Confusion surrounds plans by the Spanish government to licence the letting of holiday homes with conflicting advice making home owners unsure whether or not they will have to comply if new rules are introduced.
Currently in some regions in Spain it is obligatory to have a licence if a property is let out to holiday makers and those who do not have a licence can face stiff fines.
The British Embassy in Spain said that it is aware of a number of cases where home owners have been fined up to €30,000 for letting properties without the correct permits.
Letting on a short term basis, i.e. holiday rents, are currently strictly regulated in Catalonia, the Balearic Islands and the Canary Islands. The law says that you can only rent out a semi detached or detached house, not an apartment unless it is part of a tourism development and even then there are strict conditions in terms of number of bathrooms and services.
Recently the authorities in these areas have been cracking down on home owners who rent out their properties to tourists without complying with Spanish law and tracking down those who do not have licences via online advertising.
There are now proposals that would see a nationwide licensing system introduced for all holiday rentals across Spain. It would mean that all property owners wishing to rent to tourists would need to be registered and obtain a licence from their local council and rental income would be taxed.
It is estimated that the government could get millions of euros a year in revenue under the proposals but the proposals are unclear and there is concern that if all holiday rentals are rigorously regulated it could put off a lot of people who only want to do so at peak holiday times to cover the costs of owning the property.
However, property experts say that owners should not be too concerned. ‘I don’t think they are trying to stop people from renting their property, but instead trying to get an idea of the numbers involved. There is no way of regulating it unless there is some form of registration of the property in the first place and I think this is what they are hoping to achieve,’ said Chris Mercer, director of Murcia based Mercers.
He said it should not be seen as a ‘foreigners tax’ as it would apply to all property owners including Spaniards. ‘There is of course a possible positive to this, and that is if they are going to tax the owner then one would presume that any reasonable costs could be claimed/offset against that tax,’ he explained.
‘At the end of the day, I think Spain will find it hard to police this new legislation, how could they possibly know, although there is rumour of the government asking for information from electricity companies if they see short term spikes and troughs in energy usage,’ he added.
Richard Way, Editor at The Overseas Guides Company, said that if new rules also impose specific health and safety conditions this might not be achievable for many property owners.
‘One of the incentives for many British and other foreign buyers in Spain is the opportunity to pay for the upkeep of their property through rental income and without that benefit, buyers could look elsewhere for a second home, in effect making the new legislation counter productive,’ he claimed.
According to Mark Stucklin of Spanish Property Insight the problem is that the current law on renting is badly drafted, open to interpretation and it all depends on how you advertise the property.
He explained that in regions where licences are required if you own a semi detached or a detached house then you have the choice of renting out your property either as a touristic rental, by obtaining a license, providing services and charging your clients VAT, or you can rent out your property, without a licence, therefore without providing any kind of service, and therefore without charging VAT.
‘In this second case, the rental will be subject to the Tenancy Act. And in either case, the property can be leased for any period of time,’ he said.
‘If you have a flat the leasehold cannot be a touristic one, because you cannot get a licence to rent an apartment to tourists. But you can rent it out as long as you don’t offer or provide any kind of services. A property advertised as a holiday home where some services are offered may tilt the touristic inspector into regarding your rental as a touristic one and, if you don’t have a licence (if a house because you didn’t want to apply for it, and if a flat, because you simply cannot get it), then you will be severely fined,’ he explained.
‘Adverts and contracts must be in harmony with one another and must steer clear of sounding like touristic rental. It is your property and the law allows you to rent it out to whoever you please, whether a business person or a tourist, and for whatever period of time. You just have to use and apply the law appropriately,’ he added.
