The licence laws in general

[costa-brava]

A layman’s view of the current potpourri of holiday letting in Spain.

Please tell me if I have any real errors. For matters of detail it's best to use the other posts. But I don't want to have nything that is wrong.

I think we need to start by accepting that everybody now renting out private holiday homes in Spain must be registered, have a licence number for each property and publish that number in all forms of advertising. If you don't have a licence number and continue to advertise, both you as the owner and the medium carrying your advert are in breach of the law and will be subject to penalties extending to thousands of euros.

The following regions have not (as of February 2016) updated their laws and by default private holiday should probably be considered to be illegal. (except licenced rural): both regions of Castile, Extremadura, La Rioja, Murcia. Navarra seems to be in this category too but I cannot find any clear information. For the city of Barcelona if you already have an HUTB number you are OK but there is, for now, a suspension of new licences. The Basque country published a document for discussion in July 2015 but it has not yet been passed into law so it remains like the others in this group.

The following regions have an established licensing system in place. The rules vary but fundamentally they give licences to rent privately owned apartments, villas and town-houses: Aragon, Catalonia (except Barcelona as above), Galicia, Madrid, Valencia. Cantabria gives licences for what they call "non-hotel accommodation" but there are some fairly strict conditions which include, for example, disabled access.

The following regions have a system in place but with restrictions: Asturias and the Balearic Islands appear to be giving licences for villas and town-houses but not for apartments. The Canaries have perversely approved a licensing system for private rentals of apartments and houses but not in areas that have been designated "tourist" or "mixed tourist/residential".

In February 2016 the region of Andalucía approved their new law permitting and licensing private holiday lets. It is just now going into operation and owners need to register before the summer of 2016.

There is a lot of confusion about the categorisation and classification of real estate properties in Spain as applied to holiday letting (also known as tourist use). There are some minor regional variations but in the main, the following definitions and distinctions hold good for all of Spain. The laws and interpretation of the laws do, however, vary from region to region, city to city and even in some individual towns. This is because of four factors: firstly the housing and urban planning situation varies from region to region; secondly the political power base may be different region to region and will vary with each election; different lobbies have the ear of the regional government; many regions already had laws in place that they felt were adequate and are reluctant to make changes.

For many years just after the Franco era, throughout Spain, the use of prívate housing was not included in any category of tourist accommodation. “Alojamiento turistico” took place in the various grades of hotel, in campsites, youth hostels and aparthotels or large complexes of apartments called “apartamentos turisticos”.

Since then many people have been renting out their holiday home as if it were just a short-term rental contract for a dwelling (vivienda). Until June 2013 this was covered by the laws on dwelling houses and flats (even if it were just for one day). In some areas there was a local law prohibiting this activity or limiting it to, for example, just villas with pools. If you go back to the eighties there were several small UK tour operators who offered villa rentals. However, back then, the rules were much more relaxed and many of these villas and apartments weren’t even registered with the “registro de propiedad”. The current system of property register and “catastro” office was just being set up. Lots of people rented out their homes and nobody in officialdom really cared very much. Most of these holiday homes were administered by local Spanish agents so they were to some extent controlled.

As the new system of property registration took hold the economics changed for these tour operators. Some folded up altogether, some moved to Turkey and Eastern Europe and a few established a more bona fide type of operation. Private individuals continued to rent in summer with placards on the balcony or adverts in the local free newspapers. UK based owners often used magazines like Daltons Weekly. In the 1990s the market quietened down and both Spanish and foreign owners continued in an ad hoc clandestine way. Some owners declared their holiday let income; many others didn't.

In the 70s and 80s there was a move by the Spanish Government to encourage tourism in the smaller villages, away from the Costas to more rural areas. This was called “turismo rural” and you will find “viviendas rurales” and “casas rurales” in the outlying areas. A special dispensation was given by law to allow these dwellings to be used for tourism provided they complied with certain regulations. Unlike the free-for-all of clandestine rentals on the Costas, these rural properties were fully licensed. The primary restriction for rural letting is that the property must be in a village of population less than 2500 (or 3000). A vivienda rural is a holiday rental while a casa rural is like a guest house.

In the cities, large towns and along the coasts there was no provision in tourism law for the use of private dwellings. However the laws on standard private dwelling had no lower limitation on the length of time an owner and renter could contract for. It could be as little as one day. The only obligations, on the part of the owner, were that the dwelling should be of adequate habitation standard, that there should be a contract and that the earnings should be declared annually. In reality very few people declared these earnings.

