The Canary Islands are a popular choice when it comes to the purchase of a holiday home. Countless foreigners fall in love with the islands and decide to buy their own place to enjoy with their families in a more private setting instead of booking in at a hotel. Many choose to rent these properties out short-term so that they are not empty while the owners aren’t using them themselves and so that the property pays for itself, generating a small income.
Up until now, both foreign home owners as well as the Spanish were free to rent out their property either on a long-term or a holiday-let basis and all they were required to do in return was to declare the extra income on their yearly income tax return (resident or non-resident, whichever applied). However, in recent times, this little scheme has become increasingly difficult throughout Spain but particularly in the Canaries making it very confusing for property owners to know whether they are legally entitled to holiday-let their second home or not.
A national law (Ley 4/2013) was published back in June to modify urban rental regulations (namely long-term rentals, contracts etc) but a portion of this law states, “that over the past few years there has been a significant increase in the use of private accommodation for touristic purposes that can be perceived as intrusion and unfair competition and also goes against the quality of tourist destinations”. The modifications made to urban rental laws exclude holiday rentals specifically since these are to be governed solely by tourist laws and it has been left to each Autonomous Region to establish their own regulations regarding necessary procedures that would allow property owners to holiday-let but again, this has just created further confusion.
In the Canaries, the procedure would consist in registering your property with your island’s Cabildo, submitting the required paperwork and projects in order to apply for a license and await approval from the authorities before proceeding. The accommodation would also have to fulfill a series of conditions regarding services, equipment, installations, logging of visitors’ details with the authorities, prices, obligatory insurances etc. Unfortunately, this isn’t the reality of the matter and if you approach the Cabildo or contact the Tourist Department of the Canarian Government, don’t be surprised if:
- Nobody is aware of the existence of this procedure at all
- Nobody knows which department is supposed to process the application
- You are told that the Canarian Government is not currently issuing tourist licenses to new applicants
- You are informed that it is illegal for private home owners to holiday let their property at all
This has become a common problem throughout Spain, not only in the Canaries as nobody seems to know how to apply this new law even though many of you are aware that this situation is not new at all on the Islands. Many owners who have tried to apply for licenses via official channels before this law even came about have denounced that the Cabildos refuse point blank to register their properties even though they fulfill every criteria. One of the reasons behind this could be the lack of honesty of property owners who do not declare their earnings, resulting in loss of income in the way of taxes to the government and it would seem that this situation will not be resolved until an almost fool-proof method can be devised to ensure holiday rentals are properly declared.
This clamp down on holiday-lets has been brought about by extreme pressure on the Spanish Government from the hotel industry as it is claimed that private holiday-lets are taking away from their businesses as well as the fact they have had to spend large sums of money to not only obtain the necessary tourist licenses but to comply with laws that determine how the quality of their services and installations should be maintained. In the Canaries, this is just another concern; tourism is the primary industry on the Islands so if every and anybody is allowed to holiday-let, who will control the quality of the accommodation on offer and the overall experience of the holiday-maker? On the other hand, others argue that tourists who choose private accommodation over hotels are actually more beneficial to local economy as they actually spend money in local establishments, something that cannot be said for the “all-inclusive package” plague we have been experiencing over the years where tourists don’t even venture outside the confines of the hotel.
In conclusion, the existence of these new regulations has done nothing to clarify the legalities of private holiday-lets but the pressure is on the Government to amend the content of the law so that in each region it is obvious whether short-term rentals are allowed and if so, the procedure to be followed. Until then, be mindful of the fact that in the Canaries it has “unofficially” been determined as an illegal practice especially if the property is openly advertised either on private websites or holiday booking sites and could result in a fine from a Tourist Board Inspector. In any case, this is a subject I have been following with a lot of interest and the same can be said for many of our readers so you will be kept in the loop if there are further updates.