2013 to be “horrific” year

2013 to be “horrific” year

Update 22 November: Here we go. Social Court 7 of Las Palmas has ruled that the Canarian Government’s decision to suspend public sector workers is legal, and has authorized the first ERE (official procedure for laying off staff) for 87 employes and 17 early retirements in Gáldar. The judgment dismissed all legal arguments that such a procedure was illegal in a Public Administration, and on the contrary, accepted the corporation’s economic arguments as proven and the lay-offs as reasonable.

Original post 24 October:  That’s the analysis of the President of the Canaries himself, Paulino Rivero, which he gave in Parliament yesterday as an attempt to prepare everyone, from the highest public servants to ordinary residents for what is going to happen next year. He didn’t beat around the bush either. “Many” of those who work in the public sector, he said, must begin to think in terms of not being able to continue working in the administration. If there had been any lingering doubt about maintaining public employment in 2013, Rivero killed it stone dead.

Cuts in Madrid’s regional funding, the next Presupuestos Generales del Estado (PGE), mean that even the situation we have come to know and increasingly fear over the last few years is nothing as to what is going to come. Already, some chemists are stocking only absolute medical essentials because they are on the verge of bankruptcy with Government payments months overdue; public transport, including ferries, is threatened because of Government payments overdue; firefighters are threatening strike action if guaranteed funding is even touched, as the Government is beginning to suggest. After the President’s remarks yesterday, however, it seems that the “horror” is only just starting.

35 Comments

  1. A suitably brilliant time then to be introducing and enforcing tourist legislation that will effectively remove independent self-catering travellers (who can’t afford a villa) from the Canary Islands, and force many apartment owners to add their properties onto the already saturated sales market, further depressing property prices and increasing banking risk on bad debts. I only hope all these 5 star tourists will be worth it.

  2. Well said Petra,

    I have just returned today from Tenerife in over 20 years I have never seen my area so quite even the roads are not busy & this is in the middle of the half term holidays.

    Also I have just had a family who booked my apartment last, year ring me to try and book it for 2013, after explaining what the authorities are doing and that they only want 5* guests to stay in 5* all Inclusive hotels you can guess the answer!!! the Canaries loose another holiday maker

  3. Author

    Bear in mind, though, that for those who live here, this particular news item is of more concern in terms of the public services, whether the chemists have medical supplies, whether schools have teachers, whether government offices will be able to stay open if they have to lay off civil servants, that sort of thing. This is an issue beyond the illegal letting concern, and for many who live here, that particular issue does not have huge relevance.

    Tourist numbers, at least those that are officially released, are good, and if the roads are quiet, perhaps that’s because petrol is going up. Perhaps too some tourists from the UK haven’t come because of flight cost or lack of availablity. I know the illegal letting issue is important, and is of great concern to many, but it is not the only thing on the minds of people who live here, and the particular problem that was behind this particular news item was the cut in funding from Madrid … not tourists who can’t holiday in residential apartments.

  4. I don’t think the real impact on tourist numbers will be felt until summer 2013. This is when Ryanair and Easyjet will have pulled a number of their routes to Fuerte. But already between Jun and Sept 12 passenger numbers are down 8.9 percent. Tenerife may hold up ok, but we could be in real trouble with all the public sector job cuts, service cuts, healthcare cuts, and a huge increase in the price of water. I worry Fuerteventura is heading for a Perfect Storm. I do not rent my apartment, which is on a dormant touristic complex to anybody, it is purely a holiday home, but many on our complex do and we are rated within the top 5 of places to stay in our resort. We outperform all the other licensed apartment complexes in terms of customer satisfaction. People enjoy the mix of living with the locals and ex-pats and we are also very popular with Canarian key workers. Until recently people thought they were letting legally to tourists and paying their taxes. Now it seems we will not fit within the grand plan.

