What is a Licence of First Occupation?

The introduction of regulations for holiday rentals in Spain has left many owners with doubts as to whether they will be able to continue renting their property as tourist accommodation. Spain-holiday.com has received hundreds of queries from concerned clients.
To be able to offer the most factually correct feedback on these and other questions, Spain-holiday.com spoke to Raquel Perez of Perez Legal Group and Raymundo Larraín Nesbitt, a regular legal-contributor for Spanish Property Insight.
There are four basic questions raised time and again by owners: What is a Licence of First Occupation? Will my tax declarations be affected? What is the ruling on tourist accommodation situated on rural land? Should I be charging IVA? 
Our first subject covers the Certificate of First Occupation, one of the prerequisites of applying for your licence in Andalucía under the new decree, due to be published in January 2015. 

What is a Licence of First Occupation?

A Licence of First Occupation (also known as Habitation Licence or Certificate of Habitation and in Spanish, Licencia de Primera Ocupación or Cédula de Habitabilidad), is a licence issued by the Town Hall (ayuntamiento); granted once the building works have been completed, which allows the purchaser to dwell in the property legally. The property developer is responsible for applying for this licence, once the Certificate of End of Construction has been issued. Each newly built dwelling will have an individual Licence of First Occupation (LFO); although in large developments the LFO are normally grouped for economies of scale. Resale properties will already have an LFO granted. 
If a long period of time has passed since the building works were completed and the developer has failed to obtain this licence, it may be a sign of serious underlying legal problems. Although it is not illegal to complete at the notary without a Licence of First Occupation, not having one will prevent you from having access to water and electricity supplies for the property. It will also mean that no bank will be willing to grant you a mortgage.
It is always recommendable to complete with a valid Licence of First Occupation in place; however, there are special circumstances in which it may be advisable to complete without one, specifically if there is no bank guarantee securing your down payments and the developer is at risk of going into administration, provided there’s no ruling affecting the building licence due to planning issues.

My property is over 10 years old, do I still need a Licence of First Occupation?

All properties, regardless of age, need a licence to be built. Some of them are called Licence of First Occupation, or if they are older than 10 years, depending on the town hall and location, licence may have a different name, but yes, you will need a Licence of First Occupation or equivalent.

Do I have to renew my Licence of First Occupation?

This will depend on the type of property and where it’s located, as the procedure depends on the ruling of the local town hall. For example in the Costa Blanca, you have licence of first occupancy and a licence of second occupancy, as the first one expires after five years of ownership. In the Costa Brava we understand the first occupancy licence lasts for 15 years, after which you must apply for a Cédula de Habitabilidad. Unfortunately, every region has a different structure and procedure for granting the licence. It's the owners responsibility to check if the correct documentation is in place.

How can you check if your property has the correct certification?

You should visit the town hall where your property is located. Take your catastral registration number with you, which you can find on your yearly bill for local taxes called IBI (impuesto sobre bienes inmuebles).

Can you apply for one, if you don’t have one?

Not everywhere. Usually, only the developer who built the complex can apply for the licence.

Currently, the town hall of Malaga made an alternative option for applying for the licence of first occupation for holiday homes.


Robert Black, owner of Costa Brava Rent and author of Holiday Rental Law in Spain commented, "If you need to renew your licence and are not getting sufficient information from your local town hall, I recommend you contact a surveyor, aparejador or arquitecto tecnico. This is the person who would carry out an inspection and sign the certificate. The aparejador checks that the bedrooms are adequate size, that you have power points, that gas appliances correspond with regulations and doors have correct specifications, etc.You may have to upgrade your water heater or put in more ventilation for gas. But you will often find a surveyor more helpful than the local town hall. In most cases the procedure is very straightforward. To renew a certificate costs approx. €100 for the inspection and €50 for submitting the paperwork. It then takes around three weeks to be sent to you directly."