New law for private rentals in Andalucia

Seems like the death knell for private rentals in Andalucia. It seems a new law has been passed requiring registration, or 18,000€ fines for non complaince. 

http://www.20minutos.es/noticia/2662749/0/consejo-gobierno-dar-luz-verde-este-martes-al-proyecto-decreto-viviendas-turisticas/

I have always decalred my minimal rental income, but some of the things being required to obtain a licence are ridiculous.

Mark

It is also against the law in Spain advertising you Spanish property for holiday rental privately you must use a registered estate agent.

Specialized portals. The Board is negotiating with specialized portals such as Airbnb , so that they only include in its offer homes that are registered in the registry. In case you do not accept the conditions, the agreement "legal remedies will be sought to achieve," said the Minister of Tourism, Francisco Javier Fernandez.

Translated from your link Mark - That will ruffle a few feathers
 

windtalker

It is also against the law in Spain advertising you Spanish property for holiday rental privately you must use a registered estate agent

Woud you say this includes webiste such as

owners direct

holiday lettings

homeaway

or even links advertising on EOS

how many estate agents are regsitered?

etc.

Will they be doing the same as airbnb?

Do / will the authorities ever chase owners or have the resources to do it (they don't chase other illegal activities)

Sounds like a law to appease the hotels and we will never see prosecutions

To put the new law in context, this is the result of lobbying by the hotel industry due to what they believe is unfair competition from the private sector that has not had to comply with the requirements that applies to this industry.

This new Law applies only to holiday rentals, that is, rentals to tourists on a per day basis (what is known as touristic rentals) with a daily rate.  It expressly excludes long term rentals and rentals on a monthly basis.

This law already exists in Catalonia and the Canary Islands. Andalucía is following the national trend of supporting the hotel industry because it's struggling. Last year Spain enjoyed a record year for tourists but most of them rented private accommodation. The government is also losing millions in due tax revenue as owners fail to declare incomes.

In my view this is a sensible measure. Private holiday letting is out of control. It also impacts residents who have to suffer and endure the appalling behaviour of people "enjoying themselves” every summer.

I agree Micky, but how on earth are they going to police it? On Holiday Lettings there are 12.978 listings in Andalucia

Edited to say

The 20 minutos article talks of 80,000 properties 

Totally agree with Micky. 

I wouldn't be so sure it will NOT be policed - after all, it could turn into a very easy money-spinner. It shouldn't be too hard if done on a municiple level.

I have not seen what the actual requirements are. Would be interesting if someone could post them (or a relevant link). Is it going to be so hard for landlords to comply? Or is it a case of most landlords being reluctant to comply, because it would mean they would also then have to declare their income? (Present company excluded, naturally!)

Trouble is - in Spain you are taxed on the TOTAL income, not the profit. 

To get around this folks will increase their prices and be less eager to spend money on improvements  on a regular basis.

These were some of the proposed requirements Roberto (old page though):

http://www.spain-holiday.com/rentalbuzz/green-light-on-the-regulation-of-private-holiday-rentals-in-andalucia

The bit for me is having to install a/c in the bedroom of a 1 bed apartment when there is already a/c in the lounge/ dining area. Means double the electric cost, so increase in price, so therefore less comptitive. Most of our guests are Spanish and prefer to use the fans, but apparently we should still provide extra.

You have to have free internet. Not a problem as we do, but how many of the hotels provide it in all of their areas and not just reception/ bar?  Some even charge for any more that a hour a day.

Bookings via Niumba are provided with all the necessary paperwork (contract, secure payment method, deposit facilities if required), so no problem there.

I have never howere, advertised daily costs, I only offer weekly/ monthly/ long term as daily is not cost effective. Utilities have always been included as has the changeover facility and on site management team.

We have smoke detectors (not specified), I have electrical tests carried out (not specified), so we are hardly out to be rogue landlords, but are being made to feel so. 