  5. El Dia has been kicking the backside of Paulino Rivero for many years now. Deservedly so methinks. But in a rare display of honesty, Rivero has brutally announced the obvious. 2013 will be terrifying. Rest assured that many Canarians are in a state of deep unease. Already there is talk of possible inflation and the cost of food. Especially since all that food will have to come via sea transport. I feel sad for the older Canarians, those who suffered under Franco. I feel sorry for the once-existing middle class who had a brief glimpse of prosperity. As author Ray Bradbury duly noted: “Something Wicked This Way Comes.” So very very sad.

  6. the picture you paint janet,of the canarian economy in such desperate straights, and the incredibley high levels of unemployment in the canary islands, does not at all fit with tourist numbers booming. something is very wrong? Clearly these figures do not include the lost illegal rented customers, and lost ryan air flights clearly represent private booked apartment customers. Can we believe the official figures ? or are the lost private rented customers tipping the balance ? If so how bad would things be if all the private renters stopped totally ?

  7. Author

    What is wrong is that you do not understand the problem. The problem with 2013 being an horrific year is BECAUSE MADRID HAS CUT OUR FUNDING. Our tourism is fine. Tourism alone even when booming and when Tenerife was filled with additional illegal renters never had enough money. We always relied on heavy subsidies from Madrid, and these regional subsidies have been slaughtered. This is specifically why the President was saying 2013 is going to be so bad. It is only the British holiday apartment owning faction who think the problem is illegal letting clampdown based.

  8. I am well aware of the issues regarding the subsidy cuts. Of course these are the biggest factor and will sweep all before them and not just for 2013 either. But why compound it right now, particularly on the weaker economies of the eastern islands with this race to 5 star? I can understand the carrot & stick approach to encouraging renovation of some existing facilities and local job creation. But where is the money coming from to subsidise the improvement of complexes to enable them to reach at least 3 star? Is it envisaged that this will come from the illegal letting fines or from existing budgets? Isn’t there a risk that these budgets will now be cut and there will be no carrot left, only stick!

  9. Author

    Petra, just to be clear, I was answering Andrew’s comment immediately above mine that “something is very wrong” with the figures. It wasn’t a reply to you.

    As far as upgrades to 3* are concerned, however, it appears that the new law will require the owners themselves to fund all improvements. Under duress if need be. Certainly the money won’t be coming from official coffers.

  10. Sorry, I thought it said something along the lines of subsidies not being available to apartment complexes that would be less than 3 star after the improvements. By that I took it to mean that 5, 4 and 3 star conversions may be eligible for subsidy. It’s immaterial to us, as we were only two keys when open many years ago, since then all the facilities have been sold off, and now repossessed by the bank, so we would have no chance of achieving 3 star anyway.

  11. Author

    and of course, we’re all second-guessing the actual detail of the legislation, which none of us has yet seen. All will become clear, no doubt.

  12. Janet its all starting to sound like a nightmare vision from hell. So the canary island economy has always relied on massive subsidy from Madrid. Even in the pre crissis years , the boom years, the whole place was not viable in any real economic sense. The one statistic that stands out ,though, is unemployment. Surely that is way up on the boom years? the numbers being quoted are very high at the moment, cetainley they show a marked increase in unemployment since last year. I would think construction jobs are suffering, but of course like everything in the canaries, construction is mainly driven by tourism, in terms of projects like shops, hotels ,apartments. I have heard one canarian politician or trade unionist ,questioning why if tourism is booming today is unemployment going up, that was reported in the press, you may even have posted that on your site. Next year its going to be the public sector that is going to have to shed jobs , those jobs seem directly to be as a result of funding cuts from Madrid. Obviously the entire mess of the spanish/canarian economy is not all as a result of the crackdown on private renting. I think myself it is a very significant reason for the canarian economies current troubles and rising unemployment. In my mind, like the canarian politicians opinion, its a circle that I can not square, if tourism was holding up and even performing strongly in the islands, well unemployment levels would not be at such record high levels. The government needs to seek independant advice on economic matters, a few thousand euros spent would be a wise investment, in my opinion their own policies and visions are way short of what is needed to sort things out.

