Tourist Rentals in Barcelona & Málaga
"The end result is that a property buyer considering a purchase in one of these locations might need to rethink their buying plans if rental income is part of the strategy."
This blog covers the regulations regarding tourist rentals in the cities of Barcelona and Málaga. Both are getting tougher, even to the extent of outright bans in some locations. The end result is that a property buyer considering a purchase in one of these locations might need to rethink their buying plans if rental income is part of the strategy.
There are reasons why Spain’s A-list city destinations are trying to limit tourist rentals in the city centres. These are the main ones:
- Local residents are being squeezed out of city centres as long term rental stock reduces.
- Affordability – rental and sale prices shooting up as tourist rental investors move in.
- Noise and tenant churn.
- Local politicians getting a clear message to sort it out.
In one sense these issues are a sign of the strength of Spain’s tourism sector. In the decade since the 2008 recession Spain’s overseas tourists rose from 59m in 2007 to 83.6m in 2019. Spain is now the second most visited country in the world, just behind France. The rise in visitor numbers to Spanish cities is also a sign of a maturing tourism sector showcasing what Spain offers in addition to the typical beach market. For far too long that’s what Spain’s tourism sector concentrated on but they have now realised there is a big market for cultural tourism as well and these visitors head for the cities. One result is that rental yields in city centres have become very attractive for property owners.
The city centre problems
But this growth brings problems. Spain’s cities are relatively small in area and the historic centres where visitors want to stay become saturated with tourists and local residents feel crowded out. Another issue is that city tourism is a year-round market, that’s why the rental yields are so good. There is no low season so there is no respite. Disruption for a couple of months in summer is bearable if everyone goes home in September but Spanish cities are just as packed in winter as in summer. So the conundrum facing the most visited cities is how to get the balance right. How the economic benefits of more visitors, who typically spend more per night on average than the summer beach holiday visitor, can be balanced against what residents will tolerate in terms of increased noise and disruption to their daily lives.
Different cities, different rules
Different places have different requirements, some locations are overwhelmed while others don’t have a problem. These differences were behind the 2013 decision by central government to devolve legislative responsibility to the autonomous regions so they could come up with rules that best suited them. But even prior to 2013 several regions already had some controls in place; of the main tourism regions only Andalucía had no controls on the short term holiday market at all. But Cataluña, Mallorca, Valencia and the Canary Islands all did and it seems to me that the main reason some cities in these regions now have problems is that enforcement of those laws was non-existent. Then they got serious.
There’s no doubt that the emergence of portals such as Airbnb and Homeaway led to the rapid expansion of tourist rentals but with increased visibility it is also much easier for the authorities to see who is doing what. Not only are there fines for non-compliant individuals, up to €300,000 in some regions, big fines have been imposed on both Airbnb and Homeaway for allowing unlicensed properties to be listed. With improved enforcement it should now be impossible for owners to list a property unless they have a licence number. And tax avoidance is much easier to spot as once a property has its rental licence that information is shared with the tax authorities, Hacienda.
Already the city with most controls, Barcelona has plans to go further. Earlier fines against Airbnb and Homeaway seem to have had some effect with an estimated 2,500 unlicensed properties taken down but still about 40% of listed properties are thought to be illegal. Barcelona town hall created four zones moving outwards from city centre. There is now a permanent freeze in Zone 1, covering Cuitat Vella, parts of Eixample and Poblenou, Vila Olímpica, Pole Sec, Hostalfrancs and Sant Antoni. No new licenses will be issued in this zone even when an existing licence expires. In Zone 2 a new license will only be granted if one has expired, so numbers will stay the same. The only areas where limited growth will be allowed are Zones 3 and 4 but these are further away from the city centre, less likely to attract to the typical tourist who wants to be on top of the action.
Several new ideas are up for future discussion. One is to fine owners who evict long term tenants solely to switch to the short term market. Another is to force developers of new projects to allocate 30% of the project to affordable rentals and finally, fines of up to €60,000 on owners who rent out unlicensed rooms in their principal residence.
Málaga is the new boy on the block and with far fewer city-based tourists than Barcelona’s massive 27m short-stay visitors, a more manageable 1.3m tourists. It’s also the least regulated of Spain’s Mediterranean coastal cities and only requires owners to apply for a licence number and meet the stipulated standards. As yet, there are no restricted zones. This law came into effect in May 2016 and already around 3,500 properties in the city have legal status with a licence number and the list is available online so visitors can check if the apartment they are renting is legal. The council has also set up a telephone hotline for the public to report suspected illegal properties.
However, although it is a much smaller market it is growing strongly and by 2017 had the highest growth in tourist numbers of any city in Spain. Already the same issues that trouble Madrid, Barcelona and Mallorca are emerging, particularly evictions of long-term tenants, rising rents, noise and disruption. While there are no definite new proposals in the pipeline the mayor is on record as saying the tourist rental market is being watched closely and they won’t hesitate to impose more controls if necessary. And owners themselves can also take action and there are already buildings in Málaga in which the community of owners have voted to change the statutes and ban tourists lets completely. This has been made easier by a change in the law requiring only 75% in favour rather than the 100% agreement demanded previously.
What isn’t certain is how these tougher rules and better enforcement might affect the property market in city centres as far as buyers in general are concerned. The best case scenario is that fewer speculative investors will reduce competition and make it easier for buyers, both local and from overseas, to buy a property for personal use.
Please check our blog page for more posts about changes to Spain’s rental laws for owners and lots of other topics. I’m quoted in this article which discusses the issues. Get the answers to some commonly asked questions about buying property in Spain on our FAQs page.
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About the author
Barbara founded The Property Finders in 2003. More than two decades of experience and her in-depth knowledge of the Spanish property market help buyers get the knowledge they need to find the right property for them.