You plan to buy in Spain and destine your accommodation to tourist rental. This sector is evolving towards a restrictive regulation, and this in all the cities of Spain, Madrid, Barcelona, Valencia, Palma, Malaga, Seville, Bilbao, etc. Small tour of Spain measures taken by municipalities to regulate the phenomenon of “pisos turisticos” (Tourist Apartments)
Tourism is one of the pillars of the Spanish economy. In 2017, Spain received nearly 82 million international tourists who spent 60 billion euros in the country. In 2016, for the first time, the capacity of “pisos turisticos” – the tourist rental offer (362,000 beds) exceeded the traditional hotel offer (330,000 beds).
TOURIST RENTAL AGAINST THE INTEREST OF LOCAL POPULATIONS
The appearance of booking platforms for short-term rentals on the internet (from 2010 for Airbnb in Spain) has generated an exponential multiplication of “pisos turisticos”.
Barcelona has grown from 40 Airbnb offers (whole homes – shared accommodations – single rooms) available in 2010 to nearly 5,000 in 2014 and 24,000 in 2017! Madrid followed the same pace with a year of lag: 6,000 in 2015, 20,000 in 2017. Even in other cities, the Airbnb offer is multiplying: from 1,100 in 2014 to 7,000 in 2017 for Valencia, from 1,100 in 2014 to 5,400 in 2017 for Seville, from 1,100 in 2015 to 3,400 in 2017 for Palma de Mallorca, from 700 in 2015 to 2,200 in 2017 for San Sebastián, from 500 in 2015 to 1,900 in 2017 for Las Palmas, etc.
Like many start-ups in the sharing economy, Airbnb and other rental platforms were built and developed in a sector where the legal framework was non-existent . The continuing proliferation of tourist rental offers creates many problems for municipalities, hoteliers and resident populations:
- tourist rental generates a very high price inflation of housing sales in neighborhoods where the supply of tourist rentals is important (city centers and historic districts)
- it also reduces the supply available for rent in the big cities for residents who are then forced to go to the outskirts
- it depopulates the historic or traditional districts, the owners do not renew the hirings with the year to privilege the tourist hiring
- many tenants (in the year) sublet their accommodation in summer without the agreement of the owners
- in neighborhoods where these rentals are the most numerous, residents complain about the noise and lack of civility of casual tenants
- the revenues earned by owners of short-term tourist rentals are not all reported
- international booking platforms pay little or no tax in countries where they market rental property
- it is an accommodation service that does not pay a tourist tax
for hoteliers, it’s unfair competition
Faced with the extent of the “pisos turisticos” phenomenon, and faced with the grumbling of hotel professionals and residents’ associations, the Spanish municipalities have raised the tone and decided one after the other to take measures limiting and even reducing or prohibiting tourist rental in certain areas.
A short tour of the Spanish cities and their actions to supervise the activity of tourist accommodation …
Barcelona, the capital of Catalonia, reacted as soon as possible: in the summer of 2016, it imposed a € 30,000 penalty on six such platforms, including Homeway, Tripadvisor and Fotocasa. In November of the same year, Barcelona becomes the first city in the world to inflict a very heavy fine, € 600,000, to Airbnb.
In March 2017, the municipality approved a specific urban planning program for tourist housing, the PEUAT (Plan Especial Urbanístico de Alojamientos Turísticos de Barcelona). This program shares Barcelona in 4 zones: in zone 1, which covers a large part of the historic center, no new tourist accommodation license can be issued and housing licenses that cease their tourist rental activities will not be renewed. In zone 2, there will be status quo of the number of licenses (only canceled licenses will be replaced). In zone 3, new licenses are possible; but not currently because the maximum number of licenses allowed has been reached, so as for Zone 2, wait until licenses cease to obtain licenses. In zone 4 (zone very marginal in area), new licenses are possible.
Copying the example of Barcelona, the municipality of Madrid has elaborated its specific urbanistic program for tourist rental, the “Especial Plan of Implantación de Uso de Hospedaje”, which should be approved before the end of the year.
The Spanish capital will also be divided into 4 sectors: zone 1, which covers the entire district “Centro” with a ban on new tourist licenses, zone 2, which includes the rest of the historic center (Chamberí, Arganzuela, one part of the districts of Salamanca, Retiro and the district of Argüelles), zone 3 which covers the area around this center, and zone 4 for the rest of the city.
Owners who rent more than 90 days in the year will need a special license that will be similar to hotels and para-hotels. In particular, in zones 1 and 2, it will be required that the “piso turistico” has an independent access from the street … which would mean the prohibition of almost all (95%) professional tourist accommodation (including the rental period annual is more than 90 days) in the buildings of the center of Madrid, including existing ones!
Since January, the municipality has banned for a period of one year the concession of new tourist licenses of more than 90 days in the center.
