This is a website for buyers, owners, and sellers of property in Spain, offering reliable information and resources to help you get things done with confidence. It is run by Mark Stücklin, author of the Spanish Property Doctor Column in The Sunday Times (2005-2008), and the book ‘Need to Know: Buying Property in Spain’ published by Collins.
A new report sponsored by the Spanish tourist trade body EXCELTUR argues that private holiday rentals need to be better regulated, not least because the Government is missing out on millions of euros in lost taxes.
Better regulation of private holiday rentals could increase Government revenues by 800 million euro, finds a new study sponsored by EXCELTUR (The Alliance for Excellence in Tourism, a non-profit trade organisation), and prepared by consultants EY (formerly Ernst & Young) and the law firm Tourism & Law.
The report estimates that if VAT was charged on private rentals, the state would raise an additional €367 million per year. And if private landlords were to include their earnings in income tax declarations, that would generate an additional €432 million, giving a total of €799 million extra tax revenue for the Spanish state each year.
Describing tourist lettings as a “highly lucrative business undergoing explosive growth” the report reveals that tourist rentals already offer the biggest supply of accommodation to tourists with 2.7 million beds available, compared to 2.4 million in hotels.
PROBLEMS TO REGULATE
The general thrust of the report is that the holiday rental sector needs better regulations to solve a host of problems, from unfair competition to friction with locals, and shortchanging the Spanish taxman.
The report makes ten recommendation for better regulation at a national, regional and local level, most of which would increase the burden of regulations on private landlords closer to levels in the hotel business. That would discourage many landlords and reduce competition for hoteliers.
The report reveals that 1 in 11 homes in the centre of the 12 Spanish cities analysed are rented out to tourists, “gradually pushing out the resident population” they say.
Holiday rentals cause problems for local residents, says the report, providing statistics to back up this claim. 59% of residents with high concentrations of tourist rentals suffer a lower quality of life as a consequence: 80% are affected by noise, 70% by dirtier streets and communal areas, and 42% by greater insecurity.
UNFAIR COMPETITION
Spanish hoteliers consistently argue that holiday rentals without regulations and tax breaks like a VAT-exemption present unfair competition for hotels.
The report quantifies the price advantage that holiday rentals enjoy over hotels. Holidaymakers spend an average of 22 euro/bed/day in tourist rentals, and 31 euro/bed/day in 3-star hotels. The average daily spend in short-term rental homes is 80 euro/day compared to 149 euro/day in hotels.
Another source of unfair advantage, says the report, is that many holiday rentals are offered in the cash economy via P2P platforms like Airbnb (see chart below for P2P market share by operator), without respecting any regulations, and evading taxes, depriving the Spanish state of as much as €800 million a year.
EXCELTUR say the holiday rental business needs a regulatory framework that is “clear, specific, concrete, and proportional,” and make some sensible recommendations like a national legal framework to reduce the current patchwork of regional laws that confuse landlords and tourists alike. Other recommendations, like charging VAT on holiday rentals, and standardising licenses, and health and safety regulations, would also reduce the supply of private homes offered for rent to tourists, or ensure that many landlords continue to operate illegally.
m fuller says:
What total tosh. Anyone can let a property that is advertised. The rent is a small part. The money that tourists brings to an area is massive. Javea and Moraira make a fortune from tourists. These far left gonks that wrote that report obviously know nothing about commerce.
Andrew says:
I agree. It is time to come up with sensible solutions, not extreme measures (eg the making illegal of short term letting of apartments which happened in Mallorca in 2004, decimating the local economy and apartment sales). I think a balance is needed, to ensure a) that people pay their taxes and b) pay some sort of a reasonable annual fee for a license, and have an inspection by local authorities to ensure the property is suitable. The Balearic Government have recently taken very responsible steps by granting licences to houses (but have not allowed this for apartments in complexes). I do sincerely hope Exeltur do not cause problems in the individual villa sector.
Also a vital factor is that not everyone likes to stay in a hotel, and prefers apartments or villas. In winter most hotels shut, and if regulation was eased (and made sensible) then winter trade and more flights would be opened up. If there is no accommodation people will simply choose another destination.
Dan Perez says:
if the hotel lobby is disappointed that hotels are not trading better it hould advise its members to improve their service to Give holidaymakers what they want, in many cases budget self catering in a more relaxed environment .
Piling regulation on private owners will do nothing to give the end consumer what they want , this is Spain reverting to the bad old days, too much regulation and bureaucracy that the majority of people ignore it and revert into the black economy . The net result no more tax is actually collected and hotels continue to offer a mediocre service that the consumer doesn’t really want .
Dan Perez says:
¡ Puedes corregir mis errores en el texto por favor !
Dave says:
I would give odds on that if regulations mean higher rental costs then it’s back to Greece, Turkey or the former Yugoslavia region where private rental accommodation is at this moment a lot cheaper than Spain, even considering the slightly higher cost to fly there!
michael cragg says:
we have been renting our property for years – but keep strict control of incoming and outgoings – we pay spanish tax on our rentals, no need to hide anything – our property has fire blankets, fire extinguishers, safety rails and seats in the bathrooms for those with impaired mobility – hell ive stayed in hotels in spain that dont offer anything like –