Spain's supreme court sets precedent and upholds ban on holiday homes by residents' associations

This judgement effectively puts a stop to the proliferation of tourist flats in all types of buildings where it has become a problem for many communities of residents

Pilar Martínez

Malaga

Tuesday, 8 October 2024, 13:17

For the first time Spain's Tribunal Supremo (supreme court) has established jurisprudence on the power of homeowners' associations to prohibit tourist accommodation with three-fifths of the property quota. The civil chamber ruling - as this is a civil case - makes it clear that the power rests with these communities to put an end to this activity without the need for a unanimous vote. It does so in response to two appeals that were brought to the supreme court in cassation (for annulment of previous rulings). These appeals followed several contradictory rulings throughout the proceedings initiated against the communities of owners, one of them in Marbella, which agreed to limit and set conditions for holiday rental properties and their subsequent appeals following the 2019 update of the horizontal property law (LPH in Spanish). So, at the full meeting of the Civil Chamber the judges unanimously laid down two rulings that, for the first time, pronounced on the interpretation and application of article 17.12 of the LPH that was introduced by royal decree in 2019. This precept establishes that "the agreement limiting or setting conditions for the exercise of the activity (...) will require the favourable vote of three-fifths of the total number of owners who, in turn, represent three-fifths of the participation quotas." It is therefore ruled out that the authorisation must be unanimous.

This court decision sets a further limit to the proliferation of holiday rental properties. It also generates great expectation, especially in Malaga where this issue is a seriously hot topic, the reason being that it is the regional province where more than half of the tourist homes in Andalucía are concentrated. Added to that fact are the new limitations being applied by local councils such as the one in the capital of the Costa del Sol to curb their proliferation while the city also faces a housing crisis generated by the shortage of supply and high prices.

It is enough to remember that, in Malaga province alone, some 41,038 properties are dedicated to holiday rentals out of the 82,454 for the whole Andalucía region. Malaga city itself has over 8,000 holiday homes in operation, according to data from the Andalusian association of holiday rental professionals (AVVA-Pro).

Up to now the rules that regulate the activity and the measures taken by the different governing bodies to curb the proliferation of this type of accommodation have been questioned on an almost daily basis. Rules like the one recently implemented in Malaga city limiting the licensing of tourist rentals only to those properties with an independent entrance and fully autonomous energy and water supplies. The questioning and contradictions have been repeated in the courts with the disparity of sentences that interpret in one way or another what is set out in the Horizontal Property Law.

A definitive end to interpretations

Such debate is now settled as the Supreme Court upholds the majority of the three-fifths of the share of the property, despite the doubts that had arisen in recent years in the interpretation of this point of the regulation, included by means of a specific decree in 2019. No more discrepancies in different provincial court rulings as a result of voting disputes between property owners who had been denied setting up a tourist property and their communities.

As a result, ruling 1.233 of 2024, dated 3 October last and based on a process focused on a residential development in Marbella, stated that "it is perfectly legitimate, in the horizontal property regime, for the purposes of reconciling strictly private interests with the concurrent general interests inherent to its legal nature, to establish legitimate restrictions or prohibitions to the powers of enjoyment which, with respect to the flats or premises of the property, correspond to its owners; provided, of course, that it is an agreement adopted in accordance with the law and with respect for the limits imposed by art. 1255 of the Civil Code, and articles 33 (right to private property) and 38 (freedom of enterprise) of the Constitution do not impose such limitations." Moreover, the Supreme Court judges consider that "the attribution of this power of prohibition with the reinforced majority is a measure proportionate to the conflicting interests." The Civil Chamber gave an additional reasoning that, if this double majority of three-fifths were not admitted, the dissenting vote of the property owner where the tourism business was to be conducted would be sufficient to prevent the adoption of the agreement (meaning there could never be a unanimous vote).

The Supreme Court analysed the expression "limit or condition" contained in the LPH as a case of interpreting a statutory rule under restrictive conditions. The conclusion was that, according to the grammatical, semantic and literal criteria, the term "limit" does not exclude any prohibition. Furthermore, it goes on to point out that "in brief, the spirit and purpose of the rule is not contrary to, but rather favours precisely the interpretation that the limitation of the activity of tourist rental includes its prohibition." To continue, it explicitly states that "the will of the legislator is in favour of residential rental as opposed to tourist rental, which is intended to be restricted with the aim of increasing the stock of housing for rental, with the natural repercussion on prices and the correlative reduction in the effort of family household budgets. Conditioning or restricting the exercise of that activity does not solve, at least to the same extent, the problem of the difficulties of access to housing, which it is intended to correct by means of such a regulatory provision."

The judges reinforced their criterion that it is the neighbours who have the power to prohibit tourist flats in their communities on the basis of the consideration that "the development of an activity of this kind generates nuisance and damages - hence the possibility of placing conditions on, or restricting it, which nobody questions, since if it were a merely innocuous activity, the modification would be meaningless - such as those expressed by the president of the defendant community of neighbours and which social reality confirms, especially in areas with a high incidence of tourism, where leisure is difficult to reconcile with the rest of the occupants of residential dwellings, who are, where appropriate, the ones who will adopt the restrictive agreement, provided that they meet the qualified majority of 3/5 of the number of owners and voter participation quotas imposed by law."

Maximum limitation can mean prohibition

The judgement emphasises that limiting tourist use implies its prohibition insofar as it is still a limitation, in this case a maximum limitation. "If we move now within the strict framework of literalism, according to the Dictionary of the Real Academia de la Lengua, to limit does not only mean to set limits to something, but also to fix the extent to which someone's authority or rights and faculties can be extended. That is to say, the possibility of limitation legally conferred to the communities of owners to limit the activity of tourist flats in the property can also mean its complete prohibition, which would be the maximum limit." So, this judgement effectively puts a stop to the proliferation of tourist flats in all types of buildings where it has become a problem for many communities of residents, who have seen properties surrounding their properties become a tourist business that causes them numerous issues on a daily basis. For this reason, the vote quota in the residents' meeting is key to complying with the precepts of this ruling.

What remains unresolved are the retroactive effects, which are mentioned in one of the resolutions but not in the other.

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