The following document has been prepared for us by our lawyer; it presents a legal point of view on the rental issue, as well as the legal situation, the moral arguments and the advantages for business. We hope you find it of interest.

Lanzarote Business Association, referred to herein as The Association, is an organisation that was created on the Island of Lanzarote to represent European residents, both individuals acting in their own personal capacity and business entrepreneurs. It is a non-profit making body that was legally incorporated in February 2008.  Among the aims of The Association are the promotion of the influx of tourism to the Island and development of strategies to attract foreign capital investment.

Attending the request of a group of members concerned about the current legal situation of property owners who use their properties for holiday lets, a special commission was created within The Association in July this year, denominated Lanzarote Property Owners (LPO) which acts as a link between many owners who seek a way to regularize a sector of the tourist business that has been in existence for many years  and that  responds to the consumer demand of a very important sector of visitors with one of the most beneficial profiles for local trade.

INTRODUCTION: THE SITUATION OF THE SECTOR

When we talk about the sector, we refer to the tourist sector that is not regularized and that according to recent studies constituted a 15% of the total tourist accommodation during the year 2006.

It is common knowledge that within the Canary Islands and also throughout the rest of Spain, thousands of privately owned villas and apartments are let during the periods they are not occupied by their owners, to Foreigners or Spanish citizens on a short term holiday weekly or monthly basis during all, or part of the year.  A simple glance at the numerous websites on the internet is sufficient to see that, in Lanzarote alone, the number exceeds 1800.

These villas and apartments are generally let to families who voluntarily pick this style of holiday, a lot more private than a hotel or apartment with no associated services such as receptions, half or full board……  Most of these villas or apartments have all the necessary amenities and facilities, such as private pools or pools that belong to the complex where they are situated.

The average type of client that these villas and apartments cater for, tends to be middle to high class and to travel in family units, for periods of one or two weeks and hires a car to sight-see and visit the island.

We are looking at the type of client who mainly tends to eat out, who will shop at the local supermarket, in local shops, take walks and visit the tourist centres. All you need to do is ask the restaurant owners in tourist areas for the type of clients who visit their establishments.

Villa or apartment owners, furthermore, will employ cleaning staff and / or maintenance companies and generally speaking, will provide a twenty four hour service to the occupants and guests to cover any unforeseen circumstances.

As we have already mentioned, the type of client who uses these villas and apartments is the type of client who specifically goes for this type of holidays, so needless to say, if this kind of holiday is eradicated from the tourism markets of Lanzarote and indeed from the Canary Islands, the client will not change their preferred holidays for hotel stays.  They will simply change their holiday destination to somewhere where they continue to be offered the type of holiday they want, such as, for example, Italy, Greece.  Do we really want that to happen? Do we really want to lose this type of tourism?

I do not feel it necessary to explain the negative impact the loss of this type of tourism would have on the Island’s economy.

Sadly, in spite of all the advantages that it generates for our economy, the lack of regularisation together with the new laws soon to be introduced and enforced by the Canary Island Government and Town Halls as well as threatening owners with important fines will finally serve to eliminate this type of tourism on the Island.

Up until the year 1998 tourist legislation existed that made it possible to obtain a licence for holiday lets for villas, decree 23/1989 of the 15th of February, according to which the only requirements to obtain the tourist letting licence were to present a series of documents, such as plans, etc. and for the villa to be inspected and found to be adequate for that type of tourist activity. As a matter of fact many villas still exist that obtained the licence in this manner.

In 1988 the

Decree 18/1999 of the 5th of March was approved regulating tourist establishments providing rural accommodation that, surprisingly, derogated section II of the previous decree that regulated tourist and holiday lets concerning villas and apartments, leaving this sector without any type of regulations whatsoever and consequently without any kind of possibility after that date,  to be able to “legalize” that type of accommodation, at a time when, thanks to internet and the new methods of location and booking of holiday destinations, holiday lets were on the increase.

Since then, in spite of the frequent debates on the importance of regulating this sector, nothing has been done to resolve the situation.

This sector is unfairly referred to in the press and by the authorities as “illegal beds”, or “clandestine tourism” whilst the villas continue to bring investment to the Islands.  In all truth the only reason they are “illegal” is because the Canary Island Government, in spite of being fully aware of the importance of this sector, has failed, during the past fifteen years to do anything to regulate the situation.

As we have expressed in the past, we feel this to be a serious mistake, not only because the average tourist that rents a villa will find an alternative destination rather than stop at a hotel, but also because hotel tourism can hardly be considered as beneficial for local trade, which is indeed ultimately the trade that will ironically be supporting the area represented by the politicians for whom they voted.

LEGAL SITUATION

The necessity of The Association to bring this situation to light arises from the legislation that the Canary Island Government intends to enact.

The Association coincides with the firm court judgement of the Provincial Courts of Las Palmas dated the 11th of September 2012, that in relation to a claim made by a person renting an apartment for one week, resolved the following:

“The contract that unites the interests of both parties is a simple contract to put the villa to a use other than that of a place a residence, or if you prefer, a short term letting contract agreed between two private parties and not between a private party and a company dedicated to professional activities of tourist letting and accommodation, as precisely an indispensable requirement in order to class an activity as tourist accommodation is that such accommodation must be offered from an establishment that is open to the public, which is not the case in hand…….. as no business or industry exists that exploits one sole apartment”

In other words, the letting of apartments or villas between private parties and individuals is not, and should not be made subject to tourist regulations.

Based on the above resolution, the rental of accommodation, villas and apartments by their owners, without any kind of business structure, should not be made subject to tourist regulations, as long as obviously, the client has been fully informed and is aware of this situation.

