Is it the end of Holiday Rentals in Spain?

There are big changes coming to how tourist rental apartments are regulated, starting April 3, 2025. Very big changes.

If you already have an apartment that you rent out on Airbnb these will be relatively minor at the moment, though possibly costly. The most significant of the changes will have no retroactive effect.

However, if you were considering purchasing a property in a community or apartment with a property owners’ association, they could be very big.

The backdrop to all of this is the housing crisis in Spain and the big protests that have taken place over the past year or so. These have targeted, amongst other things, vacation rentals such as Airbnbs.

While tourist rentals in some areas have intensified housing competition and raised prices, a bigger issue remains the lack of construction. As a result, there is an annual deficit in terms of the number of new homes vs the number of new households. But tourist rentals are an easier target than the more intractable, structural problem of construction.

The result are the new regulations, which have been added as amendments to the already existing Horizontal Property Law. These amendments make a number of specific changes that are both the initiative of the government and the result of court decisions. There are also measures to bring Spain into compliance with EU level regulations.

At the EU level, member countries are expected to enforce the registration of all tourist properties, which will be assigned a number. All platforms, such as Airbnb, must collect and share this information with the government. Anyone who rents without this authorisation will face significant fines up to €600,000.

Landlords have until July 1 to register their property through the government’s online site. This registration will have to be renewed every year. Andalusia alone has almost 85,000 tourist properties and Spain has an estimated 351,000 properties with 1.75 million beds. A large majority are not registered.

Up until now, it has been difficult to drag the tourist apartment economy out of the grey market. For instance, in Madrid, there remain 15,000 tourist apartments without licenses and only 250 were regularized in 2024.

Regularizing and professionalizing the industry is not a bad thing in principle, depending on how it unfolds. It allows the government to properly and scientifically set policy priorities and regulations using data, rather than prejudice or ideology. