Context
The use of housing for holiday rentals has undergone considerable growth over the past decade, to a large extent due to the popularity of digital platforms, which promote and facilitate this type of rental. This phenomenon is having a great impact on the real estate property market. On one hand, the supply of housing intended for main residence has become reduced, with the resulting general increase in prices. On the other hand, the urban model of our cities has changed; districts which beforehand were predominantly residential with local commerce have been transformed into areas for tourism and the hospitality industry.
These changes have generated an open conflict between the owners of tourist dwellings and owners’ communities. Complaints due to noise, a lack of security and the disruption of the residential setting are some of the concerns raised by those who oppose this type of use in their communities. Nevertheless, the law and case law are not clear regarding the legal channels through which an owners’ community can prohibit or limit this type of activity. At the moment, two principal mechanisms exist, either a by-law amendment or the passing of resolutions via a qualified majority. In this article we shall focus on the first, given that the High Court has not yet ruled on the second mechanism in order to unify doctrine.
By-law amendment.
An owners’ community can always opt to amend its by-laws and explicitly prohibit this activity, however, the resolution shall require unanimity, thus, if the problem already exists, it is unviable. Furthermore, it is a recent phenomenon so very few owners’ communities come into being with this provision in their constitution.
Nevertheless, many owners’ communities do provide for limits on other types of activities. In particular, it is common to encounter buildings wherein it is prohibited to use dwellings as offices or premises for carrying out any kind of economic or professional activity, as well as owners’ communities which provide for an “exclusively residential use”. It is for this reason that the recent decision passed by the Supreme Court in relation to this matter is especially relevant.
The Supreme Court deems holiday rentals to be an economic activity.
The Civil Chamber of the Supreme Court has established that the rental of dwellings for the purposes of tourism constitutes, for legal purposes, an economic activity. This is ruled upon in two recent judgements, STS 5197/2023 of 27th November 2023 and STS 5199/2023 of 29th November 2023.
In the first judgement, an appeal filed by an owner’s community in Oviedo is settled, which sought to veto the touristic use of dwellings, and whose by-laws established that the use of the dwelling must be exclusively residential, and “professional, business, mercantile and commercial activities of any type” cannot be carried out. The Chamber upholds the claim of the owners’ community and orders the cease of the holiday rentals activity deeming that they are of a “business and commercial nature” and do not correspond to residential use.
In the second judgement, various owners filed legal action against their owners’ community in San Sebastián in order to overturn the prohibition contained in its by-laws, which prevented it from “carrying out any economic activity in the dwellings”. The Court came to the same conclusion, the prohibition set forth in the by-laws is clear and orders the cease of the activity under the consideration that holiday rentals are an economic activity.
As indicated by the Chamber, the Tourism Act 13/2016 of 28th July, already considers that holiday apartments constitute an “activity” and that they are managed under the unity principle of a “business operation”. Furthermore, they are differentiated from dwellings when the act specifies that they are intended for “temporary accommodation”, without constituting a change of residence for the person using the accommodation.
Therefore, firstly, the activity of renting a dwelling for tourism is included in the general category of economic activities, insomuch as there is a “commercial, professional or business component”, that is to say, the carrying out of an activity in exchange for a financial consideration. And, secondly, in the words of the court, it corresponds “with a different use to that of a dwelling”, therefore, its use is not exclusively residential. Nevertheless, before the aforementioned judgements were published, discrepancies existed between the higher courts of law regarding whether or not holiday rentals constituted a residential use of the dwelling.
In conclusion, the Court upholds the veto of holiday rentals in those owners’ communities which prohibit in the by-laws the use of dwellings for carrying out economic activity, or in those dwellings where the use is exclusively limited to residential use; without it being necessary to expressly mention the prohibition of this specific use.
Commonhold Property Act.
As mentioned above, another mechanism exists via which an owner’s community can limit this activity. If we take a look at the specific regulation, article 17.12 of the Commonhold Property Act legitimates owner’s communities to “limit or condition” the exercise of the activity of tourism use through an agreement in favour with a majority of three fifths of the totality of the owners. Nevertheless, even if the lawmakers introduced this mechanism with a view to solving this problem, this precept has generated more uncertainties than solutions.
The text, as happens more often than not, is not very clear. Particularly, there is no specific provision for the faculty to prohibit the activity. Likewise, it is not clear whether in some cases unanimity is required. Consequently, in the absence of the unification of doctrine, we find contradictory interpretations among the high courts of the different Spanish autonomous regions. In fact, in the judgements indicated above, the Court has warned that it will not settle matters regarding the interpretation of the Commonhold Property Act. However, it is probable that we may see a unification of criteria in this regard, hopefully sooner than later, and that it will throw some light upon the joint interpretation of the legislation applicable to the activity of holiday lets. In the meantime, this issue will continue to generate uncertainties, appeals and disputes.
Julio González Valverde
Vilá Abogados
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5th January 2024
