The legal troubles of the Canarian Government's Vivienda Vacacional decree

[Janet]

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 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 of residential property to holidaymakers as long as it is in a non-touristic area (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 conflicted interests involved, and that the Government was attempting to allow "the general interest" to guide legislation. The acknowledgement comes after a question was raised about the lack of residential property – and certainly the lack of residential property 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 being the only areas able to register for a Vivienda Vacacional plaque.

The Government has not fixed a date, 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 mixed and touristic areas 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.

[Nova]

That sounds like they're planning on keeping residential areas residential... as they should be!  Ooh, fingers crossed 

If that were the case, I wonder what would happen to the residential residentials that already have their plaques under the first draft of the decree...

[Janet]

Those who already have VV plaques will continue to have them because the decree will still apply in those areas ... it will just now apply in tourist areas too. There aren't any plans to enforce residential areas as residential, and that couldn't form part of this decree anyway. They will be hoping that the demand will mean more tourists able to stay in residential properties near the coast or main tourist areas thus relieving the undue pressure on residential areas naturally by market forces.

edit: and in any case, the suggestion of the reason why there was a problem in residential areas came from a PSOE member ... i.e. not the Government ... 

[Nova]

Oh boo hiss.  Well at least once this thing is finished, people might stop trying to argue that they can do whatever the fuck they want because "the law is on hold" 

Unless of course there's another appeal...

[Janet]

As long as the Government gives ground to the Monopolies Commission and stops clearly favouring the hoteliers then the law will be fine ... and this decree redraft would seem to comply with what the Commission was asking for. There's no actual "appeal" possible because it's the law, not a Court ruling. The only one with any power against the Canarian Government was the Commission, and they issued an instruction, not an appeal in a legal (or any other) sense. If they're happy, the law will be what it is.

Both sides - hoteliers and those wanting to keep tourists away from residential areas - will be equally unhappy, I suppose, which does suggest that in an impossible position, the Government really is doing what it says in trying to serve "the general interest".

[Janet]

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 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 released confirms that several aspects of the existing VV decree must be changed, not least that of permitted areas: 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 hotel groups.

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 hotel groups who offer single rooms, 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 four judgments expected any day now will come up with 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.

[TOTO 99]

Humble apologies, I didn't know this thread existed.

Can I ask in simple terms, does this mean that the purge on illegal letting will come to an end? By that I mean, there are going to be people who go from being illegal to legal once they have permission. ( If I've read it correctly...lol ). And the remaining ones would appear to be committing a somewhat lesser crime of not getting permission. An £18k fine would then seem really over the top.

There are of course also residential blocks where the majority, including the committee, let their apartments out. Obviously that's against the law but if the government scale back and nobody from the block makes a complaint, they'll more than likely be "allowed" to carry on and a blind eye will be turned.

[Janet]

Humble apologies, I didn't know this thread existed.

No problem!

Can I ask in simple terms, does this mean that the purge on illegal letting will come to an end? By that I mean, there are going to be people who go from being illegal to legal once they have permission. ( If I've read it correctly...lol ). And the remaining ones would appear to be committing a somewhat lesser crime of not getting permission. An £18k fine would then seem really over the top.

yes, there will be some who register, and who therefore become legal. There are requirements, though, including registering for VAT (IGIC), fulfilling minimum standards on construction and contents, insurance, etc ... the criteria are HERE. I imagine there will still be plenty who won't want to go through that, nor to stick their heads up as far as tax is concerned, let alone formally register for IGIC.

As far as fines are concerned, though, €18k is the standard mid-range fine for infractions of tourism legislation generally. Infractions of the VV decree specifically are far higher ... this is presumably because people now have the opportunity to be legal so there really is no excuse, as well as because the Government feels it really needs a control over private letting. Fines for VV infractions are between €30,000 and €300,000 ... so by the mid-range calculation would be likely to be €150,000.

The difference between infractions would be, say, a private owner letting out a residential apartment that's not registered under the VV decree, or letting out a touristic apartment which should by law be let out through the sole agent. Those would be tourism infractions, whereas a VV infraction would be to fake a VV plaque, to fail to comply with the administrative conditions set in the decree, tax or insurance matters under the VV scheme, misapplication - eg claiming that a community's statutes didn't prohibit letting when in fact they did, or lying about the standard of the property and/or its contents ... and so on.

There will therefore be two areas for inspections, rather than one, so instead of a purge ending, I see it spreading more widely in terms of control. There is too much money in fines - and plenty of opportunity to impose them - for them to pull back in this area.

[TOTO 99]

Thanks @Janet

I think I'll apply for a job as an inspector. If they put me on commission I could bring in about a million euros worth of £15k fines without even leaving the UK.....

[Michael]

Thanks @Janet

I think I'll apply for a job as an inspector. If they put me on commission I could bring in about a million euros worth of £15k fines without even leaving the UK.....

I know you're kidding but i'm surprised they don't put the inspectors on commission.

I remember reading about one American state that put it's traffic cops on commission. One cop became a $ millionaire.