If they have residencia, then they can be demonstrated to live here ... at least as far as the police are concerned. The law is that they
must exchange their UK licence for a Spanish one, or at the least have their UK licence inscribed. Now, the law isn't always enforced, but if you get stopped by a policeman who has an issue with it, he can fine you for not having either, and at this time of year, of course, they're out for fine money .....
A Spanish licence is fine to drive on in the UK. A UK licence is not, officially, fine to drive on here.
From there on, it's their choice.