Having said that, specific regulations are required for the sector to legally protect the interests of the parties.

Since 1998 random fines for carrying out this type of unregulated tourist activity have been received by property owners.

For a good reason and for the purpose of facilitating trade between EEC countries and removing legal barriersRule 2006/123/CE of the European Parliament and the Board of the 12th of December 2006 obliged EEC countries to liberalize services within the EEC, which included the rental of villas for holiday purposes, due to this not being a service expressly excluded from this EEC rule by article 33.

Various autonomous communities of Spain had to adapt their legislation to comply with the aforesaid EEC rule.

In The Canary Islands the Law 14/2009 of the 30th of December was approved modifying the law 7/1995.  This law permitted holiday lets to be carried out subject to the submission of a declaration of responsibility by the villa or apartment owner.

The relief of the owners who were led to believe that at last, a solution had been given was short lived when they soon found that the government authorities were systematically refusing to accept the declarations of responsibility, or to be more precise, declining to provide owners with the guests book and claims forms, alleging that the Tourist Moratorium did not allow this type of tourist letting activity pursuant to article 24.2 of the Law.

It is clear that by continuing to obstruct the liberalization of trade in these services, ignoring the fact that these services have been in existence for the past ten years, the spirit of the relevant European Rules is not being respected or fulfilled.  It is not a question of creating new beds, but of regularising the existing ones.  We know the Government Delegation of Lanzarote is perfectly aware of this, because some ten years ago they actually prepared a census of the villas with the intention of legalizing the lets and urged owners to register on the census which they did, although unfortunately this was never taken any further.

Currently and as a matter of urgency before the moratorium expires, a new law is due to be passed.  This would have been an excellent opportunity to, once and for all, regularize a sector that is so vital to our economy, but once again, they are letting this opportunity slip away, by conditioning the commencement of the activity to the obligation of such accommodation:

To be more than 500 metres away from the sea (requirement that cannot be justified in any way and only represents leaving this area for the hotels).

To be situated in a plot classed as being for “touristic use” by the corresponding developments plans.

These requirements mean that it will not be possible to regularize the situation of the vast majority of villas being let and practically all the apartments, as most of them stand on plots that the various plans have classed as “residential”.

Concerning this point, I think that we are all conscious that even though extensive areas are classed as “residential”, the vast majority of plots with bungalows and villas are not the place of residence of the owner, but really for tourists or short term holiday lets.  The use is seasonal by foreigners who have their first home in Great Britain, Ireland, Germany……

It would only be logical to permit holiday lets of this nature, if not on the whole Island, at least in the Municipal Districts classified as tourist areas.

PROPOSALS

The proposed law will not serve to resolve the situation, it will not promote tourism and economy growth, but it will promote the loss of jobs and trade.

What this Association proposes is at least, for holiday lets of villas and apartments (with regulations) to be permitted in tourist areas or municipalities, although in all truth the reality is that the whole of our Island is touristic; whether we like it or not, so we consider that in reality this should be permitted on the whole of the Island.  Why not?  Is it really going to bother anybody if, for arguments sake, somebody decides to let their house in Tiagua when they aren’t using it?

This has been going on for years, more than twenty five, and there have never been any complaints from the population.

For this purpose, and in order to once and for all clearly define the tourist areas or municipalities the autonomous government needs to approve the Statutes on Tourist Areas and Municipalities within the Canary Islands, Statutes that should have been approved within a maximum term of six months counted as from the enactment of the law on Tourist Ordinance in the year 1995 and that, eighteen years later has still not been enacted.

What does exist, by approval of FECAM is the declaration as tourist municipalities of those localities with tourist allotments superior to a 40% of its population which in Lanzarote we believe is fulfilled in the Municipalities of Tias, Teguise and Yaiza.

We propose a rule that permits the regularisation and, why not, the promotion of holiday villas on our Island, either on the entire island, or within the tourist areas and municipalities.

Along these lines the reforms approved by the Valencian government can be observed and followed, where currently two laws exist, one that is applicable to complexes and urbanisations where more than 50% of the properties are under tourist letting management and another, the decree 92/2009 that clearly defines the holiday let of a villa or apartment and frees the owner from any obligation to notify or register this activity, although with the right to register the activity if they wish.  Should the owner opt not to do so then he/she has the obligation to notify this circumstance to the clients and it is ultimately the client who chooses the type of holiday and services.

The regulations we are asking for not only favour the sector, the population in general,  local trade and the tourist consumer, but they furthermore would represent an important additional source of income for the public treasury, both state as well as autonomous and local, reason being that they would represent a reduction in black economy, as we are convinced that the Spanish or residents who currently do not declare their income for these lets would do so and in the case of non-residents it would facilitate their declaration of this income.  It is absurd that many owners indeed do want to declare the income from these lets and cannot do so, because the tax forms prepared by the tax authorities require them to include the National Identity document, Fiscal identity code or Foreign identity number of the payer, which they are unable to provide, as in the majority of cases the payer is a non-resident foreigner who does not have a Foreign identity, fiscal identification code or National identity document.

The regularisation of this sector would give rise to services such as cleaning and maintenance, that would create jobs, that would be subject to IGIC (Canary Island General indirect tax, known as local VAT) and finally the regularisation and opening of this sector would encourage the growth of the real estate market, encourage investments, municipal payments and among others the plus value tax.

We should be joining forces to encourage the growth and improvement of the Canary Island economy and stop benefitting just a minority.

To add your support, or to find out more contact.

Lanzarote Business Association, Lanzarote Property Owners Project

Email. lanzaroteba@gmail.com

Tel. 928 596 080 / 638 240 224

http://lanzarotebusinessassociation.com