What Does the New Holiday Accommodation Law (VV) in the Canary Islands Mean for Investors?
Vivienda Vacacional in Tenerife - still possible? Where do we stand with holiday lettings in Canary Island after new strict law is decided in 2024?
Currently, nobody knows for sure!
Buying property in Spain, including the Canary Islands, remains popular among young families, ambitious retirees, and investors. Clients of ‘’Tenerife24’’ seeking investment opportunities, particularly those looking to purchase apartments for holiday rentals, are understandably anxious and waiting. We all want to understand the new holiday accommodation law before we start spending our money.
Will something be completely banned? Will conditions just get a bit stricter? Is it even worth investing in the Canaries right now when the specifics of the law are still unclear? No one has the answers yet, since the new law will be passed only in the summer - the draft is expected by the end of June 2024, which is just around the corner! So far, rumours about the new law have been quite discouraging, and locals have made a wide range of suggestions to get tourists out of residential apartments and make more apartments available to local families at reasonable (read: much lower...???) prices. But, why any of the owners should want to rent their apartments out for less money for locals? Let’s see what the new law will say to our owners - what are the new conditions of vivienda vacacional lettings?
Finally, some more information has leaked from behind closed doors in the form of the following article, which we translated for our property buyers along with our small explanations. Enjoy reading, as it seems the major "scary stories" about how oppressive the new law will be are not confirmed by this article. Rather, the hints in this article suggest that the future for investors remains bright, provided the new (and doable) requirements are met. Time will tell!
In advance, it can be said that the article only gives an IDEA of where the thoughts of the lawmakers are heading - there could still be many surprises! Investors, therefore, have two options: either rush to the notary and quickly apply for a holiday let licence and start renting out rapidly because the demand for holiday accommodation from sunseekers is only growing, and the 2024 tourist numbers in the Canaries are again unprecedentedly high.
By the end of March 2024, the Canary Islands had a record number of foreign arrivals - 4.3 million visitors in 3 months (+14%, 611,000 more than the same period in 2023); in March alone, 1.5 million visitors from other countries (+19% compared to the same month last year). Continuing at this pace, the Canary Islands hope for an 8% growth in tourism in 2024 (even without considering domestic tourism), with more foreign tourists visiting throughout the year than ever before. The two years with the highest number of tourists in the Canaries are still 2017 with 14.3 million, compared to 14.2 million in 2023. So, there are plenty of accommodation seekers and payers - is it really worth it for locals to turn off this golden faucet with one law?
Or, the second option for investors - calmly grill and chill this summer, take a break, and wait to see what the new law will do to the local real estate market. Currently, neither purchase prices nor rental prices are showing any downward trend, rather they are slightly higher again than a year ago at the same time! We hope that the quick translation below and our small additions will still be helpful to you, as total ignorance is likely much worse than this bit of information we have written down here!
You can find the link to the original English version of the article at the end of this piece!
Yours, Tenerife24 & Eike Feigenbaum
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Jessica de León, the Minister of Tourism of the Canary Islands, announced that by the end of June, a draft will be ready to regulate properties intended for holiday lets. The new law will bring "improvements," including reducing the minimum required area to 25 square metres and adding additional equipment requirements for legal holiday rental apartments.
During the forum "The Challenge of Regulating Housing for Tourist Use," organised by Cadena Ser, the tourism minister said changes have been made to the regulation. Thus, the final text will reflect these proposals and comments. De León expects the draft to be ready by the end of the month to begin more detailed processes and declare the draft urgent.
Key Updates:
One of the main "updates" is reducing the minimum "useful" area from 39 square metres to 25 square metres. This criterion matches the requirements for small hotels, rural houses, and emblematic accommodations and corresponds to the minimum space required for a housing occupancy certificate. Tenerife24: If this idea is implemented, many locals who wish to list their "cave house" or small rural house in the mountains on Airbnb, previously considered too small for tourists, can enter the holiday accommodation market. This does not threaten investors near the main resorts - it rather makes the law more lenient! A nice start!
The new regulation also includes "certain quality standards" for these accommodations. Homes wishing to remain on the holiday rental market must meet at least one of ten additional equipment requirements. Tenerife24: The draft currently discusses that all new accommodations must have an energy efficiency certificate at level B or C. If the requirements also include technical additions like fast internet (one can dream) or similar, then why not! Reasonable, right? Surely they will include things that tourists need in their holiday rental apartments anyway! We don't see anything terrible coming from this either. The next few months will provide exact answers!
The new law will likely stipulate that newly built residential buildings must be used as residences for locals for at least 10 years before they can be applied for use as holiday apartments. To start the activity, a declaration must be submitted, including a technical report on the activity, the area's development plan, etc., and apartments subject to any public protection order must not be used for tourism purposes (VPO apartments).
The aim of the new holiday home law in the Canary Islands is to change the situation in areas already saturated with holiday rental apartments. This means even homes with a vacation rental licence granted years ago must update their status concerning future regulatory requirements, and a 5-year transition period will likely be provided.
Community Participation
The goal is to encourage active participation from local communities in tourism-related decisions in their areas, ensuring that their voices and opinions are heard and considered.
Changes Driven by Public Participation:
De León mentioned that the regulation considers whether the accommodation has facilities like on-site parking, private or shared pools, sustainability certificates, electric vehicle chargers, or if the accommodation creates many new jobs.
These additions result from a public consultation process that received 3,003 proposals from local residents and organisations. The regulation aims to be flexible while maintaining sustainability principles, considering economic, environmental, and social aspects.
Balanced Approach:
The minister emphasised the need for "regulation, balance, and planning" in the holiday accommodation sector in all Canary Island municipalities. While the draft does not set a limit on the number of apartments engaging in holiday rentals, it stipulates that 90% of homes must be dedicated to residential use as required by Article 40 of the constitution, and the remaining 10% is allowed for holiday rentals. Tenerife24: The good thing here is that local municipalities are not given a specific number of licences to issue after checking requirements, but instead, percentages are used to keep the area's tourist occupancy balanced overall! This will likely make it harder for new investors to obtain holiday rental licences in larger main resorts where many licences are already operating. However, it is still too early to say anything definite - we await the final version of the law!
Additional Information: In municipalities like Yaiza (Lanzarote), holiday homes constitute 22% of all homes. Other notable places are La Oliva (Fuerteventura) 21.5%, San Bartolome de Tirajana (Gran Canaria) 10.62%, Adeje (Tenerife) 13.35%, or Hermigua (La Gomera) 10.72%.
Currently, there are 59,000 legal holiday rental properties in the Canary Islands. De León dismissed concerns about the "call effect" raised by organisations and parties during the consultation period. She acknowledged that the rapid growth of holiday rentals necessitates a review of the 2015 regulation as it no longer meets current needs. The government wants to ensure the new regulation is well-discussed with the public and carefully considered before being presented to parliament. Tenerife24 comment: Anyone interested can familiarise themselves with the 2015 law in detail using a translation program via the link provided: [2015 law](https://noticias.juridicas.com/base_datos/CCAA/553671-d-113-2015-de-22-may-ca-canaria-reglamento-de-las-viviendas-vacacionales.html)
Timely Regulation:
At the same forum, Manuel Domínguez, Vice President of the Canary Islands Government, noted that regulating and organising the new holiday rental law is timely since holiday rentals are a significant part of the economy. He emphasised the need for better integration of tourism, the region's main income source, into everyday life, highlighting the importance of orderly development of the sector. Tenerife24: It's good to hear the voice of reason and that the holiday accommodation, which moves enormous sums of money in the local economy, will simply undergo regulation rather than prohibition or restriction! We look forward to the new regulatory law with interest!
Sources:
- [New Draft Law on Regulation of Holiday Lets Will Be Ready This Month](https://www.canarianweekly.com/posts/New-draft-law-on-regulation-of-holiday-lets-will-be-ready-this-month) (18.06.2024). CanarianWeekly. Viewed 18.06.2024.
- [The Canary Islands Toughen Conditions for Tourist Apartments](https://www.idealista.com/en/news/property-for-rent-in-spain/2024/04/17/816440-the-canary-islands-toughen-conditions-for-tourist-apartments) (17.04.2024). Idealista. Viewed 18.06.2024.
- [Record Tourism Numbers in the Canary Islands for First Quarter of 2024](https://www.canarianweekly.com/posts/Record-tourism-numbers-in-the-Canary-Islands-for-first-quarter-of-2024) (04.05.2024). Viewed 18.06.2024.