Neighbour has rented out our property abroad without permission!

[unsurebut]

My father has a property in Spain. It's been in the family since the 70s as a holiday home. Until 3/4 years ago my father travelled there regularly and the place was occasionally used by other family. Then my father had a catastrophic stroke and wasn't able to travel for a while and the place wasn't used as much.

The neighbour there offered to keep an eye on the place in return for his family being able to stay there on the odd weekend/couple of weeks in the summer. He's a nice guy and has done a lot to modernise the property. My father then gave him permission to rent out the flat when it wasn't being used, again, for the odd weekend / couple of weeks in the summer, nothing permanent or long term and we were to be kept informed about who was staying there and when in advance of it being rented out.

Fast forward to this year and my father has recovered enough to travel. We've booked to go there in June, all very excited. My father emailed the neighbour, only to be told that it's not possible because he's rented the property out until January! Not only is this not permitted, we weren't even told! I am absolutely outraged and my father is very cross. He's emailed the neighbour to say that we will be arriving on said dates and that's non-negotiable, the neighbour has replied to say that he's away this week so will respond next week. Meanwhile, flights have been booked, all on the assumption that we were to be notified in advance of it being rented out.

There's communication between my father and the neighbour referring to the agreement, but no specific contract or anything, and the arrangement has worked well until now. I think what has happened is that the neighbour has become used to us not using it and has been renting it out far more than we were aware.

So what do we do now if he refuses to get the 'tenants' to leave?! Surely their contract with the neighbour is null and void because he doesn't have permission to rent it out on this basis? The neighbour DEFINITELY knows this.

AIBU to demand the people leave so we can use the flat as and when we want?

Absolute worst case scenario is that you cancel your flights, the flat is returned in Jan and you owe some money to the Spanish authorities.

Annoying but completely capable of being sorted out.

@UneTasse Exactly.

She and father do not even know who why or what or for how much and he has been gravely ill and not visited for at least 4 years or collected any money. (Able to prove this) Before then was Covid. Who exactly will report this man? The neighbour? Absolutely not!

He is hardly a tax evader.

Relatives in my villa when I lend it always pay towards electricity (high in summer, pool, air con etc), before and after cleaners, food delivery for arrival and laundry. Always.~ 250 euros.

That is what this guy next door said he was doing. He gave cash as OPs father would have been paying direct debit for IVA Spanish tax, the equivalent of council tax, electricity, rubbish collection and water.

It has all changed, it transpires. Unknown to anyone.

I have sent you a PM. I live and work in Spain and may be able to assist. This situation is complex for various reasons, and advice that you have been given to send the police round is not good in this situation. You need proper advice before you take any steps at all.

Doing this in Spain is likely to land you with a criminal charge against you extremely quickly. Please do not do this under any circumstances.

To be fair to people posting on here, the advice to send the police round was mainly before the OP revealed that dad knew of this arrangement all along and has been profiting from it.

I wouldn't be imposing any recourse on the current tenants, it really isn't their fault and I would not see somebody go homeless but I would be insisting that the neighbour covers full cost of booking a weeks accommodation on the dates you expecting to go out to visit. I would also be retracting any permission for the property to be let out again.

Not sure if this is helpful but in the last few years laws have been introduced requiring properties To be licenced before they can be rented out so I'm not sure who would be liable for the illegal let...probably your keyholder. So you'd be completely justified in evicting your "tenant" and changing the locks. Who has been responsible for paying your Suma(rates) , electric and water charges ? If that's been left for your lawyers to deal with surely they should have noticed the rise in consumption?. Lots of questions to be answered about the management of your property.

You handed over responsibility of it's upkeep, you allowed him to make modernisations to it, and then gave him permission to rent it out odd weekend or not. And are now shocked that it's actually it's being rented out full time.

I know this is not what you expected but anyone with any knowledge of the reality of living in Spain, particularly the south where it is very hard to make a living, should have known this would be a likely outcome of your arrangement

As for getting it back you either negotiate with him, pay him, or pay a lawyer that works in English and Spanish. Each option getting vastly more expensive and time consuming then the former.

The law may be very different from the UK, so best to get advice from a UK firm that specialises in Spanish legal issues.

I have read there are also companies who will negotiate with squatters and pay them off with enough money to leave.

I thought the tax on rental income was paid in the country that the property is in?

It's easy to see how this has slowly and quietly escalated over the years. Like boiling a frog. You taking over your DF's affairs on this mean new sight and new scrutiny which neighbour wasn't expecting.

It will be possible to sort this. I hope by the time you go or you'll have to stay in the neighbour's apartment whilst he sleeps elsewhere!

