The Court, in a recent judgment annuls the Decree creating Register of Short-Term Leases. The mean reason of the ruling is that the State lacks the competence to impose a national system that overlaps with existing regional registers.
This register affected owners of holiday rentals and short-term rentals, who, in order to carry out such activity, were required to register their properties in that Register, which depended on the Land Registry.
For many property owners and foreign investors, this judgment represents very good news, as it improves legal certainty and allows a significant reduction in the bureaucracy associated with real estate investment in Spain aimed at holiday rental activity. In cities such as Málaga, Marbella, Alicante, Valencia, Madrid or Barcelona, thousands of foreign buyers acquire apartments, villas and holiday homes each year with the aim of generating income through tourist or short-term rentals.
The judgment does not annul the decree in its entirety, but exclusively the precepts that frame the single registration itself, including the obligation to obtain a state registration number to advertise housing on platforms such as Airbnb o Booking. However, it is important to understand that holiday rentals remain regulated, and obligations do not disappear, but rather the entire regulatory burden falls back on the Autonomous Communities and local councils.
What are the practical effects of the Judgment?
The Judgment eliminates the central register and concludes that the State does not have sufficient powers to impose a mandatory national tourist register. The Supreme Court considers that competences in tourism and tourist housing mainly belong to the Autonomous Communities and not to the State.
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This has also a consecuence; this number cannot be required in order to advertise a property on digital platforms such as Airbnb or Booking. In other words, these platforms will not require it, and it will be sufficient to provide the tourist licence number issued by the relevant Autonomous Community.
What must be done now to legally rent a tourist property in Spain?
The judgment obviously does not eliminate the regulation of tourist properties in Spain. Owners and buyers must continue to comply with regional and local regulations, as well as pay the corresponding taxes in Spain on the income obtained from such activity. Even if you are a non-resident owner, holiday rental income is taxed in Spain through Non-Resident Income Tax (IRNR).
In Andalusia, it is still mandatory to obtain the VUT number if the property is urban, or VTAR if the property is rural, and it is compulsory to register the property in the Andalusian Tourism Register (RTA) in order to obtain such registration. This register is equivalent to the tourist licence of the property for holiday rental purposes in Andalusia.
Therefore, any foreign owner or buyer interested in investing in property to be used for holiday rental must continue to carry out a prior legal analysis before acquiring the property.
In order to register the property in the RTA, it must be verified that it meets the technical and legal requirements necessary to carry out holiday rental activity, such as: authorisation from the Community of Owners for such activity, First Occupancy Licence, minimum room sizes, etc.
What should I do if my property already has an NRA or is pending registration?
Since the NRA has been eliminated, nothing needs to be done. This means that whether your property is already registered, in the process of registration, or was not registered for any reason, with regard to the NRA, the owner does not need to take any action because that register no longer exists.
From now on, the owner may rent the property provided that it has the tourist licence from the Autonomous Community where it is located and complies with municipal regulations.
What should a buyer do if planning to invest in property for holiday rental?
It is essential to carry out legal due diligence before purchasing a tourist property in Spain, in order to avoid problems and reduce unnecessary risks. This real estate legal due diligence or legal report should include the requirements necessary for the property to be used for holiday rental, and whether the property to be acquired meets those requirements.
It should be taken into account that there are different legal requirements in order to carry out holiday rental activity, and that municipalities and cities may also impose limitations and restrictions on new rental properties. If the intended use of the property is holiday rental, it is important that this due diligence is carried out as soon as possible and, obviously, before the buyer signs the private purchase contract (PPC).
The reservation or the PPC itself should include a clause protecting the buyer in case the activity is not feasible and the buyer wishes to withdraw from the purchase.
Legal advice from a lawyer specialised in real estate law, with proven experience and knowledge, is essential to ensure a safe process and to provide certainty regarding the possibility of using the property for holiday rental.
How does this judgment affect Airbnb and Booking?
Digital platforms remain obliged to cooperate with public authorities and verify certain legal requirements.
However, they will no longer be able to require registration of properties in the NRA, although they will still require the property registration number in the relevant regional tourism registry in order to advertise a property on their platforms.
We are currently advising to review each case to confirm which obligations currently apply under the applicable regional regulations.
So, do not doubt on contacting us if you want to study your situation.
