Letting your property in Tenerife and the law

By John Parkes

Join the Paloma Beach Facebook group!

What does "tourist board registered" mean for an owner of property in Tenerife? I've tried to outline the law below, but in the interest of fairness I have listed all my sources and translated them at the bottom of this page (roughly as not to augment or second guess the meaning). I also added a picture of a sad cat just to keep you awake.

The tourist board (cabildo) have always required apartments used by tourists to registered with them to ensure standards are maintained and letting and management agents are accountable for their actions. The tourist board also require registered agents to provide statistics on the number of visitors to their complexes and keep up with specific standards detailed in the tourist law such as fire safety, amenities, hygiene, service, etc.

Originally (law 3/1986) any owner could rent his or her apartments to tourists so long as it was registered with the tourist board. The property could be registered under the individual owner's name, or with any managment agent with a tourist license. This law< was replaced by the 7/1995 law. law 5/1999 - source 1 see below)

In 1995 a new tourist law was introduced, article 38 of this law required unity of exploitation (law 7/1995 - Source 2). This meant that each complex had to have a single management company responsible for all of the apartments rented out on that complex. Said management company had to have two thirds of the complex registered or in the case of a new development at 100%. Eventually the two thirds was reduced to 50% plus one (Source 3). Each owner has to give their express written consent to the sole agent allowing them to let their apartment (this doesn't mean they have to accept bookings from the agent, it also doesn't mean you can't still let it yourself - you can!).

The thinking behind the change in the law was that previously there were so many companies on each complex, it was impossible for the tourist board to hold anyone accountable for services provided to customers. By making one company responsible for the whole complex it made it easier for the tourist board, and also for customers when they had a problem - imagine someone locking themselves out of their apartment and trying to find out which agent, out of 15 or 20, they should be calling for help.

The law has been criticised by many as it seems to promote monopolistic practices, however many of those critics had never done things legally in the first place which is why they suddenly found their circumstances untenable.

There are fines levied on owners and un-authorized agents ranging from €30,000 to €300,000 (article 77 & 79 of 7/1995 source 4 & 5). Click image to the left for full size article.

On Paloma Beach the sole legal letting agent is Paloma Beach Enterprises (here is conclusive proof of this). The only other registered agents ever were Marcus Management services and the chap called McKay. Marcus Management deregistered circa 1997 and McKay disappeared in the early 90s, we hold the registration on Paloma Beach and currently have 137 of the 223 apartments on our books after over 20 years of business.

Marcus Management were sanctioned in 2002 for renting out an apartment on Paloma Beach without being registered. See proof of this in Spanish here or in English here.

John Whitehouse is an owner of 2 apartments on Paloma Beach, he was fined 18,000 euros in August 2009 for letting his apartments and those of other owners without a licence. He has since put his properties up for sale. To see the Boletin Oficial entry of this fine on the Canarian government website click here - To buy one of his apartments click here.

There are still illegal management agents operating on Paloma Beach, they will tell you that it's okay not to be registered or that the registration is in the complex's name not ours, but this is untrue, take on this advice at your own risk. If we don't hold keys and manage your apartment then no-one can let your apartment to tourists without the risk of being fined - if you are with us you can enjoy the benefit of renting the apartment yourself or accepting bookings from us (optional) - all the time knowing you're fully legal and above board.

Read the law for yourself either by running the laws through freetranslation.com or Google translate, alternatively there is an independent apraisal of the law by respected fiscal acountant Marcos Cabrera page 1, page 2, page 3 and page 4.

Whatever happens after investing in a property in Tenerife, you owe it to yourself to make sure you are above board and legal.

Read a letter from the tourist board confirming we hold the registration and are the only legal letting agents for Paloma Beach.

That's about it, if you already own a property on Paloma Beach, or are thinking of buying, and you have any questions regarding ownership, management charges and letting payments please don't hesitate to ask, you can email me or phone (0034) 922 750410.

Sources:

Entire 1995 letting law in Spanish

Source 1: Ley 7/1995, article 84: DISPOSICIÓN DEROGATORIA. Especialmente se deroga la Ley 3/1986, de 8 de abril, reguladora del Régimen de Disciplina en materia turística.

