Property investors with homes in France and Spain face a ban on renting out their properties to tourists unless they fork out cash for a licence.
The new laws are already causing chaos as French authorities in Lyon, Marseilles and Paris implement the licensing rules in a trial run.
Many homeowners are left without a licence and face breaking the law as holidaymakers move in to celebrate Christmas and the New Year.
The problem could lead to hundreds of thousands of holidaymakers who have booked cheap flights to both nations for the winter holiday season to pay out for hotels as holiday home owners turn them away.
The home owners are also facing a cash flow problem as they may have taken deposits and advance payments for holidays they now cannot provide and may have to repay the cash.
Licences aimed to raise cash
Around a million French and Spanish holiday homes are reckoned to have British owners.
Estate agents in France and Spain expect a rush of properties coming to the already struggling property markets as owners sell up because they cannot afford to keep the homes without income from tourists.
The likelihood is many property investors will have to sell at a loss as housing markets in both countries are in the doldrums and bringing even more properties to the market will push down prices even more.
If the French trial is considered a success, the government will roll the licensing scheme out across the country.
Spanish property investors have a reprieve – the licensing laws do not take effect until spring 2014.
Local government in both countries welcome the plan as a cash-raiser for their economies, while hotel owners are also celebrating their luck as they expect more bookings.
However self-catering holiday firms and property investors argue the licensing schemes will ruin their businesses.
The cost of the licences is yet to be set, but is expected to run to several hundred euros per property.
Licensing is also intended to raise standards as the licensing check involves reviewing property maintenance and cleanliness.
Letting for even a few days without a licence is likely to attract fines and other penalties.
German lawmakers are also expected to vote on a similar ban on unlicensed holiday lets in the coming weeks, although this is unlikely to affect many British property investors.
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