Spain’s failed short-term rental registry may prove even more expensive than first thought, with the holiday rental sector preparing compensation claims worth almost €500 million after the Supreme Court struck down the scheme.
The fallout from Spain’s illegal short-term rental registry continues to grow. The holiday rental sector now claims the failed scheme caused almost €500 million in losses and is preparing compensation claims against the Government.
According to the Spanish Federation of Tourist Housing and Apartment Associations (Fevitur), the now-defunct registry cost affected property owners an estimated €496 million. The organisation estimates average losses of around €33,000 per owner, taking into account lost rental income, delays, cancelled bookings and the costs of complying with a system that was ultimately ruled unlawful.
As readers will know, the Supreme Court struck down key parts of the registry in May after concluding that the Government had exceeded its powers. Rather than creating a simple national coordination system, the Court found that the decree effectively created a fully regulated national register in an area where the autonomous regions hold the main powers.
Speaking at a conference organised by the General Council of Notaries, Supreme Court judge Diego Córdoba confirmed there had been extensive debate within the Court before the unanimous ruling. He explained that the State could have coordinated regional registers and statistical information but instead chose to create an exhaustive national regulatory framework that overstepped its legal authority.
Government ignored warnings
The criticism did not stop there. A lawyer from Spain’s Council of State revealed that the Government had been warned during the drafting process that the decree was vulnerable to being overturned because it encroached on regional powers. Those warnings were ignored, resulting in greater legal uncertainty rather than less.
Fevitur argues that the registry turned Property Registrars into a bottleneck, preventing many legally licensed holiday rentals from reaching the market. The association says it is now studying legal action to recover the damage suffered by owners.
One important question remains unresolved. The Property Registrars maintain that the marketing registration numbers already issued remain valid and that the Supreme Court ruling has no retrospective effect. Lawyers representing the sector disagree, suggesting that further litigation may still lie ahead.
This story is far from over. What began as a supposedly straightforward implementation of an EU regulation has become one of the biggest self-inflicted regulatory disasters to hit Spain’s short-term rental sector in recent years. If compensation claims succeed, taxpayers could ultimately end up footing the bill for a law that many experts warned was legally flawed from the outset.
