Short term rental – Holiday letting law in Tenerife.
Edit: As of December 2014, there has been a draft law written that may well change things later in 2015, click the link to find out about the possible changes to the short term letting laws in Tenerife.
Subject to “Ley 7/1995”, the short term commercial letting of property i.e. holiday letting, in the Canary Islands is illegal, unless the complex in which the property to be let is situated, was originally defined as a touristic complex. This would have been when the original statutes were written for the complex or if the licence was later requested and approved.
This means that if the property to be let is not on a touristic complex, then the owner letting the property for a short term holiday let, is acting illegally and if found out, could be subject to a potentially hefty fine.
It is not as simple as this though..is it ever…??? Not only must the property be on one of the touristically registered complexes, but there must also be a management company that has registered 50%+1 unit (i.e. anything over 50% of the total properties within the complex) of the complex with the relevant authorities as touristic letting properties. Not only that, but all of the rentals that are booked must be booked through the rental company that has the authority to rent the apartments, this rental office is also supposed to be situated on the complex itself. Once again, this is not cast in stone, because there are complexes that run their rentals and booking a little differently, so it’s always best to ask first.
The main idea of the law, initially set out in 1995, was to regulate the tourism sector and protect the tourists coming to the Canary Islands. Ensuring that complexes and hotels that were to be used for tourist lettings were all adhering to a set standard of rules and regulations set by the authorities.
The laws, as in a lot of cases here, were taken with a pinch of salt and many apartment owners did indeed let their properties on a short term basis to holiday makers and got away with it and not falling fowl of the law and the subsequent fines.
Since the start of the crisis in 2009, the hotels realised that they were all registered with the tourist board as touristic destinations, but that they were competing with property owners that did not have the legal right to let their property on a short term basis and as such, they were losing business to apartment owners that were charging a lot less to the tourist.
During 2010, it was suggested that there were 400,000 beds illegally being let within the Canary Islands and as such, it was announced that a team of 17 inspectors would be set up to start investigating illegal lettings throughout the islands.
It must be pointed out that if you are an owner of a detached villa, that is not a part of any complex and you are letting your property on a short term basis, you are still subject to this law. As a villa owner you can apply for a touristic licence, but you will probably not be granted one as there is currently, as I write, a moratorium on issuing any new licences.
Thanks to the team set up by the regulatory body, a number of hefty fines have been awarded to owners who have infringed the law, there are a number of court cases awaiting to be heard…and obviously a number of properties that have been put on the market as this law does not seem as if it will be in any way relaxed. There is a little more information here now, as there have been a couple of developments.
So, if you are a prospective buyer and your intention is to let your new holiday home on a commercial basis while you are not using it, be sure that you get confirmation that the complex that you are buying on has the relevant touristic licence in place.