Madrid's Holiday Rentals' Interference

There was a post on Facebook, someone saying they were thinking of buying an apartment and renting it out. One presumed that this would be for tourist rental, and comments that followed reinforced this. There was reference, for example, to a tourist licence, something which does not exist, except in certain limited cases.

A peculiarity of accommodation classification in Mallorca is that there is the odd apartment block that is licensed. The classification system is such that there is a category of tourist apartments, which normally refer to accommodation which is only for tourists. This category of accommodation is often operated by hotel chains, though not always. The key point is that it is not also residential. However, there is, as I say, the odd exception, which arises principally from the history of the accommodation. In the case of one such block in Alcudia, this goes back more than forty years. It is a mix of residential and tourist, and this mix is perfectly legitimate.

So, the mere fact of there being apparent exceptions serves only to add to the confusion regarding apartment rental. But exceptions or not, overwhelmingly the law should mean that there is no confusion. There is no such thing as a tourist licence for apartments, and there never has been. So, when I read the Facebook post, my reaction was to be very careful, especially in light of the legislation that is about to come on to the statute book.

Personally, I think anyone currently contemplating buying an apartment in order to rent it out to tourists needs their head examining. An almighty headache could ensue, to say nothing of the fines. The main reason for thinking this is the way in which the government intends dealing with the tenancy act loophole. But as previously noted, will the government gets its way on this?

Madrid's intervention the other day, by which the ministry for economic affairs queried certain provisions in the Balearic legislation, was described as political interference by the regional government. Was it? Well, no. The regional government does have a great deal of power to come up with its own tourism legislation (and indeed other legislation), but this cannot countermand national laws. The tenancy act is one such.

While Biel Barceló seems convinced, having taken legal advice, that any let for less than one month will be treated as a tourist let (unless the owner can prove otherwise), Madrid was signalling that he may not be able to apply this. The fact is that there is only direction in which the legislation is heading - and that is to the courts. Madrid might apply an appeal to the Constitutional Court, while one fancies that the likes of Aptur will most certainly want our learned friends to issue rulings. If the courts get involved (not if, when), there will be yet more legal uncertainty that could drag on for months or even years. Meanwhile, there will be people thinking they'll buy an apartment for tourist rental. Crazy.

The courts have already been active in ruling against Canary Islands legislation in respect of zoning, and they may also be asked to intervene in Andalusia. The equivalent of Aptur in Andalusia wants the regional government to amend its legislation, but the government is standing firm. The main aspects it wants amending include the fact that in certain major tourist resorts, such as Marbella, no licences can be issued.

Back in Madrid, the Supreme Court has made a ruling that will be looked upon favourably by the regional government. The court has supported a decision of the High Court in Catalonia which forces websites to only publicise tourist rentals which have a registration number (the Balearic legislation envisages this). HomeAway appealed this decision, but the Supreme Court has found in Catalonia's favour. The precedent could well prove to be very significant. The general secretary of Cehat, the Spanish Hoteliers Confederation, has described it as "very important and the first step in putting an end to the underground economy".

Might Mallorca Follow Barcelona's Airbnb Lead?

While we await with great interest what the Balearic government will be proposing with its holiday rentals' legislation, tourism minister Biel Barceló must be keeping a close eye on what is going on in Barcelona. That city, which some time ago opened what amounts to all-out war against accommodation websites, has caused a stir that captured headlines a few days ago - fines of 600,000 euros on both Airbnb and HomeAway. But there was more lurking behind those headlines. Airbnb are accused of having 3,812 advertisements for unlicensed accommodation; HomeAway of having 1,744. Mayor Ada Colau is blunt in her opinion: "It is unacceptable to have thousands of tourist apartments without licences and in an illegal form, without paying taxes and with causing harm to resident communities."

Both these websites, as far as Barcelona is concerned, have failed to collaborate with the town hall (a neat take on the so-called collaborative economy they profess to represent), but it isn't only the town hall which is taking aim at them. Activist groups are openly accusing Airbnb of pretending that profiles of hosts match those of people who rent out in order to make ends meet and pay the mortgage. However, the great majority of adverts are for large owners, the activists claim, and they reckon that Airbnb is also giving instructions on how hosts can avoid inspections.