In recent days, the new law “Ley de Turismo, Ocio y Hospitalidad” of the Generalitat Valenciana (Valencia Region) allows municipalities to have legal control of tourist housing. From now on, the owners of the Valencia region who want to have new tourist licenses will have to apply to their municipality.
But already, since the end of February 2018, the Valencia City Council has banned the granting of new tourist licenses in the old city (Ciutat Vella) until the implementation of the new Special Plan for the Protection of the Old Town, the “Plan Especial de Protección de Ciutat Vella “.
The Municipality of Valencia is also preparing an amendment to its Law on Tourism (Ley de Turismo) that will “recover the control of tourist accommodation in the city” by limiting them especially to the apartments of the ground floor and first floors of buildings (provided that the ground floor does not have a residential use). With this amendment, two-thirds of current tourist housing should be banned in Valencia.
Valencians protest against “pisos turisticos” (Tourist Apartments)
Palma de Mallorca is one of the Spanish municipalities that has adopted drastic measures against “pisos turisticos”.
From next July, it will be simply forbidden to rent a flat apartment for tourist purposes! Only single-family homes will be allowed for tourist rentals: more than 95% of the tourist rental in Palma will disappear.
The Balearic government has also implemented the Tourist Rental Law 6/2017, which provides fines of 40,000 to 400,000 € for operators who advertise illegal tourist accommodation, and 20,000 to 40,000 € for owners.
At the end of March, came into force the municipal ordinance regulating the urban use of accommodation and tourist rooms (Ordenanza reguladora del uso urbanístico de vivienda turística y alquiler de habitaciones en vivienda habitual para uso turístico).
On the Barcelona model, this ordinance divides the city into three different zones. Zone A, saturated, which covers the Old City and where no more licenses will be granted. Zone B, with high demand, corresponding to the outlying districts of the old town, where tourist accommodation will have to be on the first floor, or every 6 floors. Area C, the rest of the city, where two tourist floors are allowed for each 6-story party.
The ordinance also establishes the conditions of habitability and occupation of the dwellings, the minimum number of square meters and defines the conditions of public information of the beginning of activity.
The associations requesting the limitation of tourist accommodation at the municipal Council of Saint Sebastian
The other major Basque city changed in January the General Plan of Urbanism (Plan General de Ordenación Urbana), in the sense of a limitation of tourist apartments on the first floors of buildings. In the central districts, only one dwelling or tourist room will be allowed per building.
A municipal ordinance, aimed at limiting the number of tourist apartments that proliferate in the different districts of Seville, will be prepared by the technicians of the Department of Urbanism. It will be a modification of the urban regulation, which will impose strict rules on the owners of the “pisos turisticos”, which will concern the surfaces and floors of these dwellings. We do not yet know the rules that will be adopted but they could be similar to those of Valencia.
The municipality will also launch a citizen campaign to identify illegal tourist housing, make available to the public the file of tourist accommodation legal, inform the public and tourists of their rights and duties, and facilitate complaints from residents against nuisance caused by the occupants of the “pisos turisticos”.
In fiscal matters, it is planned for next year a differentiated tax on tourist accommodation activities.
Under the pressure of hotel professionals, property managers and the population, the Malaga City Council is in the middle of a debate on the subject of tourist housing. Some people think that it is up to the Spanish central government to solve the problem by instituting a direct tax on tourist apartments, an IBIT (Tax on Touristic Real Estate). Others want more controls and penalties against the operators of Internet rental booking platforms. Still others a moratorium on these activities.
It is already too late to imagine measures for this summer, but it is certain that this subject will be a priority for the municipality of Malaga from this autumn, and that there will be a regulation in 2019.
WHAT SHOULD BE THE CONSEQUENCES OF THESE MUNICIPAL REGULATIONS?
- a significant drop in the supply of tourist rental … so an increase in prices in this sector
- lower prices rents and a stabilization of the purchase price of residential real estate in the tourist areas of major Spanish cities; we can even consider a drop in sales prices in the areas where they had flamed in recent months like the Centro in Madrid
- a larger residential rental offer available to residents in tourist areas, and therefore the return of local residents and neighborhood life
- a tightening of controls and an increase in tax revenues
- a rebalancing of tourist receipts towards the peripheral districts
- an increase in the occupancy rates of traditional hotels
- a decrease in nuisances in very tourist areas
- increased collaboration of reservation platforms with municipalities
THEN SHOULD CONTINUE TO BUY IN SPAIN IN THE LARGE CITIES FOR A RENTAL INVESTMENT?
Our advice: yes, rental property in Spain is still profitable, but forget the tourist rental and turn to the residential rental … which is often as if not more profitable in the end: according to experts, tourism rental is more profitable than the residential rentals only if the occupancy rate is over 70%!
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