Opinion
How is the housing and tourism crisis changing Spain?
It’s already been another bumper year for tourism in Spain. According to the national statistics institute of Spain the number of visitors had reached over 53 million by the end of July, a 12 percent increase from the year before. The amount of money spent increased by a whopping 19 per cent to 71 billion euros. But this isn’t just a story about the lucrative tourism economy, which makes up between 12-14 per cent of Spanish GDP. It’s also about crisis and transformation.
The crisis is already here and I’ve written about it more than once in the past year. It’s the crisis of housing primarily but also of cities whose infrastructure is overwhelmed by the endlessly growing number of tourists. And of Spaniards’ frustration with how the situation is affecting them. A recent article in the New York Times, for instance, highlighted the number of people living in tent cities in the Balearic Islands. Literally the people who are serving the tourist economy, caring for the children and homes of the wealthy and even the police, have nowhere to live.
The article begins by focusing on a single mother and taxi driver who wanted to find an apartment for her and her 10-year-old son. “But her would-be landlord wanted six months of rent plus a security deposit upfront – close to 14,000 euros (about $15,300) in one shot.” The woman ended up purchasing a caravan and living in an illegal tent city where they were expected to pay up to 450 euros plus another 100 euros in water and electricity costs. They had to dig their own toilets. Until the police showed up and drove them all out. Now they’re homeless again. This is one of the more extreme examples of a problem that is obviously more generalized. It has led to a summer of protests against over-tourism in major cities and small towns, as well as on Spain’s popular island destinations.
Winds of Change
It has also led to a raft of changes to legislation relating to short-term vacation rentals like Airbnb. In Barcelona all Airbnb style rentals will be banned by 2028, including those that currently have licenses. In other cities there are different levels of restriction being applied depending on degrees of popular political pressure and who the governing party is. But regardless of political stripe, everyone is running to get ahead of the growing anger.
In Sevilla, the mayor has announced that they will cut off the water to unlicensed Airbnbs and will shut down those that don’t meet new criteria for separate entrances. This is seen as unworkable and a diversion from more direct measures. It’s likely that restrictions will increase in Andalusia’s capital city. In other cities, such as Madrid, Cadiz, Valencia (for 1 year), and Granada (for one month) banned new tourist apartment rentals. Even some small towns are picking up the momentum to do likewise.
Other cities are increasing restrictions, such as insisting that to receive a license an Airbnb must have a separate entrance for tourists. Fuengirola in Malaga recently cancelled 600 tourist licenses because the properties lacked separate entrances. Over 700 in Seville face the same. Other measures include increasing taxes or the charges that tourist rentals have to pay for municipal services.
There are also changes to the national housing law coming in the short term to strengthen limitations. One will require landlords to justify short term rental contracts that are often needed for students and seasonal workers. The second change forthcoming to the national housing law will allow community housing associations to ban holiday rentals. These associations exist in every building and in many subdivisions (urbanizaciones).
Previously, communities could restrict tourist rentals in various ways, including increasing community fees. But they couldn’t outright prohibit them unless they had a unanimous vote. When the law changes, communities will be able to do so with a majority vote of 3/5 of neighbours. The law comes in response to two recent Supreme Court rulings that supported the right of community associations to ban them as economic activities in a residential zone. It is obvious that we are in the midst – and likely the very beginning – of a wave of changes. There is widespread popularity to these measures. A poll by the Centre fo Sociological Research at the beginning of September found that over 76% of Spaniards support controls on tourist apartment licenses. Almost a majority – 45% – support restrictions on the amount of tourism.
Where Will This Lead?
Because of all this, the question of tourism rentals has entered the consciousness of home buyers as well. I have had more clients asking me about whether tourist rentals were acceptable in a given community. Some, particularly those interested in high end properties, want to ensure that it is banned in the community where they are considering making a purchase.
High net worth buyers are paying large sums of money for privacy and security. They don’t want a party of wedding goers or holidaying students next door. They want to know who their neighbours are. Others want to finance their holiday home costs with Airbnb rentals when they are not in Spain. They want to ensure that an urbanization hasn’t banned tourism rentals –and in the case of off-plan developments this remains an unknown until the first community meeting. I heard of a client taking possession of a new apartment in Malaga which he intended to rent short-term only to find such activity banned at the first community meeting.
Obviously – based on the protests that we’ve seen – those looking to buy in city centres want to see more accommodations dedicated to long term housing. They want to know their neighbours and they want affordable rents. The changes to the national housing law will likely lead to a wave of apartment buildings voting to prohibit tourist rentals. From the point of view of residents in a building, what’s in it for them to have tourists for neighbours?
Thus, it seems likely that restrictions will grow primarily in high-end, luxury communities and in city centres. Those developments that are dedicated to vacation properties will likely be far less affected. That could lead to some big changes in the property market and it’s hard to know exactly how it will shake out in the end.
Will there be more separation between tourists and residents, as it was prior to the rise of Airbnb style tourist rentals? Will there be a surge in developments and/or purchases of entire buildings to convert them into regulated tourist apartments, hostels and hotels? How will the 70 or so million people likely to come to Spain every year be accommodated? And what will it mean for holiday home buyers? At present many owners of second properties, whether houses or apartments, are only resident in their holiday homes for a few weeks or months of the year. If they can’t monetize the period when their property is vacant, how will that affect their buying decisions?
Will that lead to a growth in the popularity of time-share condominium purchases? The biggest question of all, perhaps, is whether all of this change will solve the problem of a lack of affordable housing in Spain. Spaniards now live at home longer and are almost twice as likely to spend more than 40% of their income on housing-related payments, according to a 2023 study by Caixa Bank.
Part of the problem in tourism heavy zones is the conversion of long term housing to tourism rentals. But really, it comes down to a lack of construction of affordable housing – or much new housing at all. Another oft-quote study makes this quite clear:
According to Spain’s Affordable Housing Observatory, the affordable social housing in the country accounted for 2.5% of the total housing stock in 2019, significantly below the EU15 European average of 15% for the same year. The concern that we should all have is that governments at all levels are creating new facts and paradigms not based on rational planning or well-thought out decisions – but for political gain and low political cost.
For instance, instead of grappling with the shortage of housing they are offloading the problem to commmunity associations, which can increase conflict between neighbours. This is a problem for all levels of government and could impact a number of sectors of the economy – housing, employment, tourism, zoning laws. A rational, well-thought out approach is needed, not half-measures.
By Adam Neale | Opinion | September 17th, 2024
