The idea for this week’s Balcony Banter came from a question I was asked over coffee at the Rosa Center: has anything actually changed with Tenerife’s housing problem?
It is a straightforward question without a straightforward answer. So, joined by Clio, Christine and Adam, we looked at rents, holiday properties, social housing and some of the measures being discussed by local and national government.
Rents That Do Not Match Local Wages
Before the programme, Clio carried out a quick search for long-term rental properties in the south of Tenerife.
She found a two-bedroom property in Arona for €1,600 a month, a four-bedroom property in Adeje for €1,800 and a one-bedroom apartment in Playa de las Américas for €1,500.
Three properties are only a snapshot of the market, but the prices help explain why people are worried. Many workers in Tenerife earn less than €2,000 a month. A single person could not realistically pay €1,500 in rent while also covering food, electricity, transport and everything else.
Clio pointed out that the mortgage on her own two-bedroom home costs less than she would now have to pay to rent something similar.
Holiday Lets and the Housing Shortage
Holiday rentals, or viviendas vacacionales, have become the most visible symbol of the crisis. However, they are only one part of a much bigger problem.
There are also low wages, population growth, foreign investment, planning delays, a limited supply of building land and too few new homes being completed.
The discussion included Adeje’s attempt to gain greater control as a stressed housing area. This could potentially give the council more influence over rent increases and the balance between residential properties and holiday accommodation.
Clio also spoke about a new development of approximately 230 apartments near Callao Salvaje. She had been told that these properties must initially remain residential and cannot immediately become holiday lets.
Stopping new licences may prevent the situation from becoming worse, but it does not automatically bring existing rents down.
Could Holiday Homes Return to the Residential Market?
One viewer suggested that investors should have to provide social housing whenever new holiday properties are created.
The difficulty is that many areas are no longer encouraging new holiday rentals at all. The bigger question is whether existing holiday properties could be encouraged to return to the long-term rental market.
Possible incentives could include simpler registration, guarantees for landlords or temporary tax advantages for owners prepared to offer secure long-term tenancies.
There is also a danger that owners will simply leave their properties empty. Some would rather keep their money safely invested in an unused apartment than risk non-payment, damage or problems removing a tenant or squatter.
An empty property does nothing to help either residents or holidaymakers.
Building Social Housing People Want to Live In
We also talked about social housing and the way it has sometimes been treated in Britain and Spain.
Tim recalled two architects known by his father who designed attractive council houses. Their design won the competition, but the council’s response was effectively: “Very nice. Now go and design a council house.”
The implication was that public housing was not supposed to look as good as private housing.
Clio contrasted that attitude with social housing she has seen around Adeje. The apartments are often close to schools, shops and other services and are designed as homes in which families can remain for many years.
More social housing will be needed, but Tenerife is a small island with limited land. Building alone cannot provide a quick solution.
Airbnb and the Power of Online Platforms
The conversation then moved to Airbnb, Uber, Amazon and what Tim described as “techno-feudalism.”
The argument is that major platforms do not necessarily make the product or provide the service themselves. Instead, they control the marketplace connecting customers and suppliers.
Airbnb grew much faster than governments could regulate it. By the time local and national authorities understood its effect on housing, it had already become a normal part of the tourism industry.
That does not make Airbnb the only cause of Tenerife’s housing shortage, but it has made it easier and more profitable to move properties away from residential use.
The Proposed 100% Property Tax
Another question concerned reports of a 100% property tax.
The proposal discussed during the programme concerned purchases of residential property by non-EU citizens who were not resident in Spain. Under the most dramatic interpretation, a qualifying buyer purchasing a €300,000 home could face another €300,000 in tax.
This was discussed as a national Spanish proposal, not a tax created specifically for Tenerife.
Would it make homes more affordable for local people, or would it simply drive investment elsewhere without creating a single additional property? The group was far from convinced that it would solve the underlying shortage.
Better Tourism Rather Than Simply More Tourism
Tenerife does not necessarily need more visitors. The island would benefit from visitors who spend money in local businesses, explore beyond their hotels, respect the culture and look after the environment.
That does not mean only attracting wealthy tourists or pricing ordinary families out of the market. It means helping visitors understand how much more Tenerife offers beyond the beach and the hotel buffet.
Housing and tourism are closely connected, but tourists themselves are not the enemy. The real challenge is building a system that allows tourism to thrive without making it impossible for the people working in that industry to live here.
There is no single answer. Tenerife needs more residential homes, sensible regulation, better wages, useful social housing and cooperation between local, regional and national government.
More Tenerife stories and live programmes can be found at https://timothydowd.com