Is the holiday rental market at risk in Spain?
August 6, 2012 3 Comments
Guest post by Anna Nicholas
For thousands of expats and locals alike, renting Spanish properties to holidaymakers particularly during the summer season can be one of the most lucrative and easy ways to earn money.
Cashing in on the tourism season has always proven popular in Spain but the country’s economic crisis and depressed housing market has driven many more foreign homeowners- a significant percentage of whom are currently unable to sell their overseas properties- to rent.
Until now there has been hazy legislation in Spain when it comes to short and long-term lets especially regarding the licenses and permissions required by law. And to add to the confusion, different regions apply different rules. Most of those renting out homes are completely bewildered by the system or ignorant of the law and even those wishing to declare earnings from rentals are sometimes told by local lawyers not to bother because of the administrative complexities. It is estimated that 55 per cent of rental properties are undeclared in Spain with many owned by expats.
The British government has grown concerned at the number of Britons falling foul of Spanish law, perhaps unwittingly, warning that some homeowners have already faced fines of €30,000 for letting properties without the correct permits. It offers advice on its website, suggesting that those wishing to rent should consult local town halls and lawyers for advice as well as professional tax advisers regarding declaration of rental income.
Much as the Spanish government insists that it is cracking down on what it considers to be’ illegal’ renting, I doubt there’ll be many expats or Spaniards shaking in their boots. Last year a rumour rippled around our valley that inspectors would soon be spying on individual suspect properties, monitoring holiday rental websites, classified adverts and property agents’ rental listings. Nothing ever came of it and I’m not surprised. How in the current crisis would the country have the resources to monitor the situation when it has far more immediate economic concerns? The added problem for the Spanish government is that expat homeowners often ensure that financial transactions are conducted out of Spain and those holidaymakers staying in rental properties for limited periods are usually advised by the owners to claim that they are family or friends if quizzed by anyone in authority.
The hotel industry which is constantly lobbying the Spanish government on the issue mistakenly believes that rental properties are depriving it of footfall when in fact most holidaymakers who rent, would never normally consider staying in a hotel. For families and groups of friends on tight budgets sharing a holiday property can offer value for money as well as privacy and flexibility. And of course the Spanish authorities should take into consideration that all of those renting will be contributing to the local economy. Stamping out the rentals market would be rather like killing the goose that lays the golden egg.
In order to tackle the problem, the Spanish government needs to devise a simple and fair nation-wide accommodation grading system that protects the consumer and encourages those renting to declare income. Publicity material -in English, German as well as Spanish- should be made freely available at legal offices, gestorias, and at town halls.
For now at least those renting properties without permits are likely to be able to continue doing so without much threat of being caught. On the other hand, rather like Russian roulette, someone somewhere is likely to cop it which is a risk that some might prefer not to take.
Article source: My Telegraph.