New Law Freezes Holiday Rental Licences in the Canary Islands: What It Means for You.
Not the most exciting topic on the surface, but one that’s sent shockwaves throughout the Canary Island property world, especially if you’ve ever considered buying a place to rent on Airbnb.
The Canary Islands Parliament has just passed the Law on Sustainable Planning of Tourist Use of Housing, and the headline is hard to ignore: no new VV (holiday rental) licences for at least five years.
Let’s have a look at what this actually means and why it matters whether you already own, are about to buy, or are still in the research phase.
The Big Freeze: No New Licences for 5 Years
Yep … as of now, new VV licences are completely frozen. That’s across all of the Canary Islands, not just Tenerife.
The idea is to give town halls time to get their act together (to be honest, they’ve had time to do this in the past, but haven’t!) to come up with urban plans that determine exactly where and how many holiday rentals they’ll allow going forward. Until that happens, no new licences will be granted.
Even then, there’s a catch: municipalities must prove they’ve not exceeded a 10% tourist use cap before any new licences are issued. In tourist-heavy areas? That might never happen.
The 90/10 Rule: Sustainability or Stranglehold?
One of the biggest changes is what they’re calling the 90/10 rule. Here’s the gist:
- 90% of a municipality’s housing stock must be kept for residential use
- Only 10% can be used for tourism
That might sound fair on paper, but in some popular areas, we’re already well over that 10% threshold. So even after the 5-year freeze ends, there may still be no room for new rentals.
If You Already Have a Licence, Breathe (But Check the Small Print)
There’s some good news if you’ve already got a VV licence you can keep operating under what they’re calling “consolidated use”.
But and it’s a big but … you must stay 100% compliant (again, they’ve said this before but never really put it into practice).
The rules are getting tighter, inspections are being ramped up, and if your paperwork isn’t in order? You could lose that licence. And under the new law, once it’s gone — it’s gone for good.
If you’re thinking of selling a VV property, check if the licence is transferable, most are not.
For Buyers: The Buy-to-Let Game Just Changed
For anyone thinking about buying a place to rent out short-term, this law changes everything.
- No new licences for 5 years (and possibly longer in hot zones)
- New builds can’t even be considered for VV use for 10 years
- Buying a whole building to run as a pseudo-hotel? That’s now illegal
- Social housing (VPO)? Completely off-limits for tourism
In other words, don’t assume you can buy and rent.
So… Why Is This Happening?
Put simply: the locals are getting priced out, they have been for years.
It’s no secret that short-term rentals and outside investment have pushed up prices, squeezed the long-term rental market, and changed the feel of whole neighbourhoods.
This law is a direct response to that and to growing frustration from residents who can’t find affordable homes.
It’s also a sign of things to come.
The power is shifting from the Canary Islands government to local councils (Ayuntamientos). In future, they’ll have more control over zoning and licences, which means things could get even more fragmented depending on where you’re buying.
A Word of Warning on Off-Plan Properties
A popular investor strategy has been to buy off-plan (before construction finishes), rent it short-term, and use the income to help pay the mortgage.
That play is now off the table, at least for the short-term rental route. Any new property must be used residentially for 10 years before even being eligible for a tourist licence.
What Should You Do Now?
Here’s some practical advice depending on where you’re at:
✅ Already Own and Renting:
- Do not cancel your licence
- Audit your compliance … safety, noise, insurance, registration, etc.
- If you’re selling, check whether the licence transfers – it probably won’t, but worth checking.
🛒 About to Buy:
- If you want to rent it on short tern vacation rental, check the licence already exists and is transferable
- Check the community rules (Comunidad) — they can vote to ban holiday lets
- Get clarity in writing — don’t assume anything
📈 Long-Term Investors:
- Look into the long-term rental market. Yields are lower, yes and the rental laws make it tough but demand is strong, and it’s now the legally safer play…and if you’re looking for the long term growth, this is a valid option.
What’s the upshot?
It’s tempting to panic when a big law like this lands but like most things in Spain, there’s nuance, loopholes, and a fair bit of “wait and see” still to play out.
The main point to think about? If you’re thinking of investing in Tenerife or elsewhere in the Canaries, the holiday rental model isn’t dead … but it’s no longer a guaranteed quick win. You’ll need to be more strategic, more compliant, and more patient.
More on this soon — especially how it might affect resale values and new developments.
