An investor arriving in the Canary Islands with a plan to build a new resort usually meets the same wall: the moratorium. For years the islands have restricted new tourist accommodation, out of a recognition that parts of the coast were reaching, or had passed, the limit of what they could sustain. Understanding what the moratorium actually blocks, and what it leaves open, is the first thing any hospitality investor in the Canaries has to get right, because it determines whether a plan is possible at all.
Why the moratorium exists
The Canaries built a tourism economy over decades, and on the most visited islands the traditional resort zones filled up. The moratorium is the political and planning response: a set of limits, evolving over time and varying by island, aimed at stopping the uncontrolled addition of new resort beds to saturated coasts. It is not a blanket ban on all tourism development; it is a brake on a specific kind of growth, and the distinction matters enormously to an investor.
The concept the brake rests on is carrying capacity. Directive 25 of the Canary tourism directives requires any decision to urbanise land for tourist use to be founded technically on the carrying capacity of the zone affected, set out as a self-standing document inside the planning instrument, weighing at least ecological, social and landscape capacity, infrastructure, the market, and the availability of professional and labour resources.
The same directive treats certain elements as sensitive in every case, among them the coastal strip of 500 metres measured from the shoreline. That analysis supports or defeats a site long before an investor sees it.
The law the moratorium actually comes from
There is no single statute called the moratorium. The first hard brake was Ley 6/2001, de 23 de julio, de Medidas Urgentes en Materia de Ordenación del Territorio y del Turismo de Canarias, which suspended the tourist-use determinations of planning instruments while the islands drafted their directives. Those directives arrived with Ley 19/2003, published in the Boletín Oficial de Canarias on 15 April 2003, whose first transitional provision suspended planning and the granting of authorisations and urban licences.
That suspension is gone. Ley 4/2017, de 13 de julio, del Suelo y de los Espacios Naturales Protegidos de Canarias repealed the first and third transitional provisions of Ley 19/2003 and most of the general planning directives, while expressly keeping the tourism directives in force. Directive 27, which governed the rate of growth, had already gone in 2013. A description written before September 2017 no longer describes the regime.
What operates today is Ley 2/2013, de 29 de mayo, de renovación y modernización turística de Canarias, on top of the surviving tourism directives and island and municipal planning. Its four-island authorisation regime was litigated: in Sentencia 209/2015 the Constitutional Court declared void the original wording of article 4.2.a) and the closing part of 4.2.c). The text in force is the one given by Ley 9/2015.
What it blocks
In broad terms, the moratorium makes new resort accommodation in the traditional tourist zones difficult to authorize, particularly lower-category capacity. The precise rules depend on the island, the municipality and the current planning instruments, which change, so no general statement substitutes for checking the specific site. But the direction is clear: adding new, standard resort beds to a saturated coast is the thing the regime is designed to prevent.
The mechanism is a prior authorisation, not a prohibition. On Lanzarote, Fuerteventura, Gran Canaria and Tenerife, article 4 of Ley 2/2013 subjects new accommodation supply arising from a transfer of capacity to a prior enabling authorisation from the respective cabildo insular, and requires the same authorisation for renovations and extensions that increase an establishment’s places where island territorial rules expressly say so. Without it the municipal building licence cannot follow.
The island plan can close the door further. Under directive 26 the island plan has to declare carrying capacity exhausted wherever the analysis shows it, and in the area declared the number of tourist places cannot rise above existing supply; it may also fix island-wide limits on authorising new tourist accommodation. Separately, article 5 bars changing the accommodation units of tourist establishments authorised on tourist-use land to residential use, save where a planning instrument or the legislation on specialisation of uses provides otherwise.
The moratorium did not stop investment in Canary tourism. It redirected it, from building new beds on the coast to improving the ones that exist and to the cities.
What it permits, and even encourages
The moratorium generally treats quality differently from quantity. Higher-category establishments, and above all the renovation and repositioning of obsolete existing capacity, are frequently permitted or actively encouraged, because they improve the stock without expanding it. This is the crucial point for an investor: the regime pushes capital toward upgrading tired assets rather than building new ones, which is why so much of the real opportunity is in repositioning, as we set out in our note on repositioning an old Canary resort.
The statute defines what counts. Tourist building renovation means raising the quality of an establishment, by rehabilitating the existing building in whole or in part, or by substitution, meaning demolition and rebuilding, with or without transfer of the capacity to another plot. Qualifying projects can claim increased buildability, an adjusted density standard and the right to additional places.