  13. If the new legislation addressess the unfairness of the sole agency system then it is possible that many of the ‘illegal’ lets will be able to become legal in Touristic Complexes. I know from my last conversation with Snr Escobedo that he found it frustrating that many of his clients are in the situation where they would like to become legal and the system will not allow it unless they literally give up their apartment to a sole agent who has little or no regulation.
    There is no doubt that no government seems to have an answer for this awful mess and I fear we will have many years of austerity and unrest wherever we are living!!

  14. Cut and pasted from the Gobierno de Canarias, Senor Berriel. It seems the entire turismo budget for enabling the renewal of touristic infrastructure has been cut – whoops, no carrot at all then!

    ‘The Minister went on to list the various cuts that form in your opinion an overview “scandalous” canaries budgets for 2013. Another blatant case occurs in tourist infrastructure, because the Draft State Budget for 2013 does not include any item for essential infrastructure for the renewal of the tourism industry in the Canaries, again ignoring the mandate of our REF, despite strategic status of this sector, the most important for the economy of Canarias. ‘s budget plan called Canary contemplated in 2011 a total of 42 million euros, which were duly budgeted and transferred. However, in 2012, the 50 million expected were eliminated, without more, by the Government of Mariano Rajoy. 2013 items are also not covered for this obligation. Neither appears in any game entered next year’s budget for the State’s commitments consortia with Resorts of San Bartolome de Tirajana or Puerto de la Cruz. In the current economic situation it is practically impossible local corporations can go to FOMIT Regarding the Financial Fund for the Modernization of the State of tourism infrastructures (FOMIT), which aims to financial support to plans for renovation and modernization of mature tourist destinations to be developed in parallel by Administrations local and private tourism companies, the departure of FOMIT in the draft budget for 2013 is endowed with 250 million euros for the entire State. “But, in practice, its application is very limited, since Being debt, local government must meet the ratios of debt capacity, so that in the current economic climate, it is virtually impossible for local authorities to go to this fund, “said the counselor. therefore unless any funds allocated to tourism consortiums canaries into other lines of action, now explicit, and limited infrastructure renewal projects that could access funds FOMIT or the ICO, there is no specific line for tourism in the Canaries renewal, “ignoring the state of this important strategic activity for the economy of the Islands,”

  15. Author

    And please let’s not forget that the basis for this news item is cuts in regional funding from Madrid.

  16. We always relied on heavy subsidies from Madrid, and these regional subsidies have been slaughtered.

    Janet, I’m not an economist but in simple maths are you saying that the money collected in national taxation from taxpayers in the Canaries was always less than the subsidies that the Canaries got back from national Government? And thus, as Andrew said, has the Canaries as a whole always made net loss and has survived only on subsidies from taxpayers elsewhere in Spain?

    Or are you saying the opposite, that the taxpayers in the Canaries are now funding national Government and the rest of Spain because the islands will not get enough of the tax back to fund the required services?

    Or something else?

  17. Author

    oh good grief … I’m no economist either, and I’m afraid I have no idea about the relative percentages of regional funding and national tax collected per capita in the Canaries. It’s my very simple understanding that without Madrid funding, or even with the funding now proposed, which has been slashed, the Canaries is going to have to start thinking about doing without essential public services (e.g. health, education), or at least see them hugely reduced.

    There are other factors too. The Canaries gets EU subsidies, and benefits from a special customs status (the ultraperipheral region status I’ve mentioned before). How this all ties together with whatever income the Regional Government itself raises, I just don’t know. I’m just a poor historian, and not an economic one either!!

    What I do know is that there are those who believe that with EU funding alone, the islands could be independent. This would mean, by definition, losing Madrid’s funding altogether, and also, inevitably, the advantageous ultraperipheral status. The taxes they think they could raise locally, therefore, must be considerable. There are, though, it’s fair to say, many many more who roll on the floor laughing at the idea that the Canaries could be independent … in any sense, let alone economically!

