Half of Spanish Holiday Rentals Are Illegal

Beach-front holiday rental on the Costa Brava

Beach-front holiday rental on the Costa Brava

Just half of holiday rentals in Spain have a licence to operate legally, according to new research by Esade business school.

The proportion of legal tourist rentals tends to be higher in places where it is regulated, such as Barcelona, where 75 per cent of holiday lets operate legally. However, it does depend on the the sanity of the regulations, with excessive regulations driving landlords into the black economy in some areas.

The proportion of legal rentals is much lower in Madrid (39 per cent), Mallorca (34 per cent) and Granada (31 per cent), despite, or perhaps because of, draconian holiday rental regulations in Madrid and the Balearics.

According to the Esade report, 14 per cent of tourists who come to Spain every year stay in holiday lets and spend €2,685 million whilst on holiday in Spain. Of this spending, €921.9 million goes on accommodation (€249 per person) while €1,763 million is spent on shopping, restaurants and leisure.

The research also finds that 32 per cent of people who stay in holiday rental homes would not come to Spain if they could not stay in this type of accommodation, so at least a third of holiday rental clients would never stay in a hotel. Hoteliers claim that holiday rentals are stealing their business thanks to unfair advantages like tax breaks, but this research suggest that is not true for at least a third of the business generated by holiday rentals.

Mar Vila, lecturer at Esade and co-author of the report, explained that the report was compiled based on interviews with holidaymakers and property owners in San Sebastián, Barcelona, Mallorca, Madrid, Granada and Calpe. The research found that just 50 per cent of the holiday rentals included in the study are regulated and registered. The proportion, Vila explained, is higher in places with holiday let legislation such as Barcelona. The exception is Mallorca where legislation is “restrictive” and only 34 per cent of holiday lets are registered. “This doesn’t mean they don’t pay taxes,” Vila pointed out.

The report, sponsored by the Spanish Federation of Holiday Let Associations (Fevitur in Spanish), also reveals that 92 per cent of owners who decide to let their home to tourists do so to “boost household finances”. For many it’s a matter of financial necessity, with 65 per cent saying they need it as a financial backup, and 58 per cent saying they wouldn’t be able to make ends meet without it. “Holiday lets contribute to the local economy, not only because guests spend in local shops or large stores but because holiday let owners employ people for maintenance, cleaning, refurbs or buy furniture,” Vila said.

He also pointed out that the study contradicts the theory that holiday rental guests are part of the “binge drinking tourism”. Clients are generally foreigners, with an average age of 47 and mostly (83 per cent) come to Spain to spend a few days with their family. These tourists’ average stay is 7.4 days, longer in coastal areas and shorter in cities.

Recently the tourist association Exceltur published a report on the P2P platforms that manage holiday lets, particularly Airbnb and Homeaway, and called for more restrictive legislation for the sector. The Exceltur report accused the holiday rental business of all manner of wrongdoings.

5 thoughts on “Half of Spanish Holiday Rentals Are Illegal”

  1. GarySFBCN

    Our building’s ‘communidad’ in Barcelona seems to have landed on a good compromise: We are suing the corporate owner of one apartment that is exclusively a tourist rental. This owner never controls their guests and frequently rents to groups of 6-10 males in their 20’s and who make life miserable for the neighbors in nearby apartments.

    And we are allowing tourists rentals by resident owners of apartments (2 of them) who occasionally let their apartments and seem to be good neighbors and not allow their tourist renters to litter, have wild parties, vomit in the elevator, etc.

    Also, the corporate-owned tourist apartment owners illegally remodeled the apartment and that is part of the lawsuit.

    What is needed are tourist apartment regulations to allow a grievance procedure by neighbors who are able to prove that there are problems.

  2. Karen Rusbridger

    I have a villa in the north of Mallorcavwhich was successfully let for a number of years, bringing money to the region, until they brought in these ridiculous rental licences. The effort and cost of obtaining the licence was such that I abandoned the process and no longer rent my property. The system is flawed in that no one really understands and you are at the mercy of the inspector as to whether you have complied with all necessary requirements. I was expected to provide a 24 hour emergency helpline, among other things – for one villa.

  3. zuki

    Spanish tax on rentals, is a whopping 24%. Non residents cannot even claim expenses like electricity, water, service charges etc. So, everyone would end up making a loss. Which is why no one bothers to declare rent.
    I say, bring the tax down to 5% for non-resdents, or let us claim expenses like residents can and I am sure we would all pay up.. Whereas now they get nothing. Oh except let them also remember that each time we rent out, brings in tourism which Spain relies on. In the area I am in, there are only a handful of hotels. So it relies on villa rentals.

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