Activists' accusations about Airbnb in Barcelona aren't new. These groups can now, though, feel bolstered by the latest fines that the town hall has dished out and the size of the fines. The Colau administration and the activists are basically singing from the same hymn sheet.

Airbnb will be appealing against the fine (as will be HomeAway). It appealed when it previously received a 30,000 euros fine, but given that it is now - as it were - a serial offender, Barcelona has slapped the maximum fine that Catalonia's tourism law permits. The Airbnb response, which almost acknowledges that there are no grounds for appeal, has sought a defence by saying that Barcelona is the only city to be fining it. While it then goes on to speak of the economic value derived from the "collaborative" accommodation economy in a city such as Barcelona, it doesn't - as has been observed - mention the absence of benefit, i.e. tax that isn't being paid.

Belinda Johnson, Airbnb's chief business affairs and legal officer, was reported the other day as saying that the company looks to work hand in hand with local authorities - by collaborating with them, in other words - but in Barcelona this isn't the case. The attitude of the town hall may not be to Airbnb's liking, it may not be like other cities, but the town hall has every right to adopt the measures it is. Colau is putting all sorts of tourist noses out of joint, but on this there is clearly a great deal of support for her action. And more websites are finding out that Barcelona is brooking no argument: TripAdvisor is one of nine to be levied with the basic 30,000 euros fine that Airbnb had appealed.

All this will not have gone unnoticed by the Balearic tourism ministry or, one fancies, by Palma town hall.

The Sharing Lobby

The regulation or non-regulation of holiday lets has reached the highest levels of Spanish governmental administration. The national competition commission is addressing the issue, taking account of the explosion of the P2P phenomenon, i.e. web portals which place consumers in direct contact with providers, be they apartments for rent or other types of service. As the issue climbs towards the top of the regulatory heap, companies engaged in P2P in Spain have formed an association to lobby government. It includes the most celebrated of the P2P websites, Airbnb, plus other accommodation websites and, for example, car sharing sites. It does not include Uber, however. This taxi and transport network has been condemned in Spain for providing unfair competition. A judge has ordered Uber to cease all activities in Spain. The French are to ban Uber from the start of next year.

But if Uber is a sort of black sheep of the P2P community, other web operators are craving legitimacy and have so formed their association - "Sharing España". Much of this sharing, holiday accommodation and so on, is considered by opponents to represent an underground economy, which this week was said to equate to 22% of the Spanish tourism sector. How such a figure is arrived at is unclear, but the secretary-general of the Spanish Confederation of Hotels and Tourist Accommodation, Ramón Estalella, asserted that 22% it was. The hoteliers want tough action on any form of what they see as unfair or illegal competition, but arriving at regulations is far from straightforward. As the director-general for tourism in the region of La Rioja has quite rightly noted, attaining uniform regulation in all regions of Spain would be "unworkable". She has thus reinforced the fact that the devolution of responsibilities for holiday let regulation to the regions by national government is itself all but unworkable; the consequence of this is that there are seventeen separate regulatory frameworks.

The holiday lets sector is now trying to fight back against the hoteliers and their claims. The association for apartments for tourist use (APTUR) in the Balearics has argued that holiday lets generate more employment than the hoteliers do, both directly, e.g. through cleaning services, and indirectly - car hire, restaurants, shops, etc. This lobby in the Balearics has, until recently, been fairly quiet, unlike in the Canaries, and the association for holiday rentals there held its first forum on Monday at which a video was unveiled. It is called "Holiday rental: the tourist decides" and features personal accounts by tourists as to why they opt for non-hotel accommodation. In addition, Homeaway, an online holiday rental marketplace similar to Airbnb, has teamed up with the university in Salamanca to create the first "barometer" of holiday lets activity in Spain and specifically in the Canaries, where the economic impact of the sector is said to have been worth 817 million euros over the past three years. The Canaries are, unlike the Balearics, edging towards a permissive form of regulation akin perhaps to that of Catalonia. And that region, the only part of Spain which has a tourist tax, anticipates generating 10% of revenue from the tax in 2015 from accommodation which has been regularised and which may legitimately form part of P2P sites' offers. Catalonia is looking forward to raising 44 million euros from tax next year, meaning that holiday lets will account for approximately four million. This is revenue which is used for tourism promotion purposes.