Beware this is coming to the Valencian Region

freddo · by **freddo** » Sat Feb 13, 2016 12:09 pm

Regular legal-contributor Raymundo Larraín Nesbitt explains the new regulations governing holiday rentals just introduced in Andalusia. He gives us an overview of the Decree in force, the requirements landlords must meet, and explains the steep sanctions for non-compliance.

By Raymundo Larraín Nesbitt
Lawyer – Abogado
8th of February 2016
Introduction

Since 2013 I have highlighted the ongoing trend in all regions of Spain to pass legislation on private holiday rentals:

• New Measures to Bolster Spain’s Ailing Rental Market
• Holiday Rental Laws in Spain

Anyone who has read my articles here will know I am not in favour of these tourist rental laws because they have not been drafted with the consumer’s best interests in mind, but rather with those of the hotel industry that fought tooth and nail to regulate this sector, and thwart what they call “unfair competition”.

Spanish politicians, and particularly those in Andalusia, have taken a string of controversial decisions in the last few years in the face of an anemic post-crisis recovery (i.e. the infamous worldwide asset declaration requirement (Model 720), stringent regional Holiday Rental Laws in various Spanish regions, empty home expropriation decree for ‘social reasons’, a disappointing ‘Golden Visa’ residency investor scheme, draconian anti-money laundering laws etc.). These laws are proving to be highly unpopular with expatriates to the point of driving many away. Unsurprisingly many town halls are reporting of late that foreign population has taken a sharp dip in their census over the last few years (for example, the Marina Alta region of Valencia has lost a third of its foreign population). Maybe some expats have chosen to live under the radar to avoid complying with Tax Model 720 worldwide asset declaration, others have simply had enough and packed their things and gone back to their home country.

If Spain had truly a modern diversified economy these unpopular laws wouldn’t be such a big deal after all, and we could shrug it off. But the sad fact is that Spain’s GDP is unhealthily over-reliant on the Tourism and Construction sectors (over 20%), and this fact, coupled with huge unemployment levels that reach alarming all-time highs in Andalusia, make for a bleak picture. Perhaps regional politicians would do well to ponder carefully on the far-reaching consequences of decisions taken on the hoof. In my humble opinion there are many countries out there that are doing a sterling job at attracting foreign investments by adopting superb fiscal measures (chiefly Portugal). Spain should take a good hard look at itself and abandon its self-complacent attitude and start embracing competitive measures that would renew the market’s interest (especially amongst British, traditionally our largest market by far). Spain has all the makings to become the hotspot; all it requires is competent down-to-earth politicians passing tax-friendly laws that attract foreign investments. Is this too much to hope for?

In February 2016, after a long struggle, Andalusia finally passed its own regional holiday rental law in the wake of much upheaval. This article serves as a gentle reminder on this new law to all those landlords who are currently letting out property in the region of Andalusia or intend to in the near future. I strongly advise to heed the guidance I provide below and not to ignore this new piece of legislation. The fines for non-compliance are very steep (ranging from £1,500 to £115,000).

Anyone who thinks the Junta de Andalucía will not hound infractors and fine them harshly is deluding himself. The whole purpose of this legislation was geared from the outstart towards sanctioning offenders as those behind it had an axe to grind. Moreover in other parts of Spain town halls are already levying substantial amounts on the back of similar new laws. They are using new technology (‘web crawlers’) that methodically and relentlessly trawl internet to come up with non-regulated rentals that are advertised over the web. Authorities cross-reference this information against their public records and unregistered properties are brought to light as a result. Not to mention that at a time where Administration’s coffers are bereft post-crisis this represents a golden opportunity to hunt, apologies, I meant raise taxes and prop up politicians’ dwindling coffers (because gold statues and palaces don’t pay for themselves you know). God bless them all.

In Barcelona, for example, in two unrelated recent cases they have levied fines of £24,000 (source) and £70,000 on the same token (source). So if after reading my article you become a law-abiding citizen registering your properties to rent them out as tourist accommodations make sure you are filing and paying your Non-Resident Taxes in Spain as well! It would be a faux pas to register them and not declare and pay tax on your rental income in Spain.

Let this article act as a stern warning to all landlords in Andalusia: the taxman cometh!

Andalusia’s Holiday Rental Decree

Andalusia approved on the 3rd of February this new decree which had sparked much controversy and debate. The final version has dropped some of the more contentious points but still retains many which are highly questionable in my humble opinion. Andalusia’s Holiday Rental Law was officially published in the BOJA on the 11th of February. Link to the new law:

Andalusia’s Holiday Rental Law.

The official name is Decree 28/2016, of 2nd of February. The best way to go around it is simply analyzing point by point what it establishes.

Obligation to Register your Property: by the 12th of May 2016

In compliance with this Decree and with Law 13/2011, of Tourism in Andalusia, landlords will have a three-month deadline to register their properties before the Junta de Andalusia as from the day this new decree is officially published in the BOJA (Andalusia’s official law gazette). The law was published on the 11th of February, so the three-month deadline ends on: 12th of May 2016. As from this day onwards, this new Decree will come into force.

You will have to fill in the form supplied by Andalusia’s Tourist Registry (or ATR going forward). If your command of Spanish is low, you can hire a lawyer to do this on your behalf in exchange of a reasonable fee.

Excluded Properties

The following properties are excluded from being regulated by this decree:

• Properties which are lent to friends or family without an exchange of money (free).
• Properties that are let to the same individual for a continuous period of time exceeding two months. In which case it will be regarded as a standard rental agreement subject to Spain’s Tenancy Act.
• Rural properties, located in what is legally classified as rural land, are expressly excluded as they are subject to their own legislation: Decree 20/2002.
• Landlords that own three or more properties, personally or through corporate structures, each located within a radius of 1 km from the reception office in the same unit (i.e. building, urbanization, condominium) will be excluded from this new decree (this is very bad news). They will be subject to the much harsher Decree 194/2010 (Apartamentos Turísticos) which basically equates these properties to a hotel. This has very serious restrictions on use i.e. landlords cannot use the property themselves for more than two months a year, they must cede the management of the units to a professional company for a minimum period of ten years etc.

Definition of Holiday Rental – What Properties are Included

The decree is rather vague on this point. Any property that complies with the following points will fall under the remit of this new regulation:

• The property is located in land classified as ‘residential’ (in other words, rural and tertiary land are excluded as they are each subject to their own legislation on rentals).
• The property is rented out to tourists regularly on a short-term basis (days, weeks, months).
• Reservation system is enabled. Reservations can be made.
• The property will be regarded to be rented out touristically when the landlord advertises it using specialized media. By specialized media it is understood companies who intermediate between landlord and tenant in exchange of a commission such as: travel agencies, real estate agencies, holiday rental websites (i.e. Airbnb, HomeAway, Flipkey, VRBO etc.).

Examples of Private Holiday Rentals

All the following landlords fall under the remit of this new law and must comply with its terms or face hefty fines.

1. Mr. Raistlin Majere, and loving wife Claire, own a duplex in a beachside urbanization in Estepona and rent their property out three months a year advertising through HomeAway and similar niche websites.
2. Mr. Aedan Cousland owns a luxury villa in Benahavis, Marbella, which he rents out to affluent Arabs only during the summer season for a substantial return. He advertises only through upscale real estate agencies.
3. Mrs. Morrigan Flemeth and husband Alistair own and live in a Guest House in Fuengirola renting out rooms to tourists all year round. They advertise over internet.
4. Mr. Loghain McTir, UK resident, owns and rents three high-end properties through a management agency. Two of the properties are located frontline in Puerto Banús and the third one in the prestigious Sierra Blanca estate.

Rental Types

Properties can be let as a whole or else by rooms (like in a Guest House).

If it’s the whole property that is being rented out, no more than 15 lodgers will be allowed simultaneously at any time (think of a large villa).

If the property is being rented out by rooms, it is mandatory the landlord lives in the property himself. No more than 6 vacancies can be offered and each individual room cannot exceed four lodgers.

Lodging Requirements

Some requirements from the draft decree have been dropped such as wi-fi in every room which is no longer required.

• The property must have attained what is known as a Licence of First Occupation (LFO, for short). It is also known in some parts of Spain as First Occupancy Licence, Habitation Certificate, Habitation Licence, Licencia de Primera Ocupación, Cédula de Primera Habitabilidad, Cédula de Habitabilidad or Cédula de Ocupación. A LFO is a licence issued by the town hall (ayuntamiento) once the building works have been completed, which allows the purchaser to dwell in the property legally. The property developer is responsible for applying for this licence, once the Certificate of End of Construction has been issued. It ensures the property is above board complying with all planning, health & safety laws. It is also very important as it is required by utility companies to supply the property with water, electricity, gas and telephone connection.
• Full compliance with planning, health and safety, security and disabled access amongst other laws; both at a national and regional level.
• Rooms must be ventilated and have blinds or shutters to obscure them when necessary.
• Rooms will have the appropriate furniture required for use by lodgers and in proportion to the number of lodgers per room.
• Air conditioning unit affixed in every bedroom including living room (as a fixed fixture, not as a portable device unit) when the property is offered between the months of May and September (inclusive). Landlords will be given one year to adapt the rooms to this requirement as from the time this law is passed (12th of May 2017).
• When properties are let during the winter season (October through to April, inclusive) a heater must be made available in every bedroom including living room (as a fixed fixture, not as a portable device). Landlords will be given one year to adapt the rooms to this requirement as from the time this law is passed (12th of May 2017).
• First aid kit.
• Landlord must provide physical or electronic brochures of the closest amenities, medical treatment facilities, parking spaces, restaurants, shopping centres as well as plans that detail use of urban transport, map of the surrounding area and general tourist guides.
• A complaints book will be made available as well as installing a large visible sign informing lodgers that a complaint book is available.
• Mandatory cleaning service at the start of new lodgings.
• Clean sheets and bed linen as well as supplying a spare set.
• Provide lodgers with a working contact phone number of person to be held accountable for any complaint or query raised so the situation is addressed immediately.
• Provide instruction booklets to use household and kitchen appliances.
• Inform lodgers on property use restrictions such as no smoking areas or pet restrictions.

Holiday Rental Agreement

Must comply with the following points:

• It will have the details of the landlord, including a working telephone number as outlined in the previous section above to address complaints, the property’s unique alphanumeric code on being registered at the Junta de Andalucia, the reservation dates (arrival and departure dates), numbers of lodgers and total price of the holiday rental.
• All lodgers, not just the one making the reservation, will be fully identified in compliance with current Security laws. Lodgers will supply a copy of their personal ID/passport.
• A copy of the signed Holiday Rental Agreement will be stored by the landlord for up to one year to provide it for inspection by the relevant authorities.
• If the agreement does not specify it, it is presumed the rental starts at 16.00 and ends at 12.00pm.
• The landlord, or person designated by him, will show the lodgers around explaining how the kitchen and household appliances work as well as providing them with security cards and access codes to the premises.

Price and Reservation

• Price must be inclusive of utility consumption (water, electricity, heating, A/C) as well as compromising cleaning the room as the start of a new rental. It is compulsory for a landlord, or person designated by him, to hand invoices for every payment made including the reservation fee to a guest.
• All contractual terms will be clearly laid out in advance including any penalties.
• Unless agreed otherwise, the maximum reservation fee is 30% of the total price.
• If cancellation of the reserve is done over ten days in advance the landlord can pocket 50% of the reservation fee in compensation. If the cancellation is done under 10 days then the landlord is entitled to pocket the full amount of the reservation fee. If it’s the landlord that cancels he may do so without penalty over ten days in advance. If the landlord cancels under ten days he must pay a compensation to his guest of 30% of the final agreed total price.
• If the cancellation is due to a force majeur, then both landlord and guest are exempt of awarding compensation. Examples of such admitted by law courts are flash floods, earthquakes, strong winds, general strike.

Inscription before Andalusia’s Tourist Registry (ATR)

All landlords that wish to rent out their properties in Andalusia must inscribe their property before the ATR. You will need to supply the following:

• Property details, cadastral reference, number of potential guests according to its Licence of First Occupation.
• Landlord’s personal details and an address for official notifications.
• Details of management agency or designated person if landlord appoints someone to act on his behalf. Any change in details must be communicated so the ATR remains accurate at all times.
• Details of this inscription will be passed on to the local town hall.
• Once the property is duly registered before the ATR each dwelling will be assigned a unique alphanumeric code which must appear by law in all publicity offering the property to let i.e. internet webs, estate agency brochures, brochures etc.

It goes without saying that any property let in Andalusia that does not sport said unique ATR code will be easy to spot and will result in heavy fines.

Fines and Sanctions

They are divided into three categories:

a.- Light offence. Can be either a written warning or a sanction with fines up to €2,000.
b.- Serious offence. Sanctioned with fines ranging from €2,001 up to €18,000. The premises may be shut down temporarily at the authority’s discretion (for periods less than 6 months), the rental licence may be revoked temporarily.
c.- Very serious offence. Sanctioned with fines ranging from €18,001 up to €150,000. The premises may be shut down temporarily at the authority’s discretion (for periods spanning between 6 months to 3 years), the rental licence may be revoked indefinitely.

If the landlord is sanctioned two or more times for very serious offences within a three-year period, the property will be struck off the ATR indefinitely.

Statutory Limitation of Sanctions

• Light offences: six months.
• Serious offences: one year.
• Very serious offences: two years.

The statutory limitation starts as from the time the sanction is imposed by the Administration. The time can be interrupted by the initiation of legal proceedings. If the administrative procedure is paralyzed for more than one month for reasons unrelated to the offender, the statutory limitation will be renewed once again (eventually time-barring the sanction).

Clandestine Activity

If the Authorities catch you red-handed renting out a non-declared property (that is not registered at the ATR) this will be regarded as a serious offence attracting fines ranging from £1,500 up to £14,000.

Conclusion

If you own property in the region of Andalusia and plan to rent it out as a tourist accommodation make sure your property is first registered before the ATR. Do not chance it thinking they won’t catch you as one of the requirements to advertise rentals is to publish the unique alphanumeric code supplied by the ATR in all advertisements (article 9.4). Any offering made going forward that lacks said ATR code and you will be done for. Let alone the unbridled use of web crawlers to hound non-compliers which is proving most effective.

Bottom line, be on the right side of the law. Hire a lawyer to ensure your property is registered to let and fully compliant with all the minutiae. Ensure you acquire all the gadgets the Andalusian law requires for each room listed above (A/C units, first aid kits etc) to avoid sizeable fines.

“Politics: the art of creating new problems where none existed.”

Related articles

Renting in Spain: Top Ten Mistakes – 8th of June 2011
Let-to-Buy in Spain: The Smart Choice – 8th of April 2012
Letting in Spain: The Safe Way – 10th of October 2012
New Measures to Bolster Spain’s Ailing Rental Market – 8th of July 2013
Tenant Eviction in Spain – 8th of June 2014
Holiday Rental Laws in Spain – 8th of March 2015
House Hunting in Spain – The New York Times. June 2015
Resurgent Spain: Málaga Sees Strong Sales – Mansion Global (The Wall Street Journal). December 2015

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. No delusional politician was harmed on writing this article. VOV.

THE VIEWS EXPRESSED ARE THE AUTHOR’S ALONE

Liz & Gordon · by **Liz & Gordon** » Sat Feb 13, 2016 12:18 pm

Pete31 · by **Pete31** » Sat Feb 13, 2016 9:30 pm

What a lot to try absorb? Mind bogling so do this mean because I am a non resident in Spain I am asumed to be renting out my property, ( i never have) so maybe I should think about going back to the UK not to many bad things happening there!!

brownale · by **brownale** » Sat Feb 13, 2016 9:45 pm

this is why we pay non resident tax? or am i missing something!!!