Thanks, now I remember these proposed requirements being mentioned previously. If, indeed, the approved legislation includes the insistence of free internet and a/c, but not smoke detectors (it does appear to include fire extinguisher & first aid kit), then I agree with you about it being unfairly stacked against landlords (there are plenty of 5hitty hotels around that don't offer these). But some of the other points I feel are necessary, such as having complaints forms & somebody responsible/accountable who is contactable...and obviously, for these to have any effect, the properties have to be registered somewhere. Apart from the a/c and free internet, I don't see any other problems/costs with conforming though.

Not sure of the bureaucracy involved in registering, especially in our area where they have a habit of making things difficult! The cost of installing extra a/c isn't really worth it for us as we only rent July and August (and not all weeks) and gross around 1200€ in the period. Take 500€ out for a new a/c unit and add the increase in weekly cost for extra electric = not justifiable really.

There are some senible ideas within it, but I haven't yet been able to find a definitive list of all things needed to comply and not sure when next out, so unable to register in time anyway!!

I have used many hotels in Andalucia and never had a complaint, I can also understand them wanting to creat a'level playing field'. They obviously invest a lot of money in their hotels and also provide local employment.

It is also good to have 'private lettings' as this helps keep things competetive, not too sure thatn hotel prices would be the same if they were not competing against the private lettings.

Not too sure if I am correct on this one but, I am fairly sure that hotels can write off all their costs in the relevant tax year against the income in the same tax year?

If they are able to write off their costs against income for the year then this is where it is not a 'level playing field'.

Private lettings can only write off costs for the period that the property is rented out, so say you rent for 2months in total, you can only write off 2 months costs, you still have a further 10 months mortgage, electricity, water, Basura, IBI, community charges etc., also if there are to be a/c units in all rooms is this then tax deductable?

Most Brits are happy to pay a reasonable amount of tax if any is due, but I would suspect that most have more outgoings than incomings.

Would apprecaiet any views on this.

Big Al

In the UK we had a Guest House and tax was payable on the profit. Deductions from the gross income was proportional to the personal element. 

However it was always open to interpretation. For example, say we had no guests in March - it could argued that the electricity for that month was a reasonable business expense as we had to keep the heating on 'just in case'. 

The way I see it is that the property boom created a huge number of new "landlords" who bought properties purely for the purpose of renting them out for profit, who are effectively running a lettings business. This is different from the past where private individuals bought holiday homes for themselves, and rented them to others when not using it themselves, in order to help cover the costs of ownership.

If someone is running a business, then why not register it as such, and then they can pay tax only on their profits like any other business? 

The problem is, how do you (or the tax authorities) differentiate between the former and the latter?

When we bought, the intention was to move out when my Son left school and live in the apartment while we sold our UK house. My Wife could work from home (wherever that may have been, and my company were willing to allow me to relocate) We would then use the proceeds from the sale and selling the apartment to buy a permanent residence. After buying, and about 6 months before my Sone left school my Wife was offered a promotion which was based in Coventry, so no working from Spain and our plans changed.

We try to keep the apartment as ours, but yes, do appreciate the little extra from the few weeks rental we get. Problem is, we don't get any related deductions against tax as non residents. HMRC also umm and ahh over whether we have paid enough on every self assessment that is sent in. So out of the small amount we do make, we get very little once tax is paid, cleaning/ handover charges, electric, etc. Adding the extras that are being demanded means we just won't rent it any more as we would then be earning nothing from it.

Sorry to be boring:     I have been saying for a long time that if was almost impossible to let 100% legally,   i.e. if one were to jump through all the hoops, some of which were/are `pretty obscure’ and not known by many ‘legal experts/advisers’.        For example in Andalucía having for years to register with the Junta to do so, with regular inspections,  and charging IVA on all rentals where the owner employed  an agent, or another person to collect the rents, manage the property  etc.

  Now with this implementation  by Andalucía, of the law which I believe was created a couple of years ago and has been implemented over that time by various regions as they have formulated their regulations,  it would seem that to do so now would leave most owners with almost no income. With the cost of repairs, replacements etc. an owner might even loose money.

