Many statements have been made by elected presidents of villa and apartment communities intent on stopping holiday rentals in their community in an effort to impose their will on uninformed property owners. They are largely bluffing and bullying. Apart from the right of any citizen to inform the authorities of what they believe to be any infringements of any law (in this case Clause 38 of law 7/1995), they have no legal authority to impose their views and are seeking to exploit the unfortunate legal ignorance of owners. They are advised to study the Law of Horizontal Division in this respect and will find that to take decisions on who can let their property to tourists is not included in the powers of the community or a select group of owners and/or the president choosing the type of tourist acceptable to them. That power is solely in the hands of the tourism department. Of course, he or any other concerned citizen, may inform the tourism department that, in their view, a law is not being observed.

  • #74966
    Profile photo of Anonymous
    Anonymous
    Participant

    @Stewlanz wrote:

    To simplify matters as regards Lanzarote, if you own on a Touristic complex (Licensed with the Dept of Tourism) there must be a sole agency who runs all the letting on the site. This can either be the community itself or an outside agency. Either way the sole agency must have 50% +1 of the properties under its control in order to operate as the sole agency. The site must be licensed by the Dept of Tourism and owners can only rent out through the sole agents. If there is no sole agency because they cannot achieve 50% +1 then no one is allowed to rent. In the sales contract (when you purchased the property) it should have been clear that it is touristic and that you are under legal obligations according to that classification) If it wasnt, there can be a fraud involved.

    I assume in the real world people still rent privately to family and friends on a touristic complex whether there is a sole agent with 50+1% of the properties or not?

  • #74968
    Profile photo of Inez
    Inez
    Participant

    Of course – and it would be interesting to note that if one had a website and agency as such in the UK – then the rental contract is effectively under UK law and tax, so how does that work then!

    Definately a loophole hard to qualify. Here in Spain there is talk of various things, but the main one is essentially tax ‘should’ be paid to Hacienda and nothing more.

    I do not know of any independant owners who offer this but prefer to pass income and outgoings via thier accounts in uk/ireland (if they even do that)

    All anyone in the apartment needs to say is they are friends of the owners!!!

  • #74972
    Profile photo of Anonymous
    Anonymous
    Participant

    @inez wrote:

    Of course – and it would be interesting to note that if one had a website and agency as such in the UK – then the rental contract is effectively under UK law and tax, so how does that work then!

    Definately a loophole hard to qualify. Here in Spain there is talk of various things, but the main one is essentially tax ‘should’ be paid to Hacienda and nothing more.

    I do not know of any independant owners who offer this but prefer to pass income and outgoings via thier accounts in uk/ireland (if they even do that)

    All anyone in the apartment needs to say is they are friends of the owners!!!

    Yes Inez. But I think not so much a “loophole” to be exploited, rather more a very, very grey area in law.
    A couple of months ago I had a potential purchaser to buy a 1 bed apt on a complex in the centre of the main tourist resort.
    Her intention was to buy and use herself for holidays and probably rent out when she was not using it herself.
    The complex does not have a Tourist Licence (although in its’ previous existence, it was used by all major Tour Operators)
    I tried my best to explain to her that in the eyes of the law, then this was a very grey area and depending on who she spoke to, she may be advised that she does not need a licence in order to let.
    (As Inez says, you should declare your income to the Hacienda via a Gestoria)
    I further told her that in the “real world” 99% of the purchasers of all the other apartments (over 100 apts) were buying with a view to renting them out and this is standard for most properties in a tourist zone and has been since I can remember.
    I sent her the text I posted earlier and told her to consult her lawyer further.
    Anyway, to cut a long story short, the lawyer advised her against it and the sale never happened.
    Was this the right thing to happen……?
    The buyer lost the one apartment she really wanted.
    The vendor lost the sale.
    I lost a commission (and lots of time and effort to boot!)
    The lawyer lost nothing.
    Someone else bought the apartment, went to Ikea and furnished it and is now renting it out very nicely indeed, thank you.
    Lawyers walk a very thin line inbetween what is the law and what is reality.
    They are bound to tell their clients the law of course, but when an area as grey as this is in question what should they have told her?
    That she must get a licence or look over her shoulder forever?
    Not to worry as everyone else does it and nobody has ever been “done”?
    Most of the members of the local council and undoubtably the Mayor have properties which they let themselves without licences?
    Indeed, if one person on a complex of over 100 apartments approached the relevant authorities to apply for a licence, would not the authority have a duty to check and double check that all the other apartments which are so obviously rented out to tourists, have a licence?
    Or, as my previous post says, would this simply be a case of suicide for the tourist industry and the tax authorities?
    The argument could rage….but it doesn’t. Nothing seems to change year after year after year. And maybe that is the best way.
    Let sleeping dogs lie….

  • #74974
    Profile photo of Anonymous
    Anonymous
    Participant

    “The complex does not have a Tourist Licence (although in its’ previous existence, it was used by all major Tour Operators)”
    So what. The past does not matter. It can also be argued in UK that in the past, a property was used for a different use, but if the change of use has been exercised, the past is the past.

    “I tried my best to explain to her that in the eyes of the law, then this was a very grey area and depending on who she spoke to, she may be advised that she does not need a licence in order to let.”
    So if she does NEED to rent out to make figures stack up, then she is a mug to buy, just because at present it is a “grey” area.
    It does not take much for grey to turn to black.

    “I further told her that in the “real world” 99% of the purchasers of all the other apartments (over 100 apts) were buying with a view to renting them out and this is standard for most properties in a tourist zone and has been since I can remember”
    So if 100 apts on an iffy development had been sold off plan, it doesn’t mean it is wise to follow and ignore the warnings and the law.

