Tourist rental – Part I

What is it?

In recent years the emergence and subsequent exponential boom of a new type of private accommodation for tourism, popularly known as “tourist rental”, has taken place in Spain. There are many owners and tenants who, through digital intermediation platforms, decide, respectively, to lease and sublet their apartment to foreigners for short periods of time. This is due to the economic-financial logic of the market: the purchasing power of the average foreign investor is currently greater than that of the average Spanish investor. Therefore, in the same way that real estate sales in Spain have benefited thanks to the increase of foreign investors, entrepreneurs in the housing leasing sector have tried to maximize their benefits by giving priority to the time factor and focusing

their services towards a profile of potential customer with greater purchasing power.

Is this activity legal?

Obviously yes! As long as all the requirements established by current legal regulations are met. In Spain, this regulation is assigned to the Autonomous Communities, so it is possible to find differences between points in the territory. For example, in Catalonia, it is necessary to previously communicate the start of the activity to the competent City Council to obtain the so-called “tourist license” that enables its development.

¿Do you have tax implications?

Of course. Any provision of services is a source of income for the provider (either in the IRPF if he is a tax resident in Spain, or in the IRNR if he is not) and, as such, is subject to taxes that tax his consumption (in Spain , VAT, or ITPAJD).

But before delving into it, which we reserve for our next article, it is necessary to differentiate the concept of tourist rental from both the rental of traditional housing and the accommodation services of the hotel industry, since its tax treatment is different. We will only refer to the first one in this article.

Tourist rental Vs Traditional housing rental.

As we said in the beginning, one of the main characteristics of the tourist rental is the temporary transfer of use of an apartment for short periods of time. On the contrary, the rental of traditional housing pursues a different objective, which is to satisfy the permanent need of housing of the recipient (¡we all need a place to call home!).

Tourist rental Vs Hosting services.

Here the differences are more subtle and difficult to appreciate; but while the first is mainly limited to the transfer of temporary use of a physical space along with a series of basic services, the second is characterized by offering complementary services, which are rather characteristic of the hotel industry.

Let’s see some examples:

“Basic” services typical of tourist rental:

• Cleaning and change of bed and bath linen provided at the entry and exit of the period contracted by each tenant
• Cleaning service of the common areas of the building (portal, stairs, elevator) as well as the urbanization (sidewalks and streets, green areas) in which the rented apartment is located
• Technical assistance and maintenance services for possible repairs of plumbing, electricity, glassware, blinds, locks and appliances

“Complementary” services typical of the hotel sector:

• Reception and permanent and continuous customer service in a space intended for this purpose
• Cleaning services and change of periodic bed and bath linen (not only at the entrance and exit of the client)
• Food and catering services, laundry, luggage storage, press, reservations, etc.

Conclusion

If you were interested in investing in the Spanish real estate market, you already have one more reason to do so: the possibility of carrying out the tourist rental activity, which will allow you to maximize the return on your investment during your tenure, and will be fully compatible with the private use of your apartment when you wish.

In our next article, we will analyse in more detail the fiscal implications of the development of the tourist rental.

This article is written by one of our independent partners in Spain, Maite, who is one of our Fiscal partners in Catalonia. Check her profile.

Do you want to get in touch with her? Ask us for an introduction and benefit from the power of our network.

Looking for a property lawyer in Spain? Follow the link and get one of our local lawyer.

Looking for another real estate expert in Spain: Mortgage, Insurance, Survey of property, Property hunting, …? Ask us directly one of our 100+ local partner!

Maite

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Automatic translation from Google translate:

Do you want to rent your property in the Costa Blanca or in the Valencian region?

How does it work with tourist rentals?

There is a big confusion in the Spanish rental property market in the Valencian Region about the obligations you have when you want to put your property for rent. After many requests on this subject, we decided to write on this topic.

There is a general Decree for touristic activity, the Decreto 92/2009, from 3rd of July 2009.

This decree has the aim to:

– Confirm the legal obligations and responsibilities from landlords
– Guaranty protection of rights of to consumers and users
– Control the activity of the landlords
This law gives the definition of a “Vivienda or Apartamento Turístico”:

It is a property following a few conditions:

• When there is a compensation for the use
• When the apartment is immediately available
• When the “use” of the apartment is “touristic”
• When it’s done on regular basis: (it is the case if one of the next items is true)

-The rent is managed by big tourist operators/companies

-When you publish your property on a tourist communication channel: internet, newspapers, …

-If you provide services (even if not a company): property maintenance, room service, cleaning of the apartment,…

If you rent your property for “living” and not “tourism”, then this regulation is not appropriate. It will be regulated by the general law of renting (or “Ley de Arrendamientos Urbanos”).

Of course, you will need to declare your rental incomes for Spanish Taxes.

If you want to rent your property for touristic purposes you have two kinds of obligations:

1. Formal obligations
2. Tax obligations

This paper will be on the formal obligations, we will devote another article to Tax obligations.

What formalities do you need to fulfil for tourist rental?

You need to register your property to the Holiday Rental Valencian Registry.

• You have one property

There are many interpretations of the law but you need to do it only if you have MORE THAN ONE property for rent. So if you have only one property, this registration is “voluntary”. Please note that if you don’t register your property, you have to inform the tenants that the property is not registered and thus not covered by the legal requirements in the law.

• You have two to four properties

You have to register to the Holiday Rental Valencian Registry as a “particular“

• You have more than four properties:

You have to register for the Holiday Rental Valencian Registry as a “company“.

Even if you have only one property and you decide not to register, your property needs to fulfil a few requirements!

Property requirements

The law created three classifications: “Standard”, “Primary” or “Superior”.

In order to register the property, it needs to qualify for the minimum “Standard” requirements.

Requirements are described in detail in the annexe of the law and are related to the room sizes, Lift, Stairs, Heating, Parking, Hot Water, Evacuation plan, Air conditioning,…

Properties will be offered to customers in a perfect condition, clean,…

Do you want to find more information on the subject in Spanish from the Valencian Authorities? Check here.

Other requirements

• Architect certificate: check with an architect to confirm if the property complies with the different legal requirements
• Energy Performance Certificate: landlords need to have this certificate before offering the property on the market
• House insurance: it’s recommended to have an insurance covering the content, the apartment itself and the civil responsibility

Don’t want to comply?

Offering services without registration may have the following consequences:

• Fines up to 90.000 EUR
• Suspension of the activity on that property up to 3 years
• Suspension of the activity to the owner up to 3 years

Where do you need to fill your form?

Once the form is filled, you have to present it in one of the Registro del Servicio Territorial de Turismo of the Valencia Government offices in Alicante, Valencia, or Castellón:

• Alicante, C/ Churruca, 29 – 03003 Alacant/Alicante
• Castellón, Avda. Hermanos Bou, 47 – 12003 Castellón de la Plan
• Valencia, Pl. Alfonso el Magnánimo, 15 – 46003 Valencia

You will receive a document to confirm the registration of is complete and obtain the registration number.

Don’t forget: In your declaration, you confirm everything to be true… if that’s not the case, you are doing a false declaration… and you are responsible for that.

This article is written by one of our independent partners in Spain, Juan Carlos, who is one of our Lawyer in the region of Alicante. Check his profile.

Do you want to get in touch with him? Ask us for an introduction and benefit from the power of our network.

Juan Carlos

Looking for a real estate lawyer in Spain? Follow the link and get one of our local lawyer.

Looking for another real estate expert in Spain: Mortgage, Insurance, Survey of property, Property hunting, …? Ask us directly one of our 100+ local partner!