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Tourist rental laws, a solution 

 

Many readers will have read about recent developments in the court cases proceeding against owners who had rented out their properties to tourists without using the appointed sole agent designated for their complex.

A large number of cases based upon evidence obtained via the internet have now been abandoned by the government, whilst many cases based on other types of evidence are proceeding to court.

Whilst this might appear as a partial victory for property owners, it does not alter the fact that the ridiculous rental law remains in place and hanging over the heads of honest property owners wishing to maximise the rental income from their properties.

The problem for the majority of owners is that the law forces them to use the current sole rental agent appointed under the said law. In many cases, those agents were appointed well over a decade ago. The rental law initially envisaged that those agents would obtain a licence for a minimum period of three years but it clearly never envisaged such licence being appointed indefinitely without a review by the community. Given that the law requires such agents to demonstrate they are approved by a majority of owners, those owners are legally entitled to demand a review and re-vote after a reasonable period (e.g. every three years). To our knowledge, few if any communities have ever conducted such a review and re-vote. Many of the incumbent agents simply ignore such requests and act as if they have been awarded a licence for life.

It should be noted that owners are entitled under community law to write to the president of the community to demand a discussion/review of the sole agent exploitation at their next AGM of the community. However, owners should also be aware that the community does not have to appoint an external private rental agent company to be the sole agent required under the law. In fact, the community itself can be appointed as the sole agent or even form its own company for this purpose, which can the shareholders can be the property owners. The community simply requires the necessary majority vote to approve such a plan and remove the existing sole agent.

One of the biggest complaints against the existing sole agents is the perception that holding the monopoly on each complex has resulted in expensive charges, poor service and even favouritism as to which apartments on the complex are rented out first. By taking on the role of sole rental agent, the community can conduct business in an ethical way as directed by the owners. It could choose to subcontract responsibility to an external company, or it could just appoint its own internal manager, staff, cleaners etc to act on its behalf in handling all rentals.

However, the key point from the perspective of the owners is that the subcontractor / staff would be controlled by the community, who dictates how they operate and how any profit is divided up between that subcontractor and the owners. Hence, if such subcontractor doesn’t keep the owners happy, it can easily be voted out and replaced at the next AGM without having to make any changes to the community’s sole agent licence at the tourist office.

Tenerife Solicitors can advise and assist clients wishing to instigate any such procedures in their community and we can advise upon the mechanics of requesting the review and re-vote at the next AGM. Tenerife Solicitors can also advise and assist generally in a wide variety of community law and administration issues.

Tenerife Solicitors offer fixed fee consultations for 50 euros plus IGIC, which is fully refundable against any subsequent work we do on your behalf in that matter. To arrange a consultation, call us on 922 717845 (or 0871 218 0063 from the U.K.) or email us at info @ tenerifesolicitors.com.