The Canary Islands government estimates that 30% of holiday homes must return to residential rentals, a decision that opens a new front with apartment owners from the EU and the United Kingdom, concentrated in the south of Gran Canaria. San Bartolomé de Tirajana and Mogán account for the majority of foreign owners of tourist apartments, especially from Germany, the United Kingdom, the Netherlands, and Nordic countries. Many of them acquired their properties under the umbrella of previous regulations, confident that they could steadily allocate them to the tourist market.
Now, the Canary Islands' new vacation rental law, which will require a single registration and could force thousands of homes to return to long-term rentals, opens up a scenario of legal uncertainty. Investors complain that the regulatory framework is being changed retroactively, jeopardizing the profitability of investments made in a market that the government itself had promoted as an economic driver.
Legal uncertainty particularly affects EU and British owners, many of whom are organized in homeowners' associations that manage tourist complexes in southern Gran Canaria. The possible withdrawal of licenses poses a risk of litigation before European courts, as it could be interpreted as a violation of the principle of legitimate trust in investments.
Attorneys specializing in real estate law in the Canary Islands warn that this situation could lead to international arbitration or claims for financial compensation, especially in cases where investments were made under regulations permitting tourist use. The regional government justifies the measure by arguing that it needs to return at least 30% of vacation homes to the residential market, with the aim of alleviating the shortage of rental housing for residents. However, in tourist municipalities in the south, the return of these homes to the long-term market is uncertain.
Foreign owners are asking: How will these rentals be managed in a market with low demand from residents in tourist areas? What real profitability will they be able to achieve compared to the tourist model? The lack of response creates the feeling that the regulatory adjustment has been designed without taking into account the socioeconomic reality of southern Gran Canaria.
A domino effect on foreign investment. The local real estate sector fears a disincentive effect on foreign investment, which has historically been a driving force for the construction and renovation of complexes in the south. If the perception of legal uncertainty continues, many small and medium-sized European property owners may choose to divest from the Canary Islands and seek more stable markets, such as Portugal, Madeira, or Cape Verde.