  18. Now, I am nop economist either, but is it not the case that taxes such as income and those due on investment earnings and so on, together with Social Security payments, are collected centrally by Spain and the grants made back to the various regions are essentially funded by what is collected centrally?

    Likewise, as far as I am aware, in the case of the Canaries the local government does get to keep the IGIC revenues collected, and the little extras such as the recent 2 cents a litre tax on fuel.

    If I am correct, then there just might be an argument which says that if the income and SS taxes were collected locally and used locally the Canaries might just be better off than at present with Madrid out of the circle.

    But the bottom line here as far as both Andrew and Craig are concerned, is that, in the first instance the fact that by private letting they are operating outside the law and the local Government is missing out on the IGIC that they should be applying to their costs, which of course goes directly into the local economy. They could both argue that their businesses bring other revenue to the islands such as work for taxi drivers and so on, however, as above, I believe the taxes paid by such trades (income/SS), has to go via Madrid and is not necessarily beneficial to the local economy.

    The fines for breaking Canarian laws however would stay on the islands, so again you can see why the crackdown has some justification and potential benefit to the local economy.

    The reality however continues – there would seem to be little chance of a change in the law being forthcoming which will benefit those who have been acting outside the law for many years, whether knowingly or otherwise.

  19. The truth probably lies somewhere in the middle. Maybe Tenerife and Gran Canaria could stand a chance at independence, but not the rest of us. In Fuerte, once we’d eaten all the goats and the cheese and drank all the water out the cistern, we’d have no choice but to hijack a Fred Olsen or two and head over to you Janet. Mind you, by then there’s bound to be plenty of empty apartments due to the crackdown on illegal lettings, so perhaps we could expropriate some of those. Sounds like a plan.

  20. I have been reading the above comments with great interest. However I believe that there are still other paths left to the Canarian (I speak only for Tenerife) Government to raise more money.
    1. An entrance tax of at least Euros 10 per car and Euros 50 per tourist bus on entering the Teide National Park (to be used for reforestation and the bomberos.
    2. Taxes on tobacco and alcohol to bring the Canaries in line with Spain.
    3. Abolish free roadside parking near the major beaches.
    4. A contribution for use of the motorways. In Switzerland this is in the form of a stamp on the windscreen and costs Euros 50 per year and per car. (Taxes to be used to complete the motorway system).
    Idem extra taxes on petrol and diesel (excluding commercail trucks etc.)

    I cannot think of any major towns in Switzerland or in France where all parking is free, with the exception of private car parks.
    In the South of Italy(also in great economic crisis) the price of petrol is Euros 2 per litre.
    I would be interested to hear other comments about this.

  21. local Government is missing out on the IGIC that they should be applying to their costs

    Is there a threshold on turnover, or anything similar, before IGIC has to be charged? For example, UK operations with a turnover less than £77,000 don’t have to be VAT registered and if they don’t register they don’t charge VAT or indeed reclaim VAT.

  22. There used to be a threshold of, I think, €29,000 but that has been abolished as of 1 Jan 2013, so all sole traders will have to register, fill out returns and charge the 7% from that date

  23. You will probably find Jon that there is little sympathy from people in the UK who own apartments but don’t live in Tenerife with the state that the island is in. We have our own worries having been in a recession for some time now and likewise I’m sure the people living in Tenerife aren’t really concerned with that. Its not our fault that tourists renting private apartments spending money on services on the island don’t have that money going directly to Tenerife. Surely not all the money spent on other things by tourists is syphoned off to Madrid! The argument of most apartment owners is that they DO put money back into the economy directly. We ourselves spent over 10,000 euros refurbishing our place and every single item was purchased in Tenerife, we employed a local builder and we keep a lady in work cleaning for us! Whether or not they declare their earning over there is out of our hands but multiply that by the number of apartment owners who do similar. Anyway I’m fed up of trying to justify this. At the end of the day you will never get an apartment owner (especially one who has been fined) to agree to your comments. We stuck our necks on the line in the first place buying property on the island & weren’t told we couldn’t rent out! Do you honestly think anyone would have bought knowing they were operating illegally by doing so? I think the people of Tenerife need to realise that other countries have been suffering for a lot longer but just get on with it.

