The Spanish government says it’s working on legislation in the form of a Royal Decree to regulate holiday lettings in a way that will favour long-term rentals in strained markets.
Spain, a global tourism powerhouse, faces a growing dilemma: how to balance the economic boon of tourist rentals (viviendas de uso turístico or VUTs) with the rising challenges of housing affordability and residential displacement. The Spanish Ministry of Housing is working a new decree to prioritise residential use over tourist rentals, aiming to address these concerns. However, the proposal has sparked debate about its necessity, fairness, and broader implications for Spain’s housing and tourism sectors.
The problem: tourist rentals and housing accessibility
Tourist rentals have long been accused of exacerbating Spain’s housing crisis. By converting residential properties into short-term rentals for tourists, critics argue, VUTs drive up rental prices, displace long-term residents, and create friction within communities. As David Lucas, Spain’s Secretary of State for Housing, puts it: “We are going to try to work to avoid this flight, to also avoid the use of tourist apartments or seasonal rentals to the detriment of this residential rental.”
Yet, while the impact of VUTs is undeniable in tourist-heavy hotspots like Barcelona and Madrid, the scale of the issue varies widely across the country. According to María José García Pelayo, president of the Spanish Federation of Municipalities and Provinces (FEMP), only about 10% of Spanish municipalities face significant strain from tourism overflow. She warns against painting all municipalities with the same brush, advocating for a more tailored and balanced approach to regulation.
The proposed solution: a national decree
The government’s proposed decree seeks to curb the dominance of tourist rentals by prioritising housing for long-term residents. The Ministry envisions a regulatory framework that empowers municipalities to limit the expansion of VUTs in areas where housing shortages are acute. The ultimate goal, as Lucas explained, is to make “long-term rents…the predominant one in Spanish cities.”
While this approach reflects growing concerns over housing affordability, it also raises questions about its implementation. Will municipalities have sufficient resources and autonomy to adapt the decree to their specific needs? And what mechanisms will ensure compliance without unduly burdening property owners?
The criticism: balancing housing and tourism
Pelayo’s criticism of the decree highlights the need to balance housing concerns with the economic benefits of tourism. Tourism is a cornerstone of Spain’s economy, contributing nearly 12% to its GDP. Overregulating tourist rentals risks alienating a vital source of revenue and discouraging investment in the tourism sector.
Pelayo also emphasises the broader challenges facing Spain’s housing market, which cannot be attributed solely to VUTs. She points to the government’s current housing law, which she claims has hindered the construction of affordable homes and driven up rental prices. Without addressing these structural issues, regulating VUTs may be more of a band-aid than a solution.
Moreover, Pelayo has called for fair financing of municipalities, arguing that local governments need direct access to European funds to address housing and other social challenges effectively. She critiques the government for imposing additional costs, such as the organic waste collection fee, which will add an average of €170 annually to household expenses—further straining budgets.
A path forward: striking a balance
The debate over tourist rentals underscores the need for a nuanced approach that reconciles the interests of residents, municipalities, and the tourism sector. Some key steps could include:
- Localised regulation: Allow municipalities to craft policies tailored to their specific circumstances, focusing stringent regulations on areas with acute housing shortages while maintaining flexibility elsewhere.
- Encouraging affordable housing: Complement VUT regulations with incentives for constructing affordable housing to address the root causes of Spain’s housing crisis.
- Equitable funding: Ensure fair financing for municipalities, enabling them to manage tourism’s impact and provide quality services without overburdening residents.
- Transparent communication: Avoid framing VUT regulations as anti-tourism measures, emphasising instead their role in fostering sustainable tourism and liveable communities.
The government has not said when the new decree will be implemented.