Jan · by **Jan** » Sat Feb 13, 2016 9:50 pm

Pete31 wrote:What a lot to try absorb? Mind bogling so do this mean because I am a non resident in Spain I am asumed to be renting out my property, ( i never have) so maybe I should think about going back to the UK not to many bad things happening there!!

As indicated in the post above which is quite correct, those of us who don't rent out only have to pay the normal Non-Resident tax every year on our property.

However those that do rent out have to declare the extra income in their tax return, as we would do in the UK.

There's nothing to fear by doing the right thing and any Fiscal representative will be able to sort out the taxes.

As for the rental licenses/ registration we have covered that on the forum before recently and anyone advertising a property for holiday/short term rental should have a registration number on their advert or their property will be removed.

See this link for the information:
property-villas-houses-apartments-to-rent-in-quesada-spain-f41/important-about-the-properties-for-sale-and-rental-t5075.html

Pete31 · by **Pete31** » Sat Feb 13, 2016 10:47 pm

Ha ok, I do pay non residential taxes but was told many years ago if you do not reside in spain full time the then authorities said we had to pay taxes as we were deemed to rent our properties out, we have had our place for near 14 years from new build.
Pete.

brownale · by **brownale** » Sun Feb 14, 2016 12:04 am

yes but as you do your non-resident tax return you have to declare if you rent your property or not which sets your rate of tax to pay.

Jan · by **Jan** » Sun Feb 14, 2016 12:44 am

Pete31 wrote:Ha ok, I do pay non residential taxes but was told many years ago if you do not reside in spain full time the then authorities said we had to pay taxes as we were deemed to rent our properties out, we have had our place for near 14 years from new build.
Pete.

Hi Pete,
There has always been a misconception over this but it is already calculated into our Non Resident taxes (It's called Imputed income tax.) Our Fiscal Rep has this statement on their website to explain (Quote):

"The imputed income tax is payable by non-resident property owners who do not rent out their property and so do not pay rental income tax. The idea is that you could rent out your property if you wished.
Imputed income tax:
is paid on a second home that is not rented out
is declared in the non-resident annual tax declaration
is paid to the Spanish Tax Authority."

So no worries...if you don't rent out your property (as we don't ) and pay your Non Resident tax each year (as we do) there is no other rental tax to pay.

More info here if needed:
http://www.abacoadvisers.com/spain_expl ... axes-spain

Hope this helps.

Jan

Paulspot · by **Paulspot** » Sun Feb 14, 2016 2:01 pm

Hi im reading this and still very unsure as when i was over i showed the licence application paperwork to a agent i trust who made inquiries through the town council who knew nothing about it, then i showed it to an accountant who will do my no resident tax returns who told me because our apartment was a residential one in a non tourist area that the document relates tourist areas like Alicante, Benidorm ?

I was told not too apply for the licence but would of course then declare any profit from renting along with my non resident tax return as i want things to be above board and pay my taxes.

I dont know anyone in the area that has a licence to rent and we do advertise on Holiday lettings and i am still worried about the possibility of fines so any verification on the situation and advice would be great but we dont expect to make very much from our rentals as our prices are cheap to compete with the others around also at very good rates.

All we want to do is cover our yearly costs with a bit left over for maintenance whilst providing good quality accommodation for quests to enjoy a reasonable cost holiday in the sun.

brownale · by **brownale** » Sun Feb 14, 2016 2:12 pm

if you don't rent then no need to panic all taxes are taken care of in your non resident tax return.

if you do rent then i would make sure you cross every t and dot every i with reference to taxes and licence or you may get a bigger bill than you expect and if you think your'e getting away with it when you sell the property any outstanding debt or taxes will come off the sale price plus interest. :lol: