Illegal holiday-let inspections and fines situation (original post)
Please note that I had to prune this thread because it had become unwieldy. These are the original posts, and there is another thread HERE which contains all posts from 15 December to date.
Update 15 December: There is a public meeting planned for the second half of January in the south of Tenerife. Attending will be the Government tourism department, the chief of the inspection team, and other senior officials of the department. I will post details of this meeting as soon as I have them. Please note that if there is no update it is because I do not have any information to post, so please do not contact me for any details.
Update 14 December: I think that with the absence of any communication about tomorrow’s meeting, we have no choice but to assume it will not now take place. The general view seems to be that they became aware of what they were about to face, and pulled out. The two main lawyers who were co-ordinating the meeting in the south (which doesn’t seem to have crossed Turismo’s mind apart from as a cash cow) say they intend to hold the meeting regardless, but at this stage, we have to assume it will be on a different day. I will update as soon as I know.
Update 9 December: I have just had confirmation that Turismo has been given one last chance to clarify their position, but that in the event that they fail or refuse to attend the meeting, the local lawyers involved in the issue, and who are lobbying the Government to change the law, are going to hold the meeting anyway. I’ll update with further details asap.
Update 25 November: There is to be a public meeting on the 15th December in south Tenerife. It is being held by the Minister of Tourism and the Inspectorate as the public information part of the Government campaign against illegal letting. I will confirm the time and place as soon as possible, but can say for the moment that it will be in the general Adeje area. It is important that people attend not just to hear from the horses’ mouths the information as it appears in these posts, but also to convey to the Authorities the strength of feeling against the enforcement of this legislation. This will not intrinsically have any real or immediate effect, but will be useful background to the lobbying efforts to persuade the Government to rescind or amend the law. The public meeting will be held in Spanish, but an English translator will be present.
With regard to the fines that have been, and continue to be, levied, there are presently 7,000 cases in various stages of process. That is not a mistype for 700: I mean 7,000. These fines have been levied on owners all across the Canaries, on every island.
I have poor news with regard to the six month limit after which the fines were thought to lapse. Whether we call it misinterpretation in the first place, or an evolution of the Government’s view, the six months is (at least now) being taken as the time within which the Government must make its first response to an appeal, rather than the period within which the whole process must be resolved. There is said to be no chance that those who are approaching the six month limit will find themselves free of the process.
I can confirm that the BOC only records those fines which have been returned or not delivered. The wording in the Boletín, however, is that which is contained in the actual official documentation: the letter notifications are merely summaries. This means that the fines are being imposed, technically, for commercial letting administrative failures, i.e. not having notices in apartments, not having a complaints book, etc. This is in large part a mechanism to streamline the inspectors’ work, because this “offence” also covers those apartments which are already touristic, but being let illegally by not going through the onsite agent. By definition, residential apartments cannot have this paperwork, so it covers them too. There are some variations in the wording, necessarily, because not every case is identical, but it is categorically stressed that the specific wording is unimportant. The fines are for “letting in an illegal manner”, however defined. There is no chance that an appeal based on the technicalities of wording will be successful, and there are Court precedents for this. The Government is fully confident in this respect.
In terms of practicalities, the fines are levied on the owner, not the property. If the fine is unpaid, it will be registered against the property. If the property has changed hands, then the fine will remain as levied against the person, and cannot be registered against the property. The Government intends to use an existing mechanism which utilises the reciprocal arrangements between the Hacienda and the Inland Revenue to pursue the case against the individual should it become impossible to register an unpaid fine against the property. This means, in short, that they are going to go after owners in the UK if they have sold up here before the fine was registered against their property. If multiple fines are imposed to the point where the total amount fined exceeds the value of the property (value as determined by the tax authorities), then the Government will undertake repossession measures.
Update 17 November: I would advise any owners of residential properties here who have advertised for commercial holiday lets to check their NIE online to see if they appear in the BOC as a result of a fine. Only today an owner called me after discovering that he was listed on 8 November, which leaves him 6 days to appeal. Clearly, if he had left it another week, then he would have run out of time to do so.
In case it helps, I have been through the last several editions of the BOC, and list below those complexes on which apartments have been fined. Many of them have multiple entries. The list is NOT exhaustive, and I have only mentioned those relevant to Tenerife, but it is intended as a guide. I hope it helps, and if I have time I will go through earlier editions and add to the list:
Dinastia, Los Cristianos
El Mirador, Los Cristianos
Sur y Sol, Los Cristianos
El Marqués Palace, Puerto Santiago
Balcón de los Gigantes, Puerto Santiago
Los Geranios, Playa de las Américas
Mirador del Sur, San Eugenio
Port Royale, Los Cristianos
Update 16 October: One case has come to light of an accountant informing an owner of a fine that he was otherwise unaware of. Please note that any fines issued will go ahead even if they cannot be delivered in Spain because there is no-one here to sign for them, and no British address has been supplied. In this case, the accountant noticed the fine published in the daily Official Boletin. This is an official Government publication which lists any debtors or the like: THIS, for example, is Monday’s edition.
In such cases, the official publication of the fine and the owner’s details are legally sufficient: this equates to delivery. The 15 day period within which to appeal counts from the date of publication. Owners’ details are published in the form of name, complex, and NIE. If anyone needs to see if they are included they simply need to google their NIE (in the form X1234567A, i.e. no spaces or other characters).
Update 12 October: President Rivero in reply to a question in Parliamentary session yesterday said that the Government intends to renew the moratorium on touristic licences. Despite the madness of the current situation, there is a clear intention to continue on this road. El Dia
Update 25 September: The Government has announced the tally for the first 8 months of 2011 in its campaign against illegal lettings. The deputy tourism minister, Ricardo Fernández de la Puente, said that between January and the end of August, 7,000 inspections have been carried out on hotels, apartments and houses suspected of being used for illegal lets.
Fines have already been initiated on 76 illegal touristic establishments, with hundreds more in process. Sr Fernández de la Puente said that the Government expects these fines to raise 2.3 million Euros. He specified that of the 7,000 inspections carried out to date, 2,757 establishments are considered to be in violation of the law. Currently, 959 cases have been sent to the fines department to initiate proceedings, while a further 346 are awaiting owner details before files are opened.
The Director General of Ordenación y Promoción Turística, Rita Hernández, said that there are another 1,452 establishments for which Turismo is currently checking or awaiting confirmation of details. Sra Hernández said that there are also 42 cases initiated against agents who lacked the necessary licences to practice. All fines are classified in the “serious” category, which comprises sanctions of between €1,500 and €30,000. DA
Update 7 September: In respect of the private villa situation, I have had another meeting this morning with José Escobedo. The upshot is not good news.
Firstly, the Ayuntamiento has rejected any proposal to change the classification of land to mixed or touristic. Secondly, however, it wouldn’t matter if they had agreed because Turismo has said, explicitly and emphatically, that under Ley 19, 2003, there is a moratorium on touristic licences which prohibits the grant of any licence other than to 5 star hotels.
This means, categorically and from the mouth of Turismo itself, that no private villa in the Canaries can be legalised for commercial lets. Long-term residential or temporada lets of 3 months or more are legal, but not holiday lets. If an owner is in the position of being unable to afford to do this because of mortgage committments, as is the case with this particular client, then the formal legal advice is to sell the villa.
This owner is now going to put the villa on the market. Whether or not he continues to risk a fine by letting commercially in the meantime is his own decision to make: legal advice is that it is highly inadvisable because the inspectors have been and continue actively to investigate sites like Holiday Lettings and Owners Direct, which is where the majority of private villas are advertised.
With regard to the fines already issued and appeals in hand, nothing has been heard throughout August, but we expect to start hearing soon now that the holiday period is over. I’ll update as soon as I have any information on how the first stage of the appeal has fared.
Update 4 August: I’ve focused so far on the law as concerns apartments, but I had another meeting yesterday morning with José Escobedo to discuss the law as concerns private villas. As a result, I can report some specific details and general legalities, as well as our start of a complete process of attempting to legalize a private residential villa that is used purely for commercial lets. Hopefully, I will be able to end up providing a definitive and comprehensive account of the procedure, and its outcome.
It is important, first, to note that I am talking about an individual private residential villa, not a villa on a complex. Complex properties are governed by the same regulations, whether they are apartments or villas. This is a private house on its own particular plot, and not part of a community.
At present, the owner is letting commercially, and is aware that this is being done illegally. He already pays all taxes on all income, declares fully, and wants to be fully legal. Without a licence, however, he cannot let to tourists: it’s that simple … even if he were to register with the tourist board, his lets would still be illegal prior to the issue of a licence.
The problem, of course, is that any application will immediately make his identity, and that of his property, known to Turismo, so the first stage involves a general enquiry, without any specific details, to the Government to see if, in principle, a licence could be awarded to this type of property in this type of area.
If a positive response is received from the Government, an application can be made for a licence in his own name for his specific villa. One key part of the Government’s permission, assuming we don’t just get a rejection on principle, will be the classification of the plot of land itself with the local Ayuntamiento.
This municipal classification could be 1) residential, 2) touristic, or 3) mixed (residential with touristic use), and if touristic or mixed, there is no problem with the Ayuntamiento end. If it is residential, however, then application must also be made to the Ayuntamiento for it to be reclassified as mixed so as to allow touristic as well as purely residential use.
The situation at present, therefore, is that we start by heading simultaneously in two directions: first, enquiries with the Ayuntamiento as to the classification of the plot of land the villa is on followed up by an application, if necessary, for its change of use; and secondly, a general enquiry to Turismo as to whether a licence application would be favourably received if the land classification were correct, and if there was compliance with whatever general requirements the Government might specifiy.
At that point, assuming a correct Ayuntamiento classification for the plot of land, and an approval in principle for the general enquiry from the Government, we will proceed to a formal application for a licence … I will keep updating as and when we have any further information.
Following this meeting, I can also now clarify some points and principles … not just in this specific case, nor even just for villas, but in general terms:
- A private residential villa that is not part of a community cannot be commercially exploited without being in possession of its own individual licence. This licenced exploitation applies regardless of whether the owner himself is doing the letting or employing an agent to do so. Each property let commercially must have its own licence.
- The application for licences for private residential villas also requires, as a prerequisite, the correct land classification in the PGO of the local Ayuntamiento.
- The biggest problem in such rentals, AND in rentals of apartments as well, is actually insurance. Although an owner is far likelier to be fined than to be on the receiving end of a claim for serious injury in a property that is being commercially let, the actual claim for such an injury could seriously outweigh the amount of any potential fine. However rare it might be, an insurance claim could run into millions. The problem is that hotel insurance would be invalid if taken out on a property that is not a hotel, and commercial insurance policies will not be valid if claimed upon for properties that are being illegally used for commercial purposes. To be explicit: even if an insurance company issues a policy and takes payment for the policy, it will not be valid if the property is being let illegally.
Update 20 July: The following article is a review of the current situation. I have written it after consultation with José Escobedo, a highly respected local abogado with considerable expertise in this field, who has also confirmed and approved the text.
Fines have now started being issued to owners of residential apartments in some numbers, and on more than just one complex, so I thought this would be a good opportunity to move the discussion on from whether they will happen, to the issue of what happens now.
There is a three-stage system involved, the first stage of which is the issuing of the notification. The second stage requires a response to be lodged with the Government within 15 days of receipt of the notification. This will essentially be a statement of justification or defence. The third stage comes into play if the Government refuses to accept the response, and comprises an appeal to the Courts. Whatever fine remains imposed after that appeal is charged against the property concerned if unpaid.
