The Property Sector: This is the area of commercial activity in Tenerife that appears to have most adverse impact on the Island’s image overseas. The problems seem to be essentially two:
- The Timeshare business, more importantly, the methods employed in its operation and
- The alleged misconduct of estate agents.
There is nothing wrong with the concept of timeshare. It’s how the concept is sold that creates problems. Sometimes one feels that the fundamental trading principle of ‘nemo dat non quod habet1’ appears to have gone out of fashion.
With regard to estate agents perhaps it is relevant to mention Royal Decree-Law 4/2000, of June 23. This RD states that “the activities that up to now were reserved exclusively to members of the College of APIs are henceforth open to anyone, without the necessity of having any qualification or being a member of any Institute.” Thus the Spanish Government, uniquely in the developed world, effectively declared a free-for-all in the property market! This is an example of a laissez-faire philosophy being very much counter-productive. Incidentally, a perusal of the API examination syllabus indicates a professional qualification that compares favourably with any international equivalent.
Unfortunately foreign buyers do not discriminate because, in the short term, they’re sun-struck and, as a consequence, have left their brains on the plane. In any civilised society being an estate agent ought to mean more than mere ownership of a mobile phone. When such agents deal almost exclusively with foreigners i.e. tourists, then it’s a case of ‘Houston we have a problem’! Caveat emptor2.
Another law, unique to the Canary Islands, which continues to cause grave concern, is the Tourism Law (Ley de Turismo) and its very controversial Article 38 which deals with Unity of Exploitation. This law has been a disaster ever since its inception. One has to assume that it was introduced in good faith with the objective of improving standards and service in the tourism private letting sector. The fact that no serious attempt has been made to implement the law isn’t relevant. The reality is that it has created a lot of uncertainty and unnecessary conflict in tourism accommodation. Simply stated, Article 38 envisaged that only one entity could manage the lettings in any one complex, regardless of size. Strangely enough no real standards of competence, experience and or qualification were set for this management entity that would inevitably have a monopoly of all tourist lettings in each residential complex.
This meant that:
- Qualified estate agents couldn’t, strictly speaking, manage the apartments that they had sold to long established clients unless, of course, they were one of the fortunate monopolists and
- By definition, this letting monopolist could set ludicrously low levels of return for the owners, including many elderly foreigners, on a ‘take it or leave it’ basis.
It is clear that, if rates of return are maintained at artificially low levels, the market values of such tied properties will, certainly in the medium to longer term, also be artificially low allowing the management entities to quietly accumulate a nice property portfolio at bargain basement prices! Is it any wonder that Brussels has expressed grave concern about this particular piece of legislation! Since most residential property purchase by foreigners is generated by tourism, it is hard to imagine that this law represents good PR for the islands. It is generally accepted that many potential investors, who otherwise would have come to Tenerife, are going elsewhere because of this Article 38.
Alicante Province: LRAU 1994: This law was passed with the apparent intention of facilitating the development of the Valencian Community. However, especially in recent years, it has been abused by developers with the enthusiastic support of Town Halls, and has caused huge distress to people who have had their land and houses expropriated with little compensation and/or have been obliged to contribute large sums to civil engineering or development infrastructure costs. ‘Land grabbing’ is historically and justifiably an hugely emotive term and, apart from causing grave anxiety at EU level, the implementation of this law is generating very bad publicity overseas not only for Valencia but also for Spain generally and especially its tourist zones, including Tenerife.
Undoubtedly all of us who cherish the right to own property deplore the brutal confiscation of private property in Zimbabwe, for instance, under the savage regime of Robert Mugabe. The methods employed in that country may be different from those applied in Valencia but the end results for the ‘victims’ are similar. Hence, the following issue needs to be determined here in Spain or, if necessary, at European Court of Justice level, as a matter of some urgency.
Does the 1978 Spanish Constitution adequately protect the rights of private property ownership, as recognised in Article 33, in all seventeen Autonomous Communities? This Article should not be in conflict with Article 47 that enshrines the right of every Spanish person to adequate and decent living accommodation.
At the time of writing the Spanish autorities are becoming cognicscant of these two problem and propose takng appropriate action.
España es diferente. Spain is still special.
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