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Renting your property to tourists 

 

Important update affecting owners

N.B.This article deals with rentals on TOURIST designated complexes. It does NOT deal with the issue of rentals of apartments on ‘RESIDENTIAL’ complexes. The writer considers that the law on residential complex rentals is crystal clear, namely that short-term tourist rentals on a residential complex are NOT permitted under any circumstances.

Over the past few months, we have been contacted by numerous worried clients seeking information regarding developments in the dispute over the rental of apartments on tourist-designated complexes.

Most readers will be aware of the flurry of activity last year, where inspectors from the tourist board carried out a number of impromptu inspection visits in respect of tourist properties believed to have been rented out without using the designated sole agent. Some of those visits resulted in the issue of penalty sanction notices.

Despite ‘rumours’ as to an increase in the number of roaming inspectors, evidence suggests that most if not all of those visits were carried out by the same two male inspectors. It is also interesting to note that the parties who received visits were predominantly independent rental agents or owners of multiple properties.

In each case brought to our attention, we understand that the inspectors tried to take a heavy-handed approach and intimidate the parties that they visited, particularly if those parties mentioned that they wished to speak to a lawyer before cooperating further.

Given that the tourist board did almost nothing to enforce the tourist rental law for over a decade but has suddenly jumped into action in the middle of a recession, the writer’s view is that last year’s ‘flurry of activity’ by the inspectors was nothing more than a desperate attempt by the government to increase revenue.

The inspectors apparently carpet-bombed the biggest agents and owner-groups with demands for details of property owners. Then, if the agent caved in and released such confidential information, the tourist office issued penalty fine notices to as many of those agents/owners as possible. No doubt the tourist office hoped that a reasonable percentage would either pay up out of fear, or at least pay something after haggling the fine with the inspectors.

Fortunately, most parties who received such visits or notifications were not intimidated and instead instructed solicitors to fight the notices. Of the numerous cases that Tenerife Solicitors took on last year, not a single client has paid a cent in fines to the tourist board. For each appeal that we filed, the tourist board has so far failed to respond with their intention to proceed within the requisite 6 month deadline. Hence all such cases to date that have reached the said 6 month deadline have been dropped by the tourist board.

Further good news for owners is that it has apparently been several months since the inspectors have initiated any new visits or penalty notices in respect of tourist complex accommodation in Tenerife. The initiative against tourist rentals appears to have been quietly dropped, or at least scaled back significantly.

Meanwhile, on 7th February 2013 a meeting took place between the Ministry of Tourism and key tourism figures. During that meeting, the Deputy Minister for Tourism reported that a new law applicable to tourist rentals was being proposed. However, so far, we have been unable to obtain any details as to the proposed changes to the law or its proposed date of inception.

The Deputy Minister also clarified that once the new law comes into effect, owners will in any event be granted a 2 year amnesty in order to become compliant, during which period no action will be taken against owners who rent in breach of the new law.

In the meantime, property owners will also be relieved to learn that the first three court cases brought against owners by the tourist board that have reached the TSJC (High Court of the Canary Islands) have been thrown out by the Judges on the basis that the Canarian rental law (7/1995) is in breach of European Law, specifically something called the ‘Bolkestein Directive’. This is a relatively new provision which seeks to remove local or national restrictions on trade and open up trade markets across all European countries. The Directive is not without its critics and is due to be reviewed by the European Parliament in June 2013, but for now, it remains in effect and even after the June 2013 review, is unlikely to be entirely abolished.

Pending further updates or clarification as to the proposed new rental law, the existing requirement to rent only via a complex’s sole rental agent is currently illegal and unenforceable. Hence, any owner who is currently renting their property privately via the internet or via an independent agent may continue to do so and should not be bullied into using the sole agent. As such, in the unlikely event that any owner now receives a fine or inspection request, he or she should immediately instruct a solicitor to appeal it.

The above commentary is a discussion of the relevant legal issues and does not amount to legal advice. Each owner’s circumstances are unique and must be considered individually on their facts.

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