The most plausible defence might be that the Government cannot prove it was the owners themselves who placed the advertisements; or alternatively that the owners placed them, but had been unsuccessful in getting the hosting website to remove them. Ignorance of the law is no defence, nor is mis-selling by agents. There is also the possibility that any advertisements the inspectors have gathered from the internet are corroborated by evidence gained by knocking on doors: this is no longer a rumour, but a fact. Indeed, it is a required part of the inspectors’ job.
This might also explain suspicious telephone calls to apartments very insistently asking who and where is the owner: “knocking on doors” does not necessarily require a real person outside a physical door. Naturally, there will be no defence whatsoever available if the inspectors have both an internet advert and evidence that whoever answered the door or phone were not the owner nor knew owner details off the top of their head
Given the above, I would recommend anyone implicated in this to contact José Escobedo. He is an abogado in the San Eugenio Commercial Centre who speaks English superbly, and who is already dealing with a pile of notifications (literally a pile) from more than one complex. The more he has, the bigger the lobby he himself will be at the head of to try to get access to the higher levels of government to make them understand the implications of what they are doing. These implications are threefold: one is the sheer scale of problem the Government’s action is causing; another is that it could have a serious and negative effect on property values here; and a third is that it would give the message to the wider world that the Canaries are not a safe place for financial investment.
None of these implications is to the Government’s advantage. For the moment, however, the problem is the Government is in dire need of money, and this action is being headed by bureaucrats. This is why the fines are unlikely to be lifted, though it possible they might be reduced. In the longer term, though, such a lobby will hopefully make it possible to get the government to see the bigger picture. This doesn’t help individual owners right now, but it might help the Canaries, and the investment those owners have already made here.
Once the dust settles, owners and communities need to decide how to face their future, and it is in fact possible, within certain constraints, that residential communities could engage in touristic letting. These constraints would make it difficult to achieve, but not necessarily impossible. Providing that a community’s statutes do not expressly prohibit it, and a vote was legally passed by the community and achieved the required percentage, then the community could set up a commercial entity – either an SL company or an Asociación – which would apply for a touristic licence. Any bookings would be through this entity and managed by it as in the case of a touristic complex. Providing that the community complied with every requirement for touristic complexes, the government could not in law refuse to grant a touristic licence. The government could not even drag its feet, because under the Administrative Silence Act, it has six months to respond, or the licence is awarded by default. All this would not necessarily be easy for a community to achieve, but it is theoretically possible.
Finally, I have said that mis-selling by agents is no defence, and it is not. There is, however, something that theoretically, and in some cases practically, can be done about mis-selling, namely taking legal action for negligence against whoever was responsible for misleading the buyer. Naturally, the agency (or individual agent depending on where the information or guarantee originated), would need to be still in business otherwise there would be no point in suing, but the avenue exists for anyone who feels aggrieved and can prove mis-selling with evidence in writing.
Update 6 July: Over the past six or so months, there has been the usual range of rumours and denials, together with calls for evidence that the inspectors were real and actually doing something, and I can now say that I have in my possession a fine of €18,000 imposed by the Dept of Tourism on a private residential apartment owner for commercial holiday letting. This is one private owner of one residential apartment who was advertising on a website.
This is NOT a post of gloating. I am desperately sorry for this owner, because others have done far “worse”. One can imagine that in due course their fines will also be far worse. I am just relieved at last to see with my own eyes, and have in my own possession, this evidence that has been called for by those who would still deny what was actually happening.
The fine is for “touristically exploiting a residential apartment without the authorization of the competent touristic authority”. This is, in fact, what the law forbids. The definition is something that so many get hung up on because they try to tease meaning out of “commercial letting”. The reality, however, is that the law forbids making a residential property openly available to the public. The owner doesn’t actually need to accept a let to demonstrate that he is making it openly available .
There is also a misperception that the Inspectors need to prove something in Court. They do not. The fine is imposed. It can be appealed with submissions being required within a fortnight, but the fine is imposed. It is now the unfortunate owner who has to decide whether to appeal, which will cost him money and which is unlikely to succeed given the evidence the inspectors have, and it is also the unfortunate owner who has to prove the fine should be lifted or reduced. The inspectors have to prove nothing beyond submitting the evidence they already have.