  24. Well said Craig,

    Can somebody answer this question what has become of all the Millions NO Billions of euros us hapless investors have spent in the Canaries buying property, surely this was not sent to Madrid, perhaps the tax part was I wonder how it was wasted it certainly was not spent on the infrostructure most of that came from the EU

  25. there does seem to be a confusion in these posts between the crackdown on private renting, and the impact that policy is having on the canarian economy, and the funding cutbacks coming next year from madrid. The position as regards the letting crackdown is that this policy is reducing visitors to the islands. If that adds up to around 800 euros of lost revenue in terms of tourist spending per apartment per week, then that is a disaster to the canarian economy. That means an economic slowdown which translates to less jobs. That expalins why official tourist figures are said to be booming, yet unemployment in the islands is at record high levels. It is quite another matter as to what possible tax revenue the govt should or should not be able to gain from this private renting, or any part of the 800 euros per week that the apartment tourists would have spent had they come to the islands as per the years before the crackdown. The withdrawl of funding fron madrid next year is quite a seperate matter. That policy is going to cause mayhem in the islands public sector, with many job losses there. The loss of spending power amongst the displaced public sector workers will further damage the canarian economy. My point is that the letting crackdown is entirely self inflicted on the part of the canarian govt, they need not have stopped the tourists coming, they could have avoided the loss of revenue and not caused higher unemployment as regards this part of their economy. I believe that they should have regulated the renters and imposed a permit system on them, an annual fee to be paid as they do in portugal. The size of the industry as regards private rentals, meant that it was always too large and important in econmic terms to enact a policy to stop it. It is out of the govts hands to control madrid funding, but it was their choice alone to attack the private renting industry. This industry operated without proper tax obsevance for years because the govt left it like that. They need to reconsider their position on this huge industry very quickly, next year they need all the internet ads back online and bringing tourists to the islands. The market is there, it is the govts own actions that have got the internet ads of the internet and this is greatly harming the canarian economy. They need to get real urgently if they are going to avoid a disaster next summer in these islands.

  26. Craig – how right you are. Those of us who live here have desperate concerns for the economy generally, and have had for some time.

    The basis of these concerns stems from Spain’s membership of the Euro and the fact that, unlike the UK neither Spain or the Canaries can print a few extra Euro notes when we run a bit short. The UK on the other hand can and has done – frequently in the recent few years and therefore may still be economically depressed but is technically no longer in recession.

    You may well put back some of your rental income into the local economy – as do others, but a considerable amount of the “turnover” you and others generate is often outside of the tax system itself, and that which is not is way beyond the control of residents, and for that matter the Canarian Government. I do hope you have given your cleaning lady a contract or have a formal contract with her employers, and are therefore contributing toward her Social Security and tax – or do you just slip her some cash?

    This is a foreign country, governed primarily by Spain, and the rules here are different to those in the UK. They always have been, and always will be. Whether or not you were not told about the different laws regarding property and the rental of it is entirely besides the point. You, as a foreigner are responsible for making your own decisions as to how you invest for your future, but the responsibility to check that you are acting within local law is yours and only yours. Yes sadly there are many who may have been misled into unsafe investments but unfortunately only you (and any others) are responsible for your own destiny(s)

    You and others clearly thought you saw an opportunity to make some good money and have your mortgage paid by others, but have learned to your cost that that is actually illegal in this country.

    Naturally you are sore, but whose fault was it that you found yourself fined for breaking the local laws – ??

