Holiday rentals: how to get legal

Well it is finally here ……the new law regulating holiday rental apartments.  Firstly, don`t panic , as all new laws they are complicated to understand but the easy way to do this is to  get professional help.

When: You will need to register your property with the authorities , you cannot do this until 12th May when the law comes into force. The forms can be downloaded , they will be in Spanish and non -spanish speakers will probably need assistance. You need to register your property if you are advertising on any website with public access and anywhere with a reservation system in place.  The joys of the internet mean there are sophisicated “screen scrapers” which can trawl websites in any language, no matter how small, to pick up data to cross reference with property registrations.

There are a few exceptions but in general if you rent your property for any rental periods of less than two months during the year , you will be subject to these laws. Larger properties will have a maximum of 15 persons allowed to obtain a licence.  The fines for not complying are very steep ranging from €1500-€115.000 so it makes sense to get on the register.

Why: Lets in the sun have been working with hoteliers for over 30 years on the Costa del Sol and holiday rentals have always been the biggest complaint at any forum or meeting hosted by tourist authorities. They quote unfair conditions they cant compete with. The holiday rental is not subject to iva , managers and cleaners mostly work cash in hand and the income has been tax-free. You may not agree but they have won the argument and now it is time to adapt. It doesnt mean you have to stop renting, you only pay tax on income but you should also be able to put through expenses incurred in order to rent the property. This will become clearer when the law is rolled out, you have a year to adapt  the property and find the best way to move forward. If you pay the non-resident tax and have legal invoices/expenses to declare the income will be subject to deductions and you only pay on the profit.

How: These are the requirements for the licence.

You will need a “licencia de primera occupacion” 99% of properties will have this , getting a copy may be challenging.

Bedrooms must be ventilated and the windows must have shutters or blinds to block out the light.

The furniture must be adequate and the equipment in the apartment suitable for the number of guests you accept.

All bedrooms and the living room need fixed air-conditioning units.(portable devices and ceiling fans will not suffice)

First aid kit and fire extinguisher

The operational side is the complicated bit, you must provide the telephone number of the person/company who looks after the property and has to intervene when a complaint is lodged by the guest. Please note you will be expected to supply invoices for any services provided by these people and they will be the people contacted for an inspection. If these people are not registered in the tax system you may have to justify why they look after your apartment without remuneration, They will also need to be available 24/7 and process paperwork on arrival and if a complaint is lodged.

There is a lot of paperwork involved, you will need manuals, complaint forms, information books, photocopies of all id of guests and sent to the police within 24 hours  and to issue and keep “holiday rental agreements ” for up to a year.

What you can charge and cancellation terms

Price offered will be per night and all-inclusive. This means it must include all the following: utility consumption (water, electricity, heating, A/C), cleaning of the property at the start and end of every rental, clean bed linen, taxes. The bill will give a detailed breakdown of all expenses including any extras requested by the guest.
It is compulsory for a landlord, or person designated by him, to hand invoices to a guest for every payment made including the initial reservation fee .

Landlords can decide freely upon the rental terms on the following points (as long as the tenant agrees): price, bookings, reservation deposit and cancellations.

If a landlord does NOT word these terms in a short-term tenancy agreement then by default the following rules will apply:

Unless agreed otherwise, the maximum reservation fee is 30% of the total price.
If cancellation of the reservation is done more than  ten days in advance the landlord can retain 50% of the reservation fee in compensation.

If the cancellation is done with less than 10 days then the landlord is entitled to pocket the full amount of the reservation fee.
If it’s the landlord that cancels he may do so 10 days before guest arrive without compensation
If the landlord cancels less than ten days before the guest arrival he must pay  compensation to the guest of 30% of the final agreed total price.

If the cancellation is due to aforce majeure, then both landlord and guest are exempt of awarding compensation. Examples of such admitted by law courts are flash floods, earthquakes, strong winds, general strike.

So the conclusion is don`t run for the hills or put your property up for sale , use a professional company to do your paperwork and management or ensure the people who look after your property are legally registered to do so.

Please note there may be changes to the above as the law is still being adapted , this is based on the current draft.

Author: reception@letsinthesun.com

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