By the beginning of the 21st century there was a massive increase in the popularity of holiday rentals and of big international websites advertising on behalf of the owners. The government wasn’t happy and nor were the hotel owners. Then came the banking crash and austerity measures. Part of the agreement between Spain and the Euro Banks was a massive attempt at cleaning up the black economy. The scene was set for substantial changes in this ungoverned, unlicensed sector.

In June 2013 the Spanish Government updated the laws on rented housing and in one very small but very important clause they excluded “viviendas de uso turistico” from Spanish law and passed the matter out to the autonomous regions. Holiday rentals did not become illegal; they simply ceased to be within the housing law. The regions then had to play catch-up but catch-up in Spain is often a slow painful process. Catalunya had seen the writing on the wall and had their new laws in place before the Spanish government excluded holiday lets from housing law. Valencia also were ahead of the game but after being quick of the mark they lapsed into an ambivalent attitude until 2015.

The other regions have had a very mixed response with some regions prohibiting private rentals and others laying out a set of rules to bring this sub-sector of tourism into legality. We are speaking here of “viviendas de uso turistico” or in some areas “viviendas turisticas” or even "extrahotelero". It is important to maintain the distinction from “apartamentos turisticos” which belong in the hotel sector and also to bear in mind that the new laws don’t generally apply to “turismo rural”. We are speaking about privately owned apartments and villas in the cities and in the Costas.

So now, in 2016, most but not all regions in Spain allow owners to register, get a “licence number” and publish this number in all advertising. The law usually also requires that owners notify the online police register with the names and passport details of all visitors. A few administrations have also introduced (or are considering) the application of a tourist tax for holiday rental guests. This really applies to the regions that already have a tourist tax for hotel guests.

There is one other type of accommodation that needs to be considered. This type is called “alquileres de habitaciones” or “arrendamiento parcial de vivienda”. That is renting out part of your home or renting individual rooms and refers to both long term lodgers and bed-and-breakfast or room-only guests in a private house. However, similarly to the case of home rentals, there is a clear distinction between longer term lodgers and holidaymakers. It is perfectly legal in Spain to take in lodgers or rent out an apartment on a shared basis, provided you declare the income. It has, until now, been illegal to do bed-and-breakfast or room-only for tourists except in “Casas Rurales”. It was considered that you were running an establishment of accommodation outside of the regulations as laid down.The exponential growth of the big booking engines fueled an explosion of illegal room rentals, not just in Spain but around the world. The hotel lobby screamed in complaint; the European banks pestered the Spanish government to control their black economy; the big listing sites just fingered their noses at everybody. So the current situation with rooms is that in most regions it is still illegal (except for licensed rural properties) while Andalucia has just recently (February 2016) included a clause in their new legislation which permits small scale room letting. Meanwhile a hung parliament in Catalunya has prevented the completion of new legislation that will allow room letting. With strong opposition from the city of Barcelona and the debate over independence from Spain it is doubtful if this new legislation will be enacted soon, if at all.



Finally, on the question of the difference between private and commercial exploitation of rentals we must look at VAT (IVA). Put simply, private renting is exempt both for long term rentals and holiday rentals. In the new laws of Andalucia anybody exploiting more than 3 properties under certain conditions will be deemed to be operating a business rather than private rentals. In that situation the owner will have to register the business on a self-employed basis or limited company or other partnership. This will involve VAT along with other social security and license obligations. The writer is not aware of this rule applying to any other region. The current tax laws in Spain require that all rental income from private property that you own must be declared in the annual tax declaration “Declaracion Annual de IRPF” as income earned from “bienes inmuebles” (immovable goods). As such it is not a business and does not carry VAT.



*NOTE: It is important to note that the declaration of income for residents is a little different to that for non-residents. But the objective in this synopsis is to throw some light on the distinctions within the rental market and to leave taxation aside as a different topic. Regardless of your tax status you have to declare the income earned.

*DISCLAIMER: The author has put together this information with the best of intentions and for guidance only. Individual property owners and other interested parties must acquaint themselves of the laws that pertain to their particular situation. No responsibility is accepted for error or ambiguity. The information and opinion in this website are based on one person's interpretation of complex legal matters and the author is not a legal professional.