The mayor of Santa Cruz de Tenerife, José Manuel Bermúdez, representing the Canarian Coalition (CC), has instructed the company Homes, Projects and Municipal Works to conduct a report. The aim is to assess whether the entire municipality or specific areas should be designated as stressed residential market areas.
Bermúdez has extended the instruction to include detailed conclusions. If the conditions stipulated in the relevant law are met, then a decision will be made on whether to request the Government of the Canary Islands to begin the necessary procedures to obtain such a designation. Additionally, the mayor emphasises that the potential impact on the real estate market must be outlined, along with any other relevant circumstances.
This move by Bermúdez contrasts with the official stance maintained by his own party in both the regional Government and the Tenerife Cabildo, where the CC governs alongside the PP. These authorities argue that the solution to the housing issue in the islands, particularly Tenerife, lies not in declaring stressed areas but in implementing the recently approved urgent measures decree by the regional Parliament, as well as the forthcoming law on tourist rentals being developed by the Executive.
It is important to note that the request for a stressed area designation must ultimately come from the Government of the Canary Islands and must be accompanied by a specific plan outlining the necessary measures to rectify any imbalances detected in the designated area. The Canary Islands Government has consistently opposed the national housing law and even considered appealing to the Constitutional Court, which did not materialize as the Canary Islands Executive ran out of time due to the perception that “August was a non-working month.” Furthermore, the PP has stated that the housing law will not be enforced in the regions under its governance, including the Canary Islands.
Bermúdez, who holds office with the support of the PP, has clarified that the significance of this assignment and instruction, without disclosing its cost, is driven by the necessity to “compile a report that provides justification, backed by objective and substantiated data,” regarding the presence of a “particular risk of inadequate housing supply for the local population.”
According to housing legislation, this risk occurs when the average expense of mortgage or rent, coupled with basic living costs and utilities, surpasses 30% of the average income or household income.
Another determinant is if, in the five years before the declaration as a stressed housing market area, the purchase or rental prices have increased by an accumulated percentage at least three points higher than the consumer price index of the Autonomous community.
The legislation also includes, as key outcomes of this designation, the potential regulation of housing rental prices, which must fall within a predefined range based on factors like construction year, area, and location.
This established range will serve as a benchmark for determining the rent amount in new contracts for properties owned by individuals classified as major stakeholders and for homes being rented out for the first time in five years.
Adeje and La Orotava
The initiation of a research study has been announced a day after the Adeje City Council, located in the southern region of the island and one of the most popular tourist spots in the Canary Islands, revealed its plans to vote on a motion in the upcoming plenary session. The motion aims to urge the Canary Islands Government to commission necessary studies to officially declare the municipality as a stressed area based on the provided data. This initiative, as stated by the Adeje City Council, which is governed by the PSOE party, marks the initial step of a “more ambitious” strategy that also includes plans to construct more residences, explore land for development, and “increase the number of houses” in the Armeñime region.
Earlier, the La Orotava City Council (also under CC leadership) approved, during a plenary session in November, the commencement of procedures to evaluate its potential declaration as a stressed area, a status that has yet to be confirmed.
Canarian Government’s Focus on Construction Industry
Meanwhile, in response to Adeje’s announcement, the Canarian Government declared on Tuesday that instead of designating stressed areas, it is emphasising (as a solution to the housing issue in the islands) the implementation of urgent measures concerning housing, as well as the forthcoming legislation on tourist rentals, currently in the drafting stage.
It is worth noting that the urgent measures directive does not address the over 200,000 vacant properties in the Canary Islands nor does it include measures to prevent the new constructions, encouraged by the directive, from falling into the hands of large landlords for holiday rentals or sale to non-residents. Opposition parties and housing experts have criticised this directive for being solely negotiated with construction industry associations, fearing that it will mainly benefit the builders without effectively addressing the housing access issue, especially since it lacks immediate solutions.
Broadly speaking, the directive primarily focuses on increasing housing construction under the assumption that a higher supply will reduce prices. However, it fails to ensure that these new constructions reach those in need and are not directed towards boosting tourist accommodations. Additionally, the plan involves providing more land to construction firms, including plots designated for public facilities (such as schools, clinics, or parks), and potentially reclassifying rural areas under the guise of “emergency”, a proposal strongly criticised as “absurd” to benefit the “privileged few”, which was ultimately excluded from the directive.
Concerning the upcoming legislation on tourist home rentals, the Canarian Government mentioned that “the key is not necessarily restricting the number [of holiday lodgings] but organising their distribution and coexistence.” However, specific details on this are yet to be unveiled. The document merely highlights the need for establishing sustainable urban planning based on unspecified sustainability indicators and acceptable transition thresholds (from long-term rentals to holiday lets) based on “the allocated land for residential purposes” and the “level of local or tourist activity”.
Tenerife’s Cabildo Opposes Rental Caps
Following Adeje’s declaration, the Vice President of Tenerife’s Cabildo, Lope Afonso of the PP party, cautioned on Wednesday for a cautious approach in considering the designation of municipalities as stressed housing areas, as he believes that potential rent restrictions could have a counterproductive impact by increasing rental prices.
The island’s president, Rosa Dávila, assured Adeje of the “support” from the Cabildo but noted the absence of any applications from Adeje to participate in the insular Active Housing programme.
