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Limitations on tourist rentals by private individuals

| News | Corporate Law and M&A

Isabel Antón analyses in El Economista the Valencian regulation that limits tourist rentals

The proliferation of municipal and autonomic regulations related to tourist rentals keeps homeowners in constant confrontation with public administrations, not only due to the difficulty for small owners to know the applicable legal regime and its corresponding sanctions, but also due to the impossibility for those who only want to make a profit by renting a second home through online platforms, to comply with the excessive requirements that are imposed.

Last July, the National Commission on Markets and Competition published a study on the regulation of tourist housing in Spain, in which it focused its attention on the distortions to free competition and the free exercise of activity caused by the limitations imposed by local and regional legislators. The limitation that only the ground floors or first floors can be tourist homes, or prevent them from occurring in certain areas of the city, make it difficult to obtain the necessary permits for the entry of new operators, to the point that on August 7, the Commission issued a press release announcing its decision to lodge an appeal against the municipal regulations on tourist homes in Madrid, Bilbao and San Sebastian.

As far as the Valencian Community is concerned, associations of owners of tourist homes such as AVAEC or ViuTur have been claiming for some time that private individuals are not equated with hotel companies in terms of requirements. As a result of these claims, the Commission for the Defence of Competition of the Community issued a report in 2015 in which it concluded that the requirement for the submission of a responsible declaration together with the registration in a Register (now the Tourism Register of the Valencian Community) and the requirement that the registration number be mentioned in all advertising that is made of the tourist apartment, is equivalent to a system of authorization for the exercise of the activity, which involves a disproportionate restriction on the freedom of business and competition.

On July 8, 2018, finally came into force the Law 15/2018 of June 7 of the Generalitat Valenciana, Tourism, Leisure and Hospitality, with the aim of ordering the tourist activity and undoubtedly to control the rents marketed through the Internet. Although in the preamble itself is presented as an innovative law that contemplates new phenomena such as the use of new technologies, the truth is that it does not seem that at this point the legislator has considered the report issued by the Commission and finally the system of compulsory registration has not changed.

The law, in what is undoubtedly one of the points of greatest conflict, equates private individuals who offer and distribute tourist services, such as mere accommodation, through advertising platforms with companies professionally dedicated to providing tourist services. Consequently, individuals, regardless of the number of properties they intend to rent, or whether it is done punctually or on a recurring basis, are required to comply with "the rules applicable to the service in question, as well as those relating to employment, safety, prices and taxation that are required of tourism companies by this law and other regulations that apply to them".

Article 65, for its part, considers tourist accommodation to be buildings which are advertised using tourist marketing channels, and these channels expressly include the Internet or other new technology systems.

Individuals are therefore obliged to present the corresponding declaration of responsibility to achieve - with the difficulty that this entails - their subsequent registration in the Tourism Register of the Valencian Community, and must include in all advertising of the property, the registration number valid under penalty of sanction as a very serious infraction.

As a result, the possibility of a private individual, not professionally engaged in providing tourist services, being able to offer his property for rent when, for example, he decides to go on holiday, becomes very difficult, all the more so if we add the requirements to be met by all the advertising and contractual documentation to be provided to users, in which the services must be clearly expressed, breaking down the price with the taxes and even expressly mentioning the system of compensation in the event of a unilateral breach of the contract.

Article 54 of the Valencian law regarding clandestine activities and illegal offers concludes with the maxim that actions of this nature that make use of new technologies will be especially controlled. Individuals who decide to offer their properties without complying with the rule are therefore exposed to a system of sanctions of quite a high amount.

Undoubtedly, before including a property in a platform or web page, it is advisable to obtain prior information, both in the commercial field that allows to have the certainty that all the contractual documentation meets the requirements demanded by each community, as well as in the administrative and fiscal. 

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