Spain: Tourist rentals

published on 19 April 2024 | reading time approx. 4 minutes

It is one of the central issues being debated in Spanish parliaments: access to affordable housing, tourist rentals and their regulation.

EU Draft Regulation »
Regulation of the VUT in Spain »
Final considerations »

It can be seen that the wide range of tourist accommodation (“viviendas de uso turístico”, abbreviated to “VUT”) offered by platforms such as Airbnb, Booking or TripAdvisor promotes and supports tourism in Spain, a sector that has once again proved to be a decisive factor for the Spanish economy, reaching an all-time high of 12.8 percent of GDP in 2023. On the other hand, in tight real estate markets such as Madrid, Barcelona or the Balearic Islands, it is becoming increasingly difficult for residents to find affordable housing.

This dilemma is reflected in the different levels of regulation in the Autonomous Communities and municipalities. Although these regulatory differences are to some extent understandable due to the individual characteristics of the Autonomous Communities and municipalities, they are often confusing and inconsistent for both real estate investors and residents.

However, the individual laws are moving in a common direction, as the draft EU regulation of 7. November 2022 aims to harmonize the area of short-term residential rentals.

EU Draft Regulation

The Commission's objective seems clear when it states in its press release that it wants to “promote transparency in the short-term accommodation rental sector in the interest of all stakeholders”.

The measures of the proposed regulatory framework can be summarized as follows:

Introduction of mandatory online registration of operators and short-term rental properties (“who”, “what”, “where”) and a unique registration number.
Accreditation and verification of this number on the platforms and control by the authorities with the possibility of imposing fines on the platforms.
Monthly data exchange between platforms and authorities, with the exception of small platforms and micro-platforms (with an average of up to 4,250 listings).

As mentioned above, these measures should lead to satisfactory results for all parties involved: more clarity and simplicity for platforms and providers/investors, more control and efficiency for authorities and more transparency for users.

From a legal/regulatory perspective, this proposal is fundamentally positive, as it introduces a common market-wide standard that will lead to harmonization and greater legal clarity.

Regulation of the VUT in Spain

Since Spain has been one of the countries most affected by tourist accommodation rentals for several years, it could be argued that this European regulation comes too late (but better late than never), since the Autonomous Communities and Municipalities most affected have already adopted or are adopting relevant measures in the form of regulations to regulate the impact of tourist accommodation, some more practical than others.

Barcelona

With more than 8.5 million guests in short-term accommodation per year, Barcelona is the municipality most affected by tourist rentals, so it is logical that it is here that the most regulations have been introduced.

At the end of last year, the Generalitat de Catalunya (regional government of Catalonia) passed the Decree-Law 3/2023 to guarantee access to accommodation, which sets a limit of 10 VUTs per 100,000 inhabitants and requires hosts to make a more comprehensive declaration of responsibility and renew their license every five years to ensure better control, transparency, and legality.

Madrid

Madrid City Council has announced a new regulation for April this year to control VUTs and combat the existence of illegal tourist accommodation. Last year's inspections revealed 478 unauthorized establishments, although the number of unreported cases is thought to be much higher.

Despite the announcement for this month, nothing has been published about the content, such as the subject of the inspections or the sanctions, so we can only speculate at the moment.

The Autonomous Community of Madrid (Comunidad de Madrid) is also preparing to amend existing regulations, specifically Decree 79/2014 and Law 1/1999 on Tourism Management, presumably in anticipation of the entry into force of the EU regulation. It is already expected that a provision will be included prohibiting VUT in protected housing and another allowing the prohibition of VUT in buildings where the community of owners decides to prohibit this type of use. It should be noted, however, that the latter measure is not new in practice, as it is already possible for condominium communities to prohibit VUT with 60 percent of the votes, according to the law on condominium communities.

Balearic Islands

The Government of the Balearic Islands has decided to take a proactive stance in the fight against illegal tourist accommodation by entering into an alliance with Booking, one of the main platforms in the market, in anticipation of the entry into force of European legislation, particularly with regard to the exchange of data between platforms and public authorities.

With this measure, the Balearic Islands are following the example of the city of Seville, which was the first Spanish city to sign an agreement with Booking to control the tourist accommodation market.

Final considerations

Although only Barcelona, Madrid and the Balearic Islands are explicitly mentioned in this article, it is evident that this wave of regulation will reach all the areas most affected by tourism in Spain (if it has not already done so) and must be taken into account in any case when investing in or managing properties intended for the VUT.

For its part, the EU regulation is very welcome as it creates legal certainty for those affected and ensures legal harmonization throughout the common market.

It remains to be seen how the European standard will be implemented in practice in the respective autonomous communities and municipalities, and whether regional legislation could even go beyond the European standard.

Since it is very likely that social and political pressure will lead to further tightening of regulations over time, with more and more caps on the number of tourist apartments per inhabitant (as in the case of Barcelona/Catalonia) and/or very strict requirements for obtaining a license, we recommend that domestic and foreign real estate investors interested in the VUT revenue stream acquire the property(s) with a functioning tourist license as early as possible, or obtain the license as early as possible to avoid future shortages of tourist apartments.

In any case, investors should be aware of the level of regulation in the municipality in which they intend to purchase and rent the property and should not underestimate the obligations associated with tourist rentals. We therefore recommend comprehensive legal advice to ensure the correct implementation and monitoring of such an investment.