SHARE
COPY LINK
HOLIDAY HOME RENTALS

RENTING

Under-the-radar rentals hurt Spain’s hotels

More and more tourists to Spain are steering clear of the country's traditional hotels and holiday homes in favour of a largely unregulated private holiday rental sector.

Under-the-radar rentals hurt Spain's hotels
Nearly 4 million of the nearly 12 million tourists to Spain in May and June 2013 did not stay in the country's hotels or holiday homes. Photo: Linus Bowman

Spain welcomed record numbers of tourists in May and June.

In May, the country saw 5.8 million foreign visitors flock to its shores, while in June this number was 6.6 million.

But nearly 4 million of these tourists chose not to stay in the country's traditional hotels and holiday homes.

That's up 560,000 on a year ago, according to Spanish Government tourism agency Frontur.

Instead, people are turning to what Spain's El País newspaper calls "alternative" accommodation providers. The most important of these new-wave tourism providers are internet sites linking guests directly with the owners of private homes and rooms.

This growing sector does involved some risks though, the daily says, with some businesses taking advantage of unclear rules to avoid paying tax, thus creating unfair competition in the holiday rental market. Also, people who rent out private homes rarely have to submit to the complex safety regulations and building restrictions imposed on hoteliers.

Among the best known of these is Airbnb, a site which earns its income by charging a 6 to 12 percent commission on all holiday rental transactions conducted via its site.

Spain is the site's third most important country in absolute terms, says Jeroen Merchiers, Airbnb's manager for Spain.

Barcelona, meanwhile, is its third most visited city after New York, Paris and London.

Airbnb saw 300 percent growth in Spain from June 2012 to June 2013 and now has 40,000 properties on its books for the country.

Asked whether property owners were paying tax on their earnings, Merchiers said: "We operate in 192 counties and can't concern ourselves with 192 different legislative frameworks."

"We recommend that our advertisers to see a tax adviser, but we can't do any more than that," Spain's Airbnb boss added.

But one Barcelona bed and breakfast owner tells it differently.

The owner of a six-bedroom property, the owner says his property was full in 2011. Now, though, he is struggling to find guests.

Indeed, the owner resorted to listing his rooms on Airbnb to boost his visibility.

"They didn't ask me to do anything, and they didn't ask anything about my tax status," the bed and breakfast owner said.

"When I got my official tourist licence, on the other hand, the police came and inspected me. There were (so many) rules, even about the width of the hallways."

This owner doesn't believe sites like Airbnb are illegal, but says they operate in a legal grey area.

The secretary general of Spain's hotels and holiday homes owners' association Ramón Estalella CEHAT is also reluctant to point the finger of blame.

He explains, though, that while his sector also saw an increase of 100,000 overnight visits from June 2012 to June 2013, hotel prices have stagnated.

Estalella points out that while holiday rental sites like Airbnb are just doing their job, "it's not possible that hotels are having problems when Spain is seeing 6 million tourists (per month) for the first time.

In the tax office, there is come concern about the state of the industry.

Around €3 billion from rental income goes undeclared every year in Spain, according José María Mollinedo, the head of the tax officals' union Gestha. 

Check out the latest exchange rates on The Local's currency page.

But he pointed out that the data "is general and it's hard to know what percentage of that fraud is tourism-related".

Spain introduced new rental laws in Spain in June 2013, with holiday rentals being excluded from the federal regime.

Spain's 17 autonomous regions now control rules for private holiday rentals, a situation which has caused a good degree of confusion among renters. 

To make the situation even more difficult, not all autonomous regions have implemented relevant laws.

Previoulsy, short-term renting to tourists, whether for the summer period or on a day-by-day basis, had been a civil right enshrined in Spain’s Urban Rental law (LAU).

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

RENTING

Renting in Spain: Can my landlord put up my rent due to rising inflation?

The war in Ukraine and record high inflation in Spain are resulting in many tenants having their monthly rent raised by the property owners. Is this legal?

Renting in Spain: Can my landlord put up my rent due to rising inflation?

We’re living in uncertain financial times where conflict, a pandemic, rumours of another property bubble and other world events make it difficult to know what’s coming next and what it will mean for our wallets. 

What can be said for certain is that most living costs in Spain are getting more expensive this year.

In February 2022, inflation reached its highest level in 33 years – 7.4 percent – and Russia’s invasion of Ukraine has economists suggesting it will hit 10 percent this spring. 

One of the consequences of the rise of the IPC (CPI in English- Consumer Price Index) in Spain is that many landlords are using this general increase in costs to raise the rents of their tenants. 

With the current inflation rates, this can result in an average rise of €40 to €50 a month for renters in Spain. 

Is it legal to do this?

Yes, but only in certain circumstances.

Spain’s Urban Leasing Law allows the monthly rent paid by a tenant to be updated in accordance with the IPC.

However, this can only be done if previously agreed between tenant and landlord. It should also be clearly stated in the contract that the rent is subject to IPC changes.

In such cases, the lessor must wait for the first year of tenancy to have been completed for the IPC rise to be applied, and from then on only once a year and based on the most updated IPC amount. 

So if the tenancy contract was signed in February 2021 for example, the prearranged IPC update in the following years should also be in February.

Landlords can therefore not increase the rent several times a year or every month based on varying IPC rates.

The property owner will also have to give their tenant one month’s notice and apply the rise to the following month. This must be in writing and the landlord must state what the rent increase is and how it corresponds to correct IPC figures.

It’s important to remember that under no circumstances can a landlord increase the rent of a tenant by an amount higher than the IPC. The most updated IPC figure must always be applied.

Other indicators or reasons other than an IPC can be given by a landlord to increase the rent, but the amount they put the rent up by can’t be higher than the IPC under any circumstances.

Tenants should also keep in mind that if the IPC were to drop and they had pre-agreed with the landlord that the contract would be subject to IPC changes, they are within their rights to request a reduction of their rent.

The IPC (Índice de Precios al Consumidor) is published by Spain’s National Statistics Institute on a monthly basis and is based on the country’s latest inflation figures. You can easily check what rise or reduction applies to your property here

Spain’s Rental Negotiating Agency (ANA) has recommended that landlords don’t apply the latest so-called “war CPI” caused by the conflict in Ukraine, arguing that a large rise in rent could result in some tenants ending their rental contracts or struggling to pay.

One of the tools that tenants can use to lessen the blow of sky-high inflation is to tell their landlords that, if at all, they should apply the IPC de Vivienda (Property CPI) rather than the IPC General (General CPI), as the former is generally less volatile than the latter and Spain’s Urban Leasing Law does not specify which should be used to increase or lower rent.

SHOW COMMENTS