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Tourist rental laws: Fact or fiction?

THE year was 2012. Owners of tourist apartments on “UtopiaIsland” were closely monitoring the legal situation regarding the rental of their properties to tourists following years of systematic persecution by the tourist authorities.

Fear and uncertainty was rife. Everyone agreed that something had to be done about the “unfair” and “monopolistic” laws restricting how properties may be rented to tourists, but nobody appeared to have any real answers.

Meetings were held, plans were drawn up and action groups were formed. Group leaders pushed their individual agendas, mostly borne out of ego or financial interest.

The common theme among all groups was to pressure the authorities into reviewing or changing the law, or to challenge the law through the courts.

However, the general consensus among the more influential members of the tourist industry and the community was that such action, in the short term, would be a complete waste of time.

The reality was that the supposedly-democratic government ofUtopiaIslandhad been fully aware of the overwhelming public majority who had been opposed to the rental laws for over a decade.

They were fully aware that a large percentage of owners already refused to use the “designated” sole agent and simply rented their properties out privately, or through an independent agent.

They were fully aware that the majority of those owners didn’t declare a single Utopian-Dollar in income tax on those rentals for fear of coming up on the radar of the tourist inspectors.

Aware of the level of black-market rentals, the government of Utopia was forced to introduce a tax based upon a notional income of 2% return on each non-resident or second property in Utopia, regardless of whether the owner actually rented it out or not.

The government was aware that many properties were sitting empty for weeks at a time as owners adopted a low-key marketing strategy so as not to come up on the radar.

They were aware that as a result, fewer tourists were visitingUtopiaIslandand were choosing other destinations.

They were aware that estate agents couldn’t sell properties in the tourist areas because potential buyers were being scared off by stories of owners receiving crippling fines from the authorities.

The government was aware of the huge loss to the taxman of the 6.5% transfer tax and government land registry fees on each of those potential property transactions.

They were also aware that dozens of livelihoods, indirectly affected, included cleaners, handymen, builders, bar, restaurant and shop owners, taxi-drivers, supermarkets, estate agents, tourist attractions and parks.

Citizens of Utopia speculated as to why such an unfair, unworkable, undemocratic, and anti-competitive law had been forced upon them in the first place.

However, the reason no longer mattered. After having largely turned a blind eye to “illegal” lettings for over a decade, the government had now begun to “rattle the sabre” by orchestrating an increase in the number of inspectors and their activities. Their short-sighted approach was purely intended to raise revenue from issuing fines. They clearly did not give a thought about how their actions would affectUtopiaIslandas a whole.

 

Despite making noises about possible amendments to the law, the government ofUtopiaIslandclearly had no intentions of repealing or altering the law to the extent that owners could rent their own properties, independently of outside interference.

So what was it going to take to make them sit up and pay attention?

If the law could not be changed in the short term because the government was making the rules and holding all the cards, then property owners decided that the logical option was to force the government on to a different playing field.

The fundamental principle behind the law was that owners had to use a sole, designated rental agent.

Most owners calling for a change in the law simply wished to remove the requirement to use a sole agent and have freedom to choose how, where and for how much they rented their properties.

Rather than continue with futile protests, some property owners began to question why action was not simply taken to remove all the sole agents.

After some research, they discovered that this could be achieved with remarkable ease.

It was established that property owners – on any given complex – were, at their next AGM, entitled to demand a review and re-vote to decide whether the existing sole agent had the requisite majority approval of the owners to retain his or her licence.

With a modicum of education, support and rallying around, property owners began to educate and encourage other owners on their complexes to vote against the incumbent sole agent at the AGM and, thereby, ensure an outcome whereby no agent could demonstrate a majority.

The word spread and the movement soon gained momentum on the island. By 2014,UtopiaIslandhad legally removed all sole rental agents from office.

To the astonishment of the intransigent government and tourist inspectors, each tourist complex had rendered the existing law completely obsolete and unworkable.

However, the citizens ofUtopiaIslandknew that removing the sole agents would only be the beginning of the path to change.

From that point onwards, it would be essential that they continued to work together and hold their nerve.

*Read the final instalment of this intriguing tale next week

John Hatrick of Tenerife Solicitors can be contacted on 922 717845 or by email at info@tenerifesolicitors.com

 

British Embassy Warning: Beware the pitfalls of renting

HOME-OWNERS renting their properties to holiday-makers are being warned that they could face huge fines unless they comply with Spanish law.

The British Embassy is aware of a number of cases where owners have been fined up to 30,000 euros for letting properties without the correct permits.

The Embassy published advice on Monday for homeowners who rent out their properties, or are considering doing so, which can be found on the UKinSpain website.

Short-term lets

Regulations for letting tourist apartments (apartamentos turísticos) and holiday homes (viviendas vacacionales) vary by region.

If you are planning to make a financial return by renting out your existing property, or buying one to let, you should seek independent legal advice, and check the local licensing laws with your local Town Hall (Ayuntamiento).

This is particularly important inCatalonia, the Balearic Islands andCanary Islands, where the rental of holiday properties on a short-term basis is strictly regulated.

The authorities in these areas are cracking down on home-owners who rent out their properties to tourists (particularly through online adverts) without complying with Spanish law.

If you own or are planning to buy an apartment which is part of a Comunidad de Propietarios (Committees of property owners who are responsible for the management of communal areas of apartment buildings/complexes), you should also check whether there are any rules that prohibit or restrict short-term letting.

Long-term lets:

Owners who rent out properties on a long-term basis are generally not required to apply for a special licence. However, it is worth seeking professional advice to make sure that you are complying with Spanish legislation, and that you are using the correct rental contract.

There are different types of contracts, depending on how long the property is being let for, such as arriendos de vivienda (a minimum of five years), and arriendos de temporada (for one year or less, generally). You can get copies of these contracts from tobacconists (estancos).

Taxes:

Property owners should also be aware that whether or not they are resident inSpain, they will need to declare rental income to the Spanish tax authorities. Home-owners may wish to seek advice from a professional tax adviser (asesor/gestor).

Managing a property rental:

You may want to consider hiring a Spanish letting agent to assist with finding tenants, drawing up rental contracts and managing the property on your behalf.

Further information:

*Advice on renting out property inSpainon the UKinSpain website

*FAQs on letting property inSpain(in Spanish) from the Sociedad Pública de Alquiler (Public Rental Society)

*Lists of local English-speaking lawyers can be found on the consular pages of the UKinSpain website.

Short URL: http://www.canarianweekly.com/?p=14273

Posted by on Aug 10 2012. Filed under Legal Matters. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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