    “the lawyer advised her against it and the sale never happened”
    Glad she had the sense to take advice, otherwise, why pay the fee.

    “The buyer lost the one apartment she really wanted.”
    But if she could not afford it without a rental income, it is pure stupidity to consider acquisition.

    “The vendor lost the sale. “
    Tough

    “I lost a commission (and lots of time and effort to boot!)”
    It’s called business. Do you expect to get a fee out of every property?
    Business is not always 100%. Take the rough with the smooth and all that.

    “The lawyer lost nothing. “
    Why should he, he gave advice which I assume he was paid to do?

    “Someone else bought the apartment, went to Ikea and furnished it and is now renting it out very nicely indeed, thank you.”
    So because there is someone to gamble, or is a mug, does that make everything OK.
    Assume the law is enforced next year. Hope Ikea will take the goods back as the owner may not have need.

    “Lawyers walk a very thin line inbetween what is the law and what is reality.”
    But that is what law is all about, or do you believe that everyone should only listen to agents?

    “They are bound to tell their clients the law of course, but when an area as grey as this is in question what should they have told her?”
    The law as is stands, be it grey, black or blue. He was doing his job.

    “That she must get a licence or look over her shoulder forever?” YES
    “Not to worry as everyone else does it and nobody has ever been “done”?” NO
    “Most of the members of the local council and undoubtably the Mayor have properties which they let themselves without licences?” Bin Laden has killed many. Does that make it OK for your neighbour to shoot you?

    “Indeed, if one person on a complex of over 100 apartments approached the relevant authorities to apply for a licence, would not the authority have a duty to check and double check that all the other apartments which are so obviously rented out to tourists, have a licence?”
    You are presumably an agent, shouldn’t you tell us?

  • #74978
    Profile photo of Anonymous
    Anonymous
    Participant

    MG – if you want a fight, then lets just take it outside!

    Seriously, though…I posted that previously to show that what is law – or may not be law – is dependent on who you speak to.
    As it it a grey area and there have been no prosecutions, then it looks as if the status quo will continue.
    Inez knows what I am on about.
    Rather than attacking my every sentence, I would have thought it better to put yourself in the same situation and see what you would have done.
    Also, rather than “having” to rent out to make it feasable – this was not the sole intention. She had the money to pay for it upfront and onwards without necessarily having to rent.
    Furthermore, “am I an agent” – I thought I made that pretty clear and have always said so on this forum!
    Also, my previous posting to help Mark stated “Lanzarote”. As all areas have their own laws, then my posting was not intended to cover all Spain.
    I fear that you have CDS-itis. Gladly, my world is not like that.
    My posting was to provide information on the current state of confusion in the world of law and the real world. They are definitely not the same world. Read 90% of this forum to see if you still believe the world of law to occupy our real, every day world!
    I await to see what Marks research comes up with and have a sneaking suspicion that it will leave more questions unanswered than it answers.
    My point was to assist and open debate. However, it seems your intention was to attack.

  • #74983
    Profile photo of Anonymous
    Anonymous
    Participant

    “there have been no prosecutions, ” You certain of that, they may have not yet come to Court.

    “see what you would have done.” If I paid for legal advice, I would have accepted it and walked.

    “Furthermore, “am I an agent” – I thought I made that pretty clear and have always said so on this forum!” So why do you either resent or envy the legal profession so much?

    “I fear that you have CDS-itis.” Don’t know why you think that, I do own in mainland Spain, as I do in Lanzarote, but not in CDS.

    “I await to see what Marks research comes up with and have a sneaking suspicion that it will leave more questions unanswered than it answers.”
    That I don’t doubt and whilst lawyers and agents are trying to get people to purchase, by playing down the laws, there will remain unanswered questions and the possibility of many tears in the future.
    Nobody thought that demolition orders would be issued on illegal premises in Spain, and similar for building, including hotels in Lanzarote, but there does come a time when enough is enough.

    “My point was to assist and open debate. However, it seems your intention was to attack.” Yes, correct, by attacking anyone who worries about losing a fee, just because a prospective purchaser sought legal advice, paid for legal advice and took that advice. When the advice given was to comply with the laws of the land, be they grey or black.

    Final point. Isn’t “CDS-itis” where agents don’t like purchasers seeking good legal advice?

  • #74984
    Profile photo of Anonymous
    Anonymous
    Participant

    Awww MG….

    I wonder what your profession is.
    I fear whatever it is, you are missing your true vocation of being a vigilante sniper.

    I will troll the web and try to find you a good site to buy a sniper’s rifle. Then you can continue your shooting to your hearts content.

    Now I know why politicians oftentimes refuse to answer questions/allegations.

    Yours are not worth the effort…..

  • #75076
    Profile photo of DrRobert
    DrRobert
    Participant

    Stew,

    Very well thought out post! Like you I’m very familiar with Lanzarote and have never heard of anyone being prosecuted for renting out without a licence or for not going via a sole agency. I’ve also never heard of any complex which has a sole agency!

    Which estate agency do you have in Lanz? I’d like to drop in for a chat sometime.

  • #75088
    Profile photo of Anonymous
    Anonymous
    Participant

    @drrobert wrote:

    Stew,

    Very well thought out post! Like you I’m very familiar with Lanzarote and have never heard of anyone being prosecuted for renting out without a licence or for not going via a sole agency. I’ve also never heard of any complex which has a sole agency!

    Which estate agency do you have in Lanz? I’d like to drop in for a chat sometime.

    Hi Dr Robert,

    Just click on “Profile” or “www” box underneath my post.

You must be logged in to reply to this topic.