  27. Firstly Jon we haven’t been fined. Secondly we do not “have our mortgage paid by others” as we own our property outright! And thirdly these “laws” have lay dormant for years now and only now that the islands are in a mess have they decided to enforce them to generate some quick cash! You come across as a smug, bitter ex pat who is worried about the “dream life” you once thought you were going to have. Well tough. If we get fined then we’ll take it on the chin. You on the other hand sound like someone who will bleat on incessantly about the state of your chosen place to live.

    Oh and get real Jon……do you honestly think everyone in the world declares every single penny they earn whether it be from running a business to renting out property? If so then you are deluded and well out of touch with how things are!

    I pity you living in Tenerife and the state your island will be in by next year with even less tourists. You chose to live over there so deal with what’s going on and stop jumping on the bandwagon of fining apartment owners for being so “awful” as to rent out their properties! We’ve all been told we will get caught at some point but there’s no need for people like you to be so smug about it. And by the time we have all been caught and fined what state will your chosen island of residence be in! Hope you’re happy then!

  28. I think one of the main problems is the 15 years they took between bringing in this law and implementing it. In this time foreign investment has come in, bought up complexes both touristic and residential and morphed them into a completely different animal. Of course they were happy to take our money, but now it is all our fault that some people are operating outside the law. But who gave permission for all these holiday complexes to be split up and sold to foreigners in the first place? The consequences are of their own making, but because they have taken so long to correct it, we are faced with dormant touristic complexes that no longer have the facilities they started off with, many of which will require hundreds of thousands of euros worth of investment to meet legal tourist standards, if they can at all. How is this going to happen? If we were all that rich, we wouldn’t have bought a little place in the Canaries in the first place.

  29. I still think a few posters are confusing and muddling together a few simple starnds of this problem. The private renting is not properly regulated, thats not the renters fault, in the eyes of the govt for 15 years the whole massive and vital industry has lain hidden.in their view it should not exist. In practical reality the private renting induystry very much exists and up to the crackdown was sending many paying customers to the canaries. The money that the private renting customers spent in resort greatly helps the canarian economy. It is irelevant to the economy if the renting owner pays no tax in spain or the cleaning company are black market and it pays no tax in spain. Leaving aside the rights and wrongs of that, the renting customer still goes around town spending, in shops ,reatuarants,bars, siam park the works. Some of those business’s will pay proper tax on the proceeds some may not. Whatever the tax situation the customers personal holiday spending is what drives the canarian economy, its very lifeblood, that means jobs. Given the size of the private renting industry in 2008 what was needed was regulation and inclusion in the tax system, the industry and its turnover was there for the taking. It was never a sane option to attack and close it down , the canarian economy could not possibly stand such a shockwave, it needed all those 800 euro per week spenders in all those apartments. The tax issues are history, the govt needs to reconsider its attack and start thinking about sensible regfualtion and tax inclusion, the clock is ticking towards the year 2013.

  30. Author

    Tax is a red herring. It goes to Madrid. And the Canarian economy is far far bigger than the illegal rental market. I don’t think anyone who thinks seriously actually considers the problems coming next year because of Madrid’s cuts would be resolved by a political U-turn over illegal letting. How many jobs of the thousands that will be lost in public services, health and education, would be saved by tourists staying in illegal accommodation. It’s not realistic. Of course the Government’s policy will make the situation worse next year … in your view. I happen to agree with you on that point. Unfortunately the Government does … or let’s hope we’re wrong, and it’s not unfortunate at all: after all, they are and have access to tourism and economic analysts and experts that you and I aren’t and don’t. Meanwhile, there’s the matter of our missing millions from Madrid, and no amount of illegal renters is going to bring those back.

