Thursday, May 09, 2013

No Let Up: Revised tenancy act

Regulations regarding the letting of private accommodation for tourist purposes are far from straightforward. Those which relate to the rental of apartments in the Balearics are subject to both regional and national law, while there is a further dimension - a European one - which has helped to make the situation ever more confusing and unclear.

A way of justifying the legality of private rental of apartments in the Balearics has been to invoke the national tenancy law. This law, as it related to tourist accommodation, was, though, brought into question by the European services directive; the status of such accommodation has, as such, been one of limbo for a good three years.

Balearics law on tourist accommodation, that enshrined in the 2012 tourism law, is, or appears to be, pretty unequivocal. It states that under no circumstances can an apartment in an "edificio plurifamiliar" (an apartment block therefore) be commercialised as a property for rent to tourists. A loophole, however, has come from the tenancy act whereby an owner could argue that a property was being rented in accordance with this act. As such, so the argument has gone, local authorities in the Balearics would have been exceeding their powers had they prevented this rental or issued a fine for having done so.

The problem with this legal interpretation is that the law in the Balearics and Spain does not always follow a clear path. Regardless of what the tenancy act might or might not say (albeit that it was in limbo), an owner would have taken a risk. The tourism ministry, as one representative of the Balearics local authorities, might well (and in all likelihood would) cite Balearics law, even if a national law might contradict it. The chances then would be that the owner would have to go to considerable lengths (and expense) to challenge the Balearics law. It has been far too simplistic to argue that the tenancy act could be held up as defence, because this is not how the process tends to work when there are different authorities involved.

The Spanish Senate has now approved what is called the law on measures for the flexibility and development of the property rental market. This, for property owners, sounds quite good, but its title is misleading. Included in this, is an amendment which will limit the private rental of holiday homes and tourist apartments. In fact, what this revised law is proposing - and it has to go to Congress to get final approval before going onto the statute book - is that, while private accommodation for tourism will not be "impeded", such accommodation will be excluded from the tenancy act. Instead, regulation will be left to law as it affects tourism property in specific autonomous communities, such as the Balearics.

What will happen, therefore, is that previous resort to using the tenancy act as a defence for private rental of apartments in the Balearics will no longer be possible. The unequivocal nature of Balearics law will make the situation that much clearer. it won't make it any better for property owners, but at least some of the confusion should ebb away. One says "should", but one can never be entirely sure.

As ever with regulations regarding holiday lets, there is a great divide between the influential hotel lobby and those with property to rent. A body does exist to defend property owners. It is called Asotur, the Asociación de Viviendas de Uso Turístico. It has tried to persuade the tourism secretary of state that pressures from the hotel lobby have been unfair. The tourism secretary of state is Isabel Borrego, and she is from? The Balearics.

Data which is used by the hoteliers to justify their posture suggest that average hotel occupancy is slightly under 50% whereas occupancy of apartments is some way above 50% (at almost 57%). This, so the hoteliers argue, is evidence of unfair competition from an unregulated market. But these average figures bear little or no relation to the Balearics or to specific parts of Mallorca (Pollensa would be one). They are evidence of very little, other than, as Asotur has been at pains to point out, there being distinct markets - those for tourists who wish to stay in hotels and those who don't.

Even if Congress approves the new tenancy provisions and so therefore gives the Balearic Government virtual carte blanche to implement its own regulations, the matter probably won't end there. Asotur, which points out the degree of market liberalism which permits private rental elsewhere in Europe, is likely to go to Brussels, and it may have a strong case. The Balearics tourism law, it could well be argued, contravenes the principle of a free market for goods and services. Getting any definitive view on this, though, would take years.

Any comments to please.

No comments: