Rental law annulled

The Canarian Government’s holiday rental law has been annulled by Spain’s Supreme Court, in a judgement that could have a profound effect on holiday rentals throughout Spain.

The judgement, from Spain’s highest court and based firmly on principles of free trade enshrined in European legislation, shows clearly that the 2015 law is not fit for purpose. This law caused controversy when it was smuggled through parliament just a couple of days before the last government was dissolved before the 2015 elections.

At that time, the Canarian Association for Holiday Rentals (ASCAV) complained that the law had utterly ignored promises and undertakings that had been made to them, and it was their resulting court case that, four years later, led to a final judgement in Madrid.

The Supreme Court upheld that the Canarian law, which bizarrely prohibits private holiday rentals in classified tourist areas, ran counter to Article 38 of the Spanish Constitution and EU directives on freedom of trade.

The Canarian Government attempted to argue that this free trade threatened the established hotel sector, to which the Supreme Court responded, “These justifications can not be described as in the general interest.”

The Canarian Government also attempted to argue that prohibiting holiday rentals in tourist areas allowed authorities to plan the use of these zones more easily, but this was also rejected by the Supreme Court. As a result, once formalities have taken place that will make the judgement firm, the Canarian Government will have no legal recourse against anyone who tries to rent their property in a tourist area.

The government has been aware of the deficiencies of the law for some time, losing case after case in various courts, and presented a half-hearted reform proposal last year which did nothing to solve the situation. With new regional elections due in May this year, it remains to be seen whether it will address the situation or palm it off to the incoming government.

The formation of that government will be key to what happens next. Recent polls have shown that the Coalicion Canaria (CC), which has won the most seats in the Canaries since 1994, may lose out to the Socialists this year. Pacts and alliances will almost certainly have to be made, but the firm grip that the hotel sector has on the CC may be significantly weakened.