  31. Marcos Cabrera can testify to the fact that there are many people who have declared rental income both in Tenerife and then in the UK as the law in both countries dictates. The non declaration of earned and rental income is something that happens all over the world and is not unique to either Tenerife or the UK and it is up to the integrity of individuals as to whether they declare it or not – if not, then it is right that the government/s pursues them and takes action accordingly.
    I think we all know that both criminal and civil laws and their implementation vary throughout the EU but Petra makes a valid point on this by referring to the fifteen year delay. I think it is interesting that many people who are now commenting on the legalities of ‘illegal letting’ (not all may I add) are now finding a voice that has remained silent for so long. My view is that it is the Governments duty to regulate and improve the Tourisitic offer in Tenerife but there are aspects of the 1995 law that are unfair, unreasonable and damaging both to the the offer and the long term future of both the property market and economy as a whole.

  32. Author

    I think what might be coming in the Spanish economy generally over the next year or so will put all this into perspective …

  33. The government has legislated one way, but then effectively acted in detriment to it’s own legislation for 15 years. This is impossible to defend. We lost our licence in 2004, presumably because the owners at the time could not meet the latest tourist standards, so the complex became commercially unviable. It was broken up and sold off to Canarians, Spaniards, British and Irish and two Slovakians, piece by piece. The original complex owner, the estate agents, the developer and the government have all benefited from this. Property prices rose 100% per unit from 2001 to 2005 when most of us bought. They are now worth less than two thirds of that and many of us are in negative equity, so we cannot sell. They have made huge profits, we have all taken huge hits. Many of the apartments have been repossessed by the banks, including all the locales. Despite all this, we have a fabulous apartment in a great complex. We have tackled none paying owners, repainted and restored communal areas, replumbed the whole site and even put in a brand new swimming pool and pool fence. We have already spent hundreds of thousands. But we do not have hundreds of thousands more to rewire the complex with non-halogen wiring, fit a centralised fire alarm system etc. We cannot afford or need a 24 hr reception. Our parking, restaurant, pool bar have been sold off, so we have none of the those orginal facilities. Most of us do not even want to rent to tourists. So, how exactly are we supposed to return to our original purpose of tourism, when effectively we are quite happily residential? We are not allowed to be residential either though, as the complex is built on touristic land. So we have apartments that legally cannot be used by anyone – residents or tourists!

  34. Of course this whole funding cuts thing is going to hit like a tsunami in 2013. But before then, the economy will already have been significantly weakened by the attack on illegal letting. More businesses will go under and unemployment will rise, welfare payments will go up, more apartments will be repossessed, property values will continue to fall. Then the flight cuts will kick in, then the budget cuts will kick in. Turismo will keep saying, tourist numbers are holding up (in Tenerife anyway) – but surely they should be rocketing up, if they had successfully transferred all these illegal customers into licensed apartments and hotels? Guess what though – those customers don’t want to stay in hotels or package tourist complexes, they are independent travellers, so they have gone onto Owners Direct and booked to go somewhere else entirely. Even though I do not rent out, I have personally recommended Fuerteventura to over 30 people who have subsequently gone there on holiday and loved it. Us apartment owners have been acting as unofficial and unpaid promoters of the canary islands for years. The impact of losing this kind of free word of mouth promotion is impossible to quantify, but if I was an owner that got fined, I would be preparing an invoice for Turismo detailing all my touristic promotion activities over the years and I think it would add up to oh, about 18,000 euros!!

  35. Author

    The problem with the economy here in particular is that Spain cannot afford the regional funding the islands need over and above any issue of individual lettings. The Spanish economy … that’s the nation, not the Canary Islands … is in freefall. This has nothing to do with the illegal letting situation.

    The Spanish economy is broken, perhaps beyond repair, for a variety of reasons, most of which come back to the property bubble, appalling banking practices, and endemic corruption.

    This is a story that will run and run, but it is currently being hijacked by the illegal letting issue – which in the overall picture is no more than a sideshow.

    I’ll close this now because it seems impossible to get away from that narrow focus. Spain is going bust. Illegal letting in the Canaries really doesn’t matter in that context.

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