When an apartment becomes seven rooms: the rise of splitting up homes for tourist rentals

Room available five minutes from Adolfo Suárez Madrid-Barajas Airport. This ad, which can be found on a platform dedicated to tourist rentals, is one of the shortcuts the owners have found to circumvent the law that, since April, allows homeowners' associations to prohibit or authorize, by agreement, the establishment of a tourist apartment in the building.

And, "given the increased scrutiny of this type of accommodation, owners who were using their homes for tourist use are exploring other options that allow them to continue using their apartments for this purpose, even if they can't be classified as such," says Patricia Briones, a lawyer specializing in horizontal property.

An example of this is advertising the property on tourist portals or channels, indicating that rooms are rented for vacation use , when in fact it is an entire apartment.

The latest reform to the Horizontal Property Law (LPH), which establishes that the owner of a home requires prior authorization from the regional government to use it for tourist purposes, is clear on this point: it only affects the transfer of the entire home.

According to lawyer Alejandro Fuentes-Lojo, this situation could lead to mischief: "We are faced with a legal vacuum, since the reform of the LPH refers exclusively to the transfer of a property in its entirety, which raises the question of whether, in the case of a tourist property being rented by rooms or on a shared basis, this modality would also be prohibited by the law or, on the contrary, since it is not provided for in the reform, an express prohibition agreement adopted unanimously would be required, in accordance with the provisions of the law itself," he reflects.

Fraud of law

Once the law is passed, the trap is set. This trick could constitute fraud under Article 7.2 of the Spanish Civil Code, which establishes that "the law does not protect the abuse of rights or their antisocial exercise."

Hence, the experts consulted question whether the reform of the LPH (Land Property Law) for tourist apartments limits the development of economic activity in a residential building, and does not extend it to other types of businesses (clinics, offices, restaurants, etc.), which also exist in a community of owners.

“Restricting a property owner's right to carry out an economic activity in their home within a block of flats seems to refer to the presumption that holiday rentals are a nuisance activity and, as a result, can be supervised by the homeowners' association, either by requiring prior authorization or by making it impossible, introducing a prohibition regime by a three-fifths agreement,” believes Supreme Court Justice Vicente Magro.

This judge doesn't understand why the restrictions were intended to be concentrated on a specific type of rental, such as tourist rentals, freeing other rental modalities from the same oversight. "The correct thing would have been to reestablish internal rules for vacation rentals that the owners would have to comply with, and if they failed to do so, it would be the judge who would prohibit this type of rental, but for specific and well-founded reasons, and not on the presumption that an owner would use their property so their tenants would bother others," suggests Magro.

Fuentes-Lojo shares this view, stating that "there is a political obsession with stigmatizing tourist accommodation and blaming it for the housing problem in our country. This is why the reform only prohibits this specific economic activity and not others, which could potentially be equally or more disruptive, such as a restaurant or a clinic." For these types of economic activities, which could be equally disruptive due to the large number of people, authorization from the regional government is not required unless expressly prohibited in the constitutive document or the community bylaws.

Briones is quick to clarify that the fine line separating the concept of tourist accommodation from other rental modalities, such as seasonal rentals or room rentals, lies in their regulation. The former is expressly excluded from the scope of the Urban Leasing Law (LAU), and is only affected by the sectoral regulations of each autonomous community. "For practical purposes, we could say that in a residential building, there is no distinction between when a user of this type of accommodation rents it for seasonal vacation use or as a tourist apartment, because the impact on the other owners is the same," the lawyer points out.

Fuentes-Lojo is convinced that this differentiation between the various rental regimes is due to "legislative shortsightedness." "This is a reform that has been rushed through, without looking at the medium and long term, ignoring the fact that there are other types of short-term rentals that can generate similar negative externalities to those of tourist housing."

Currently, seasonal rentals are regulated by the LAU (Law of the Autonomous University of Madrid) under the category of rentals for non-residential uses. However, according to Briones, given the current situation, "it is essential that this type of accommodation be regulated in more detail, since this law merely defines them as contracts whose primary purpose is not to satisfy the tenant's permanent housing needs."

The lawyer advocates that contracts should detail the purpose or objective justifying their temporary nature, for example, due to a job transfer, and that documentary evidence be provided, or failing that, a sworn statement from the tenant, as well as details of the rights and obligations between the parties.