As expected, Spanish regulations on holiday rentals are getting stricter. Not only are legislators working on new initiatives to restrict holiday rentals, Spanish case law is also interpreting existing legislation more strictly. For instance, the interpretation for restrictions on holiday rentals in Spain within co-owners' associations is being widened.
The Spanish Supreme Court ruled in two statements ruled that holiday rentals qualify as an economic activity. An economic activity means all professional, business and commercial activities, such as, for example, a beauty salon, a doctor's practice or the operation of a shop. The Court states that existing prohibitions in co-ownership regulations on carrying out an economic activity can also apply to holiday rentals. Holiday letting cannot therefore be regarded exclusively as residential use of a flat or house.
Impact on landlords
This restriction is separate from the possibility provided by law for the co-owners' association to prohibit holiday rentals by 3/5 of the votes present at an ordinary general meeting. This means that pre-existing clauses with restrictions on economic activities in the articles of association or co-ownership regulations can be used to stop holiday rentals.
This is the case if the rules of co-ownership contain a clause prohibiting any form of economic or business activity in the building or complex. Ditto if there is a clause limiting the use of the flats and houses within the urbanisation to residential use. Such clauses must be unambiguous: the prohibition of the exercise of an economic activity and/or the command for exclusively residential use must be clear, precise and explicit. In case there is a valid restriction, the administrator or president may decide to interpret these clauses as prohibiting holiday rentals.
The implications for owners with an existing rental licence are still unclear. On the one hand, it could be argued that, even if it exists a prohibition against carrying on an economic activity or an injunction against exclusively residential use, as long as no action has been taken by the community in the past, a resignation has arisen. On the other hand, and this is a more likely scenario, one is going to try to argue that a rental licence just confirms the existence of the economic activity. The implications will therefore have to be considered on a case-by-case basis. Consider, for example, the following questions:
- Is there an existing restriction in the statutes or regulations?
- Is the prohibition and/or commandment sufficiently clearly defined?
- How did the community view holiday rentals in the past?
- how regularly are rentals?
What is meant by holiday rental?
The rules regarding holiday rentals are determined by the 17 different autonomous regions in Spain. Each region therefore has its own legal definition of holiday rentals. However, general characteristics of holiday letting are a house or flat made available on (i) a regular basis, (ii) for a fee, (iii) for short periods, (iv) directly or indirectly (with mediation or operator) to (v) tenants with holiday purposes. In particular, there is an economic activity if you publicise or advertise your premises and provide additional services. For example, consider letting your property via an online rental platform with the offer of cleaning services.
Decision: restrictions on holiday rentals in Spain
Based on the recent ruling, Spanish co-owners' associations can more easily prohibit holiday rentals. Indeed, it is sufficient to invoke frequent restrictions in the articles of association or regulations for the operation of an economic activity within the complex. The consequences for owners with a pre-existing rental licence are still unclear and will strongly depend on the concrete situation within the co-owners' association. However, it should be clear that prospective investors should thoroughly vet the co-owners' association before purchasing.