Those rights are calibrated and conditional. Renovation meeting the minimum investment per place set in the law’s annex gives a right to authorise up to fifty per cent more places than the establishment held, raised by a further twenty-five per cent for each category grade above three stars, never exceeding one hundred per cent of the pre-existing places. On substitution with transfer the uplift reaches one hundred per cent where the cleared land is ceded to the municipality for public use, free of charges, and the authorisation follows only once demolition is executed or secured.
Places rather than buildings
The unit of account is the accommodation place, not the building. Each cabildo keeps a tourist register of accommodation places in which rights to obtain prior authorisations for new places, arising from renovation projects in its territory, are compulsorily entered, with a certification sent to the regional tourism register. Those rights can be transferred to a third party and grouped with others to be materialised in one or several establishments.
They are also perishable and geographically tied. Additional places not materialised in the renovated establishment have to go on the same island and on tourist land, and the application must carry a certificate from the regional tourism register showing the right is in force and its holder. The right lapses five years after its entry there, which makes its remaining life a valuation input.
There is one more source of places. New public equipment, or private equipment declared of general interest by the Canary Government, on urban or developable land, is rewarded with up to one thousand accommodation places, at one place per thirty thousand euros invested and a minimum equipment investment of thirty million euros. Modernisation plans can also cap the places in residential dwellings marketed touristically, which is where this regime meets holiday rentals in the Canary Islands.
The urban exception
Urban hotels, serving city and business demand rather than resort tourism, sit largely outside the saturation logic, because they are not adding capacity to an overbuilt coast. This is why the cities have become one of the more interesting entry points to Canary hospitality, a play we set out in our note on urban hotels in the Canary Islands. Where the coast is closed, the city can be open.
The exception is in the statute, not inferred from it. Article 4.2 of Ley 2/2013 provides that hotel establishments sited on consolidated non-tourist urban land do not require prior authorisation, without prejudice to the standards for the category sought, and the law defines urban hotels as those sited on such land. That removes the cabildo step, but not the municipal licence, the sectoral standards or the plot’s planning classification.
What the planning file has to show before the price is agreed
The first question is whether every place sold is authorised. Ley 2/2013 opened two routes to regularise places and buildings predating the 2001 urgent measures law, but both required the application within three years of its entry into force on 1 June 2013, and it provided for closure of the unregularised places after four years. Those windows are closed, so unauthorised capacity should not be paid for as revenue.
The second question is what the title shows. Article 23 obliges the holder of a tourist establishment to record in the Land Registry the use assigned to the plot and the building and the limits on changing it, when registering the new building, the horizontal division deed, or a right over an existing building. What the Land Registry entry shows is therefore evidence of the planning position, and its absence is itself a finding.
The third question is who operates. Under Ley 7/1995, de 6 de abril, de Ordenación del Turismo de Canarias the tourist exploitation of an accommodation establishment must be carried on under the principle of single operation, by one undertaking, with all units devoted to the tourist activity to which they are tied. In a complex held in horizontal division that is decisive, and it shapes whether the asset is bought directly or by buying the company that holds it. Alongside it sits the duty to conserve and rehabilitate, enforceable up to seventy-five per cent of replacement cost, with substitution of the owner among the consequences.
How it shapes the investment strategy
The moratorium turns the Canary hospitality market from a development market into a repositioning and quality market. An investor whose thesis depends on building new resort beds will struggle; an investor whose thesis is upgrading obsolete stock, moving up the quality ladder, or entering through the cities is working with the regime rather than against it. Combined with the tax incentives set out in our note on the RIC, that reshapes what a good Canary hospitality investment looks like, and it rewards investors who understand the constraint before they fall in love with a site.
In structuring terms the planning position has to be resolved before the holding structure, not after. The number of authorised places, the life left on any place rights, the registry wording on use and the operating title decide whether the asset can do what the model assumes, and they belong in the same file as the numbers driving investing in Canary Islands hotels.
Montclare structures and operates investments in the Canary Islands, from the ZEC and the RIC to hotel and real estate assets on the ground. Our services are set out on our services page.
This article is informational and does not constitute tax, legal or investment advice. The Canary Islands regimes have specific conditions and change over time; treatment depends on the facts. Each engagement is subject to scope and applicable regulation.