UK Residents are liable to UK tax on income arising anywhere in the world. Unless you are Non Resident status although living in the UK.
(Confused yet 😕)?

If Foreign tax is also paid on that income credit can be given for that if there is a Double Taxation agreement with the other country and the credit is limited to the UK tax liability on that source of income (so HMRC don't refund foreign tax)

That rule in France about no winter evictions refers to the situation where the tenants have stopped paying their rent. Every year in spring there are stories of people who finally get evicted for that. If you are paying your rent, you cannot be evicted under any circumstances unless the landlord sells the house or can demonstrate that they or a close family member will be moving in.

To give another idea of how well tenants are protected in France: The landlord has to give the tenant every key that they own to the house. They are not allowed to keep a key (although many do, and many tenants don't mind). But formally, if the landlord wants to gain access, they have to get a court order and/or call a locksmith.

In Spain it gets even worse because squatters have very strong rights. Non-resident owners worry about this a lot because if someone breaks in you have about 72 hours to turf them out summarily before the squatting laws take effect, at which point you have to go through the courts. But a tenant can become a squatter simply by stopping paying the rent.

Plus, in this case, it seems that the tenants have done nothing wrong...

He(Your Dad)
would have had to make a declaration about which country he was a resident for tax purposes. The usual rules would then apply...declare the rental income less expenses (insurance, maintenance, Local rates, community management fees, keyholder fees, water, electricity,lawyer/administration fees,bank fees, other amenities...all with receipts)
HMRC will probably allow him to go back up to 7 years if he declares now and may take his stroke into account...although he seems to have known more about ongoing rentals than your original post indicated
You should retain a reputable bi-lingual lawyer and with your Dad's consent apply for for yourselves and whoever else he wishes to have power of attorney. If he hasn't already, he needs to make a Spanish will.To act on the power of attorney, should he lose capacity make sure you and whoever else is named apply for and obtain NIE numbers before the POA is granted.
Bear in mind you're only allowed to spend 90days out of 180 in your property (dates on a rolling basis)
Employ a property management firm. Yes they charge fees but will manage your apartment however you wish along with any rental arrangements you allow them to make on your behalf, they can also undertake /manage cleaning and maintenance
Change the locks and give the neighbour notice of your new arrangements (so they dont report your management company's employees as burglars)
Look on the property as an asset and protect it as you would any other.

So how long hasn't he been out there for? Can't be a small bundle...

As a non-resident of Spain and being non-EU, tax is payable on the full rental income. No deductions (eg, agent fees) can be made to reduce the taxable amount.

https://costaluzlawyers.es/blog/guide-to-taxes-on-rental-properties-in-spain/

Because your dad asked him to!

These poor tenants

See what the neighbour says/offers before you get into any arguments with him.

Great to have an expert with experience here.

So what would you advise OH to do at this stage? Get in touch with HMRC, put hands up, and come clean- and pay back tax?

I'm confused, if the neighbour used to give him tge rental income in cash, presumably this hasn't been happening since your dad's stroke, so he hasn't had any of the money from what seems like a fully booked rental.

Not to be alarmist but if the tenants don’t want to leave, they don’t have to. It will take you years and will cost you a lot of money to get them out. The law is absolutely ridiculous in Spain in regards to squatting….. hopefully they are nice enough to leave without causing you any problems. Lawyer up and make sure this gets done properly for this instance and future reference. Good luck!

Hang on...whose getting the money when this neighbour is renting out your father's property?!

Me too, unless they're friends or family of the neighbour who is illegally renting it to them, then they would definitely know that they are not there legally.

Why not go in June, collect a bag of cash, and treat yourselves to a luxury hotel and enjoy.

It is an opportunity to find out what's going on with the tenants. Take it slowly, no need for guns blazing as Dad was quite happy with the arrangement up to now and it gave him a tax free income. The neighbour was doing him a favour really, ensuring the property was ok and letting it out when he could.

How do you know the tenants will bed themselves in come January? You don't, but you can find out when you are there.

Gather information first before blaming left right and centre. Then take action if you have to. I think the presumption that the neighbour has made thousands out of this is quite knee jerk. If neighbour hadn't been around, would you have gone over to sort everything out?

Slowly, slowly catchee monkey, and you can suss out good English speaking Spanish lawyers while you are there to give them a heads up if things go wrong. As it is, it seems to me that the only issue is the fact that you cannot stay there this time. Not the end of the world is it since Dad or family etc. don't seem to have been there for a long time anyway.

The poor renters though! Not their fault either!