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The National Commission on Markets and Competition (CNMC) has published a sweeping and devastating report on the Holiday Home Law drafted by the Canary Islands Government’s Tourism Department, which is currently being processed by the Canary Islands Parliament under urgent procedure.
According to the CNMC, the restrictive measures imposed by the Bill will have an immediate effect (already denounced by ASCAV months ago): vacation rental activity will be residual in the Canary Islands, “which could have serious consequences for the competition of tourism services in the Canary Islands.”
The CNMC emphasizes that the regulation will particularly penalize small-scale holiday home owners in the archipelago (as ASCAV has also been denouncing from the outset). Thus, the agency concludes that “many homes currently designated for holiday use could be excluded from the market, and it will be difficult for private and small-scale VUTs to establish themselves.” In this regard, the CNMC’s statement is devastating, indicating that “One would therefore expect, in the future, a replacement of VUTs owned by small owners by VUTs owned by “professional” owners or by other hotel or non-hotel establishments, an aspect that the APL itself seems to encourage with the measures proposed in the fourth and fifth transitional provisions.”
In addition to the above, as ASCAV has already pointed out, the Draft Law includes disproportionate measures that are unjustified. This is confirmed by the CNMC, which considers that the Draft Law’s 90%-10% (80%-20% for the Islas Verdes) reservations regarding the residential use reserve are unjustified, as it is up to the municipalities to justify the most appropriate percentage for their territorial scope. In short, as the Association has already pointed out, the Draft Law includes a “one-size-fits-all” approach that is far from the criteria established by the Court of Justice of the European Union in its September 2020 ruling in the Cali Apartments case, which established that limitations on the exercise of this activity must be clear, objective, proportionate, necessary, and duly justified in each case.
Finally, the CNMC understands that many other provisions of the Bill “considerably limit the potential supply of VUTs and once again distort their nature” (such as the minimum age of 10 years for a building to be used as a holiday rental); the limitation on the accommodation capacity of VUTs, the prohibition of VUTs in agricultural settlements, etc.
The organization emphasizes that the objective of some of the measures is clear: to cause the “disappearance in a short period of time” of existing vacation homes by expressly prohibiting the transfer of the vacation home in the event of the death of the owner, preventing their heirs from continuing to own it.
The CNMC insists that even the incentives to expand the long-term rental market are disproportionate and highly restrictive, so it would be advisable to relax the requirements.
In short, a new report, along with the multiple ones already available to the Ministry of Tourism, discredits the draft law; and despite all of them, the Ministry of Tourism has continued to move forward with its anti-holiday home bill, confirming, as ASCAV has repeatedly stated, that the goal is to gradually but inexorably eliminate vacation homes in the Canary Islands and, fundamentally, depriving the 90% of those who own those homes, who are small owners, of the possibility of earning a living from tourism.