I repeat the advice I have previously and repeatedly given: if you are advertising, STOP NOW.
Update 1 February: Just to clarify the law after several concerned readers have emailed me, the situation is the following:
Commercial letting is defined in Ley 7/1995, updated 1998, as when “temporary accommodation which will not require a change of address is openly offered to the public.” “Openly offered to the public” is any mechanism which presents the accommodation to people with whom one could not have otherwise come into contact. This is why “friends and family” are allowed, though that specific term is not included in the legislation. Clearly, though, such contacts would have been possible without an advert or website for enquiries.
Commercial letting of privately owned property is permitted in apartments that are defined (in their original statutes from the licence granted for construction, or as subsequently amended after approved application) as touristic. In touristic apartments, all such commercial letting must be done through the sole on-site management agent, in accordance with whatever scheme that agent operates. Touristic apartments can be let on a long-term residential basis, or be used by friends and family, independently of the agent because such use does not qualify as commercial holiday letting. By the same token, residential apartments cannot be let out commercially, and there is naturally no on-site agent, but there is nothing to stop use by friends and family, nor long-term lets.
Private villa owners can, in theory, apply to the Tenerife Cabildo to register their property as touristic. This would require, however, the granting of a touristic licence, and since the moratorium on touristic licences has been in place over the last several years, the only licences granted are for the construction of high-end hotels. A lawyer with connections to the tourist board has this morning confirmed that the Tenerife Cabildo will not issue such licences to private villa owners, though this situation may change in a couple of years … presumably when it begins to dawn on the authorities that villa holidaymakers are in fact going elsewhere for their holidays rather than using the top-end hotels.
Update 31 January 2011: Apart from the fact that this was officially announced in any case, there are now the first clear proofs that this campaign is underway. Several complexes have been visited by inspectors armed with sheafs of adverts culled from internet sites, no doubt gathered by the inspectors’ foot soldiers, the new Canarian Police force. I myself know of complexes in Los Cristianos and Los Gigantes that have been visited, both touristic and residential complexes. In one case last week, the inspectors gave 10 days for owner details to be produced, and had clearly received them within 5 because within that period one owner received an email requesting accommodation which gave no phone number and required an e-mail answer. For anyone who was in any doubt that this was actually finally happening, it is.
Original post 15 December 2010: Rumours have been circulating for months about the new Canarian Police trapping residential apartment owners who offer commercial lets to holidaymakers, but now the Canarian Government has committed itself to identifying the 400,000 or so “illegal beds” and around 650,000 “clandestine” ones thought to be available in the Canaries.
Seventeen inspectors will be charged next year with finding and fining owners of residential apartments in the Canaries who let commercially, the Minister for Economía y Hacienda, Jorge Rodríguez, confirmed yesterday in a Parliamentary session. Sr Rodríguez said that the strategy has been designed by the regional Tourism Inspection council to control and diagnose holiday placements which have no authorization for touristic use.
There are some 430,021 official tourist beds in 3,033 establishments in the Canaries, 645 of which are hotels and 2,388 self-catering premises. Clearly, the “illegal” beds roughly double the available official accommodation, and more than triple it if one takes the “clandestine” ones into account. As hoteliers have been complaining for years, this has an ongoing impact both on their revenue and the image of the Canaries in the international travel market.
The Canarian tourism law permits commercial letting only in touristic complexes, and in those, only through the sole agent on site. The definition of commercial letting has never been tested in court, though it is generally taken to mean the letting to holidaymakers who are neither friends nor family. As a result, “friends and family” is the one exception granted by the law to residential apartment owners, and many have previously defined the phrase very loosely. From next year, however, any owner who manages to secure a let through a holiday website or advert will be hard pressed to claim the holidaymaker is a friend if it turns out to be a tourism inspector or Canarian police officer. PV