My son has an apartment which, because of the hoops, he has allowed a friend to use without any rental charge for over 3 years now, so that he has no  problem re letting regulations, but the apartment  is being looked after until, if or when, the property market gets back to where it was in 2008.

I rarely complain about about Spain, but ‘they’ are really stupid.    People who rent private (illegally maybe) are probably not the same people who would use hotels, so no loss to hotel owners if they rent. 

People coming to Spain means income and jobs, empty apartment means unemployment.        

As I said before, apart from the a/c and internet access (if those are included in the final draft), I don't see how these new regulations create that much more expense (overheads) for the landlord. Hoops, perhaps, but hey, this is Spain! Presumably what you're saying here is that if owners have to register their rental properties, they will then have to declare their actual income from them and pay tax accordingly. Clearly implying that these owners currently do not. 

As for the employment angle, I'm not sure I agree. Illegally rented apartments support a huge black economy of cleaners / maintenance staff etc., whereas hotels create (mostly) legal employment and therefore generate tax revenue which can (wishful thinking) be re-invested in local economies / infrastructures. As for the people who stay in "illegal" properties, there are probably now a disproportionate amount of such properties due to the boom. Those people stayed somewhere before it got to the situation we have now, they'll find somewhere else if these properties disappear (which they won't, because nobody's going to bother adhering to the new law anyway by the sound of things!)

I'm not saying I'm 100% in agreement with this new law, just offering an alternative perspective. As I said, it does mean people who genuinely just want to rent their private holiday home for a few weeks to cover their ownership costs will bear the brunt of it, and that could potentially mean foreign ownership of Spanish property becomes even less attractive than it already is, which means sadly your son will probably never see the market recover to 2008 levels.  

By the way, it's perhaps worth pointing out that similar regulations have been in place for some time in other areas of Spain, and even in unregulated regions, a legal contract must be prepared for every guest (how many owners do that?) In the Valencian Community, it became compulsory to register this year, and f you manage five or more properties you must register as a Tourist Company (and can then enjoy the same tax benefits of any company!) In Andlucia I believe if you rent out more than 3 properties within a 1km radius, you must also register as a business.

I have read today that the fines could be 150,000 euros. I wonder how they can justify this? Some of the houses and flats rented out won't even be worth that.

I think it will be very negative for employment - even if cleaners and handy people etc. are in the black market, they still then spend that money in the local economy. Also in many areas there are no hotels so there is no local competition operating. It just means that tourists will not be able to go to these more rural areas and the locals there will suffer even more - losing their business in the village bars and little grocers' shops etc.

I also seem to remember someone mentioning a rule that you had to have a new gas safety certificate for each new let! That would be bonkers - does anyone know if that is in the legislation?

It looks like the register in Andalucia will be open from May and you have 3 months to register, so could be 'caught' from August onwards if you are not registered... After all the costs associated it doesn't seem worth the bother unless you are dependent on the income (which might well be the case, unfortunately, for many).

I have no idea if this quote is correct.

I hope that as people here speak to the professionals they will report the facts, not guesses.

This is the QUOTE:-

We are pleased to report that we have held another consultation with the Junta de Andalucia, the regional government, and the information they have provided confirms our interpretation of the law. The Junta states:

To have the classification of tourist apartments there must be 3 or more apartments (or properties) integrated in the one establishment. One or two apartments cannot be marketed or promoted for tourists using the term tourist property.

With regard to the rental of properties that are not classified as tourist apartments or tourist property the law of urban rentals will apply. This law sets out the rules on rental of private property which is for non-residential or short term use. In this case the property can be rented out always provided the term “tourist” apartment or property is not used and the rental contract complies with the Law on Urban rentals.

You can therefore rent out your property if it comprises one or two apartments or properties provided you do not use the phrase tourist property or anything similar to this to advertise, market or promote your property. You can rent on a short term or weekly basis and in every case you have a fiscal obligation to pay tax on the rental in Spain”

This leads me to believe that if we don’t mention the word “tourist” in any advert then we don’t need a licence….