Are You Renting Your Property Illegally?
May 18th, 2007
Martin Dell, Kyero.com: A recent article in The Daily Telegraph highlighted that property owners in Spain cannot legally let their property without a special licence. In many areas of Spain, even if the licence is applied for, it is rarely granted.
Of course, property owners cannot know whether a licence will be granted or denied until they apply. If the licence is not granted, the owner can no longer continue renting the property ‘under the radar’ as the vast majority currently do. Hence, most owners never apply for a licence, certain that it will be denied anyway.
This practice may no longer be viable, however, as a fresh crackdown by Spanish tourism and tax authorities over unlicensed apartments and villas threatens home owners with fines of up to €30,000.
I asked Richard Spiegal from holiday rental portal Espana Breaks for his opinion and experience.
“Most owners would have no problem if the authorities just issued licenses. In fact most would benefit from a set of consistent standards to follow. In Menorca they were taking a more pragmatic approach and allowing people to submit licence applications with every possibility of them getting
passed. This means cash for local estate agents/architects (who do the paperwork) and legal renting which means quality tourists. It all depends which approach each region takes.”
Many home owners are reliant on holiday rental income to pay the mortgage on their home in Spain. If this source of income is no longer available or, worse, carries a real risk of financial penalty, many may be compelled to sell the property itself. Knowing that a property now takes an average of 39 months to sell in Spain, many homeowners face a very difficult choice:
- Continue to rent and accept the risk of a substantial fine
- Stop renting and apply for a licence to do so legally
- Attempt to sell the property in a difficult market
I believe that most home owners would opt to let their property ‘legally’ if given a real option of doing so. If you are renting your property in Spain (legally or illegally) I’d appreciate your feedback. Simply complete this anonymous 60 second survey. Once you’re finished, you’ll be able to see the results and we’ll publish a summary and analysis here in a month’s time.