Especially the law 3/1986, of April 8 is now negated.

Source 2:

Artículo 38. Principio de unidad de explotación - Principle of unity of exploitation.

1. La explotación turística de los establecimientos alojativos, en sus distintas modalidades, deberá efectuarse bajo el principio de unidad de explotación.

Touristic letting of accommodation establishments, in all of its kind, should be done under the principle of unity of exploitation.

2. A los efectos de esta Ley, se entiende por unidad de explotación el sometimiento a una única empresa de la actividad de explotación turística alojativa en cada uno de los establecimientos, conjunto unitario de construcciones, edificios o parte homogénea de los mismos, cuyas unidades alojativas habrán de estar destinadas en su totalidad a la actividad turística a la que quedan vinculadas.

To the effects of this Law, is understood that unity of exploitation of tourist activity is given to one business in each of the establishments, unit assembly of constructions, buildings or splits homogeneous of the same, whose units will should to be destined in their totality (100% at this point) to the tourist activity to which they remain linked (ie the management company).

3. A los efectos previstos en el presente artículo, la explotación turística comprende el desarrollo de todas aquellas actividades de gestión, administración y dirección comercial propias de la prestación del servicio de alojamiento turístico.

To the effects predicted in the present article, tourist exploitation is the development of all those activities of management, administration and own business address of the installment of the tourist hosting service.

Ley 7/1995, article 42: consequences of the non-fulfillment of the principle: The apartments cannot be offered for touristic lettings and it will be unlawful to use them for that purpose. They can only be rented in accordance with the regulations of the Spanish civil code or of the letting law (ley de arrenatarios urbanos), and under no circumstances can they be used for touristic use.

Source 3:

Ley 5/1999 Modification of 7/1995

http://www.aedave.es/common/mt/compendio/legislacion-general/ordenacion/canarias/ley_5-99_cana.shtm

Disposición transitoria única. Aplicación del principio de unidad de explotación.

1. Los establecimientos alojativos que a la entrada en vigor de esta ley estuvieran autorizados para el ejercicio de la actividad turística y aquellos, que habiendo solicitado autorización no hayan obtenido resolución expresa en el plazo fijado normativamente para ello estarán sujetos al principio de unidad de explotación, con las siguientes especialidades:

a) Deberán estar destinadas a la explotación turística más del 50% de las unidades alojativas del inmueble de que se trate.

b) El título habilitante otorgado por los propietarios a la empresa explotadora contendrá una delegación expresa a favor de aquélla para la adopción de las decisiones y medidas que afecten a la administración, gestión y uso de las zonas e instalaciones comunes.

Unique transitory disposition. Application of the exploitation unit principle.

1. The establishments that, at the time of this law coming in, were authorized for tourist activity and those that having requested authorization they have not obtained express resolution in the time limit set for it they will be subject to the exploitation unit principle, with the following specialties:

A) There should be destined to the tourist exploitation more than the 50% of the units.

B) The title holder of the exploitative business will contain an expressed written delegation in favor of them for the adoption of the decisions and measures that affect to the administration, management and use of the zones and common installations. (see registration form attached).

Source 4:

Artículo 75. Infracciones muy graves.

Se consideran infracciones muy graves a la disciplina turística: La actuación sin la preceptiva inscripción en el Registro General de Empresas, Actividades y Establecimiento Turísticos o sin cualesquiera de las autorizaciones preceptivas para la entrada en servicio de establecimientos y el desempeño de actividades turísticas reglamentadas.

Very serious infractions to the tourist discipline are considered: The action without the mandatory inscription in the General Registration of Businesses, Activities and Tourist Establishment or without any of the mandatory authorizations for the entrance in service of establishments and the performance of regulated tourist activities.

Source 5:

Artículo 79. 2. Las multas se impondrán según la siguiente escala: En las muy graves: entre 5.000.001 y 50.000.000 de pesetas (30,000-300,000€).

Article 79. 2. The fines will be imposed according to the following scale: In the very serious: between 5.000.001 and 50.000.000 of pesetas (30,000-300.000 EUROS).