Updated 20 July: A third judgment from the Canarian Supreme Court is again against the Canarian Government’s attempt to ban private holiday lets of residential apartments in tourist areas. The judgment ruled that the decree as it is infringes competition possibly in an attempt to give favourable treatment to the hotel sector. The rulings are piling up, and this one will no doubt be appealed along with the first two.
Updated 13 June: And the second judgment from the Canarian Supreme Court in response to Ascav’s appeal is the same as the first: the prohibition on private holiday lets of residential apartments in tourist areas will not wash. The regional Government is coming up against two EU principles which, in the Canaries are in conflict, namely that the Autonomous Community has the legal right to pass its own tourism legislation, however restrictive and protectionist, and the absolute requirement for freedom of commercial enterprise and competition. The Government has already confirmed that it will appeal the first ruling last month. No doubt the same will happen with this judgment too. Rulings to further challenges are still awaited. This could take a while. Meanwhile, the legal position is as I detail HERE.
Updated 18 May: The Canarian Government has announced that it will appeal the judgment issued last month against the Vivienda Vacacional decree. The court ruled that the decree had to expand the areas in which private letting of residential properties took place to include tourist areas, and for people to be allowed to rent individual rooms. The Government said that its appeal was based on the errors it believes the court made in its legal reasoning in respect of the legislation, and reminded that the regional authority was fully empowered to pass tourism legislation as it considered appropriate for its tourism model and to guarantee the sector’s development. Four more court judgments are expected for other similar actions, but the Government is not waiting, and has pre-empted them by announcing that it will appeal.
Updated 26 April: The Government was already in the final stages of redrafting its Vivienda Vacacional decree to comply with demands from the Monopolies Commission to allow private renting of residential apartments in touristic areas provided legitimate conditions were complied with, and now there will be extra pressure to finish with the first of several imminently expected judgments from the Canarian Supreme Court.
The ruling that has been issued is in respect of the action taken by FEVITUR (Federación Española de Asociaciones de Viviendas y Apartamentos Turísticos) and the Monopolies Commission, and confirms that several aspects of the existing VV decree will have to be changed. Perhaps the most significant of these is that of the areas within which letting is permitted: the Court said that it was so illogical to require tourists to stay in areas that were not touristic that the only conceivable reason for the restriction was to favour the hotel sector.
Another aspect of the existing decree that the Court has rejected is the requirement for all private holiday rentals to be of whole properties. Again, the Court says that this is only logical in the context of the Government seeking to favour the hotel sector, and that holidaymakers who want to rent just a room but more cheaply than a hotel would offer should not be prevented from doing so. If the Government accepts this, it will open up B&B as a formal and legitimate tourism model in the Canaries, something that has always been completely banned.
It is unlikely that the following judgments expected soon in response to other actions will result in different rulings, and the Government’s response will be interesting. They have the right of appeal, but there must surely come a point when they recognize that the weight of public interest and commercial fairness is against them … and that everyone sees through their claim to be protecting Canarian tourism rather than Canarian hoteliers.
Of course, there must and will still be protections in place for tourists and residents, and the final version of the Vivienda Vacacional will have to outline very clearly what these are. I suspect that the Government will use this argument, with considerable justice, to toughen up by some degrees the criteria for registration.
Updated 5 April 2017: The Canarian Government has announced that its redraft of the Vivienda Vacacional decree will be published in the near future. Tourism minister María Teresa Lorenzo said in Parliament today that the redrafted decree would allow owners to let residential properties to holidaymakers in touristic areas but with conditions attached, most notably related to quality and security being on a par with that offered by existing tourism businesses so as not to endanger the islands’ tourism model.
The decree in its current form allows private letting to holidaymakers of residential property in non-touristic areas (see HERE for detail), but as reported below, the Government has spent the last couple of years redrafting it after the Comisión Nacional de los Mercados y la Competencia (CNMC), which we would know as the Monopolies Commission, said that it “restricted competition and created barriers to the market, thereby unjustly privileging tourism businesses and disadvantaging users”.
The minister conceded that there was no form of regulation that would satisfy all sides given the conflicts of interest involved, and said that the Government was attempting to allow “the general interest” to guide legislation. The acknowledgement comes after a question was raised in Parliament about the lack of property to rent, particularly at a reasonable price, in residential areas, which the questioner (Rosa Bella Cabrera Noda, PSOE) said was the result of forcing tourists into these areas, and thus making rental prices soar and residential availability decrease. Cabrera Noda said that the redrafted decree must now be a priority so as to allow other owners to register for a Vivienda Vacacional plaque to release the pressure on these areas.
The Government has not fixed a date for the redrafted decree to be published, but we now know two things: it is not too far away, and it will allow registration under the Vivienda Vacacional scheme for private owners in areas with a touristic designation to let their residential properties to holidaymakers, though under conditions which will only become clear when that decree is published. Until then, existing rules apply. Naturally I will post the details as soon as they are available.
Updated 23 September 2015: As expected, and now confirmed, the Canarian Parliament has approved the motion for the regional Government to paralyse the application of its Vivienda Vacacional decree, and to redraft it. It will now work on a new text that seeks to incorporate both criticisms from the CNMC as well as resistance to looser legislation from Ashotel. In the meantime, VV registrations continue under the terms of the decree as current, though with no inspections nor fines for any violations.
The resolution the Government will have to find in its redraft must satisfythe hoteliers, lobbying groups like Ascav, owners who want to let their residential properties to holidaymakers, and residents who oppose this fiercely. I remember a philosophy colleague once talking about squaring the circle. I’m not sure I ever understood the concept … until now.
Updated 22 September: The debate in Parliament is to start today, and expected to last at least throughout tomorrow. Already the hoteliers are putting on pressure saying that any softening of the decree will undermine not only the decree but also the main legislation because it would essentially allow for a free-for-all, as well as endangering employment in the only legitimate tourism sector that creates jobs in the hundreds of thousands. It will be interesting to see how the Canarian Government manages to accomodate everyone in a situation where trying to please all sides has resulted in quite the opposite!
Original post 18 September 2015: The Comisión Nacional de los Mercados y la Competencia (CNMC), which we would know as the Monopolies Commission, has called for the Canarian Government to modify its Vivienda Vacacional decree (see HERE). In a press release issued this morning, the CNMC said that some clauses of the decree must either be removed or altered because in their current form they restrict competition and create barriers to the market, thereby unjustly privileging tourism businesses and disadvantaging users.
The CNMC says that it notified the Canarian Government in July that these would have to be changed, and hoped that its suggestions would be taken on board, thereby avoiding appeals against the decree in the Courts. It reminded the Government that it is a legitimate body which has the power to intervene in any such respects where competition is compromised.
The Commission is calling for two main changes, namely to allow private owners of residential properties in touristic areas to be able to register under the VV system because excluding them privileges hoteliers and other formal tourism businesses; and to allow private owners of residential properties registered under the VV system to be able to rent out a room to holidaymakers rather than requiring the whole property to be rented out. The other changes being demanded are to reduce the bureaucracy involved in declarations and compliance, both of which increase the cost to owners to enter the tourism market.
It remains now to see how the Canarian Government responds to this. They have to accept these recommendations or else face legal challenge from the CNMC in the Canarian High Court.