Renting your property
Tenerife is ranked as the most popular winter getaway and the repeat visitor ratio is the highest in the whole of Europe. More people return to Tenerife than any other destination. There’s no getting away from it, private holiday rental by owners in the past has been a popular activity.
Sky News called it ‘the end of an era’, as the demand for package holidays dwindled to be replaced by the growth of the independent traveller. The reasons are multiple but are fundamentally rooted in post-modernist individuality. Holidaymakers’ willingness to buy off the shelf holidays designed for the average Joe Bloggs declines as individuals are less and less likely to identify with the herd. Nowadays they see themselves as unique and their purchasing habits in all product areas from fashion to cars have become a statement of that individuality.
However, contrary to popular belief or advice given, not every property is suitable for such an investment. There has been a lot of publicity regarding the holiday letting of property in the Canary Islands by owners to tourists and concern regarding the legality of letting in residential developments.
Most complexes, including those located in the most popular tourist areas, were built under residential planning as opposed to touristic planning with a license for tourist activity. Over the years the Ministry of Tourism, under pressure from the Hotel groups have been refusing to give tourism licenses to developments, although they were not previously concerned with individual owners advertising their properties for rent on holiday rental portals.
So, it is important that you understand what the actual situation is and that you receive honest professional advice from the estate agent that you are dealing with. Very often we see in property for sale adverts, comments like “This is a very popular apartment that can produce excellent holiday rental income.” They do not go on to say that the complex within which the apartment is situated is not legal for commercial touristic letting and you could receive a very high fine amounting to many thousands of euros if you are caught out doing this.
Quite simply, there are some developments that hold a Tourist License and consequently by law have one management company within the complex that is responsible for the commercial touristic letting of the properties. All owners who wish to receive income from tourist letting in these complexes should hand their properties to the management company for renting through tour operators and travel agents and receive an income that has been pre-set by the Management Company, taking into account their costs, commissions, cleaning and laundry etc.
The rest of the developments in Tenerife, which are the majority, were built under residential planning consent and do not have a Tourist License. Therefore it is important to understand what can and cannot be done with regard to obtaining income from letting activity in any particular property that you may purchase.
The key reference is ‘Commercial Tourist Activity’ which means that owners cannot participate in doing short term holiday letting through tour operators and travel agents, neither should they do commercial advertising to tourists on property rental websites. However, they can rent their apartments on a long term residential let basis should they wish to do so.
Outside of ‘Commercial Tourist Activity’ nobody should dictate who you allow to stay in your apartment, be it family, friends or even friends of friends, as long as they are well behaved and do not upset the neighbours.
New legislation to clarify the situation regarding holiday letting was introduced in the Canary Islands Vivienda Vacacional Decree, but because there has been so much vigorous opposition to it, the Canarian Parliament has approved the motion for the regional Government to ‘paralyse’ the decree and it is now working on a new text that seeks to incorporate both criticisms from the Monopolies Commission as well as resistance to looser legislation from Ashotel.
Specifically the approved proposal says that the necessary steps should be taken to paralyse the implementation of Decree 113/2015, and its related sanctions, setting aside any measures already taken. It called for a process of review and reworking of the decree in coordination with all interested parties and institutions. In the meantime there is no format for registration of residential apartments for touristic letting.
Until the text is rewritten and agreed, it’s back to square one and they have to find a resolution to this that satisfies the hoteliers, lobbying groups on behalf of a multitude of businesses reliant on the tourist industry, owners who want to let their residential properties to holidaymakers, and residents who oppose this. Not an easy task and for sure not everyone can get what they want. There has to be compromises, but it is hoped that a good solution can be found.
There are many agents who do not correctly understand the current situation regarding the letting laws and others who choose to ignore it and give very bad advice to potential purchasers, which could ultimately turn out to be disastrous for them.
If you receive honest advice from a base of good knowledge regarding this subject, then you will be in a position to understand and make the right decision regarding the property that you purchase. We are keeping our clients informed in this respect, so they have up to date information.
Obviously, when searching for the ideal property to suit your requirements it is essential that you receive the best information and advice from people who have the knowledge and understanding to do this, and one way to be sure of this is to use an estate agent that is covered for misrepresentation, be it deliberate or accidental. Tenerife Property Shop S.L. holds Professional Indemnity Insurance for your protection, so who you should speak to? We think it speaks for itself!