Opinion
Will a ban on Airbnb ease the long-term rental housing crisis?
I had just finished writing the last piece on the explosive appearance of movements against “tourist massification” and legal changes to tourist apartment rentals when news appeared that Barcelona was banning all Airbnb rentals.
It is a surprising development in its radicalism. The full implications for the Barcelona tourism market – a key feature of the Barcelona economy – will take years to shake out. However, there’s already a debate opening about what the effect will be on the stressed housing market in Barcelona.
For instance, Spanish Property Insight, a source of solid analysis and statistics on the housing market had an interesting analysis. They argued the ban would make no difference to the rental housing stock. It argues that unrelated factors, such as the new housing law in Spain, will ensure that the rental market continues to deteriorate.
Barcelona Regulations
Before getting into the details of that argument, let’s talk about the Barcelona law itself. Since 2012 Barcelona has had a licensing system if you want to rent an apartment through an online tourist apartment platform.
In many ways, Barcelona City has been a pioneer, for good or ill, in the regulation of tourist apartments in Spain. It has pushed increasingly stringent regulations as it sought to relieve pressure on the rental market and preserve the traditional character of neighbourhoods – with limited success.
It’s not surprising, given that Barcelona is a magnet for more than 12 million tourists per year (2023 numbers) in a city of 1.6 million. It brought in a total of 9.6 billion euros and employed 100,000 people.
Barcelona City Council puts out very detailed annual reports, and the report for 2023 (see Capsule 1) shows that while 7.8 million tourists stayed in hotels, Airbnb-style tourist homes made up 2.9 million. According to the same study, the number of licensed Airbnb style homes was approaching 10,000 in 2023.
All of which is to say, tourism is a very big deal in Barcelona.
Besides the economic benefits of employment and tourist spending in the city, it has had negative consequences that will be familiar to anyone who lives in a heavily touristed area. There is a lack of affordable housing, a sense of loss of cultural identity in neighbourhoods where few locals can find affordable apartments, etc.
For instance, house rental prices have increased by 70% in the last decade, while purchase prices have gone up by 40%.
With that in mind, the city’s PSOE administration passed a “sunset law” on all 10,101 Airbnb-type licenses in the city. By 2028 they will all expire and won’t be renewable. In addition, they are working on a law to mandate all contractors to allocate 30% of new homes to social housing.
This is a very big deal and will have an undoubted knock-on effect throughout Spain. In Valencia, following the Barcelona decision, there is a law in the works to ban any new tourist apartment licenses in the old city.
Back to the argument in Spanish Property Insights – which is also an argument made by tourist apartment operators. They start by stating that eliminating 10,101 tourist apartments only represents 1.1% of Barcelona’s housing stock. How can that change anything?
Except that this is a bit of a, shall we say, self-serving number.
Honest Accounting
First, it is a number based on licensed Airbnb-style apartments. Except, it is estimated by some – such as the watchdog website Inside Airbnb – that only 41% of Airbnb listings are licensed, while 32.5% are unlicensed, and the rest are exempt from licenses.
They get their numbers by data scraping Airbnb’s website, which doesn’t include booking.com, VRBO, et al. But according to their data model, there are 18,519 Airbnb listings in Barcelona.
Also, only 60% of listings are for a full property vs 39% for a private room in a shared property. That means that Airbnb alone accounts for 11,100 properties plus another 7,000 multi-room listings. But that’s not the only reason that the 1.1% figure is problematic.
The second reason is that commentators are counting total housing stock – including home ownership. But that’s comparing apples and oranges. In fact, according to the city’s statistics, the rental stock in Barcelona is 290,416 units. Assuming 15,000 licensed and unlicensed Airbnb-style properties represent over 5% of the rental stock dedicated to Airbnb-style tourist rentals – and it may still be higher. One study in 2015 wrote that it was 6.85%.
The Impact on Rental Prices
What’s more, if you look at the map below, also from Inside Airbnb, you can see that tourist rentals are heavily concentrated into a small area. Outside of the downtown, there are almost no Airbnb rentals at all.
To be an honest accounting of the impact of Airbnbs on rental housing availability, we have to look at the rental housing stock just in those areas where we find Airbnbs. It seems clear that in many parts of the historic downtown, there is considerably more than 10% of the rental stock dedicated to Airbnb rentals. That pattern is exactly what you see in every tourist area – heavy concentration in downtowns, near the beach, the old town, etc.
In 2023 I wrote on the question of Airbnb-type rentals and their impact on local rental prices, using other studies. Here’s what I wrote then:
“There is certainly evidence that shows high concentrations of tourist rental properties do indeed have an impact on rental prices within a region of a city. For instance, a study from 2019 argued the following:
“’The results show that a one standard deviation increase in Airbnb intensity is associated with an increase of 7.3% in rental price.’”
Well, if large sections of downtown Barcelona have more than 10% “Airbnb intensity”, I’ll let you do the math on what that means in terms of rental pricing.
When I wrote the above article, almost exactly one year ago, I was more circumspect about the impact of Airbnb on rental costs and quality of life. But I think the recent, very large street protests and broader concerns regarding “over-tourism” demonstrate how deeply the impact is being felt.
Underlying Issues Beyond Airbnb
It’s a vicious circle: more tourists = more demand for short-term accommodation = less supply of long-term accommodation = less supply of housing stock in certain areas = price increases = Locals get priced out of the market.
This point also needs to be made.
Simply outlawing tourist flats will not solve the rental housing crisis in Spain. There are bigger structural problems at play that have led to a long-term lack of new house building. If we just go back a few years, post-COVID Covid, the situation is very different. According to this study by the prestigious Brookings Institute, there was a glut of available rental property post covid.
“As a result of the [COVID] crisis, the supply of rental homes in Spain increased 52% between September 2019 and September 2020. One factor is the transfer of tourist and short-term rental properties to the long-term rental market and the change from sale to rent for owners who cannot reach their price expectations.”
However, taking the example of Barcelona once again, the Spanish Property Insight article argues the following in 2024:
As a result of Socialist policy, the long-term rental supply in many Spanish cities has declined dramatically, especially in Barcelona, where 30% of rental adverts are now for seasonal rentals, up 53% in a year, whilst long-term rentals have declined 15% YoY, according to property portal Idealista.
They use this as proof that the recent Spanish housing law reform has “destroyed the long-term housing market”. I don’t agree with the PSOE housing law and have written on why it won’t solve the problems we face. But the above argument about the rental housing market doesn’t stand up to scrutiny.
It is equally likely that with the return of booming tourism post-Covid, owners returned their properties to short-term tourist rentals. Moreover, accompanying this tourism boom has been a boom in home sales and prices, thus further depleting stock and supplying the ever-increasing tourist rental market.
Let’s also not forget residents taking advantage of the booming sales market to sell rental stock, thus further depleting the market share of long-term rentals.
It may make us feel good to score points against the government, but this is not the only reason for the increase in tourism rentals and the decrease in long-term housing stock. And, as evidenced by the recent protests, you can’t hide the truth from those experiencing it.
By Adam Neale | Opinion | July 15th, 2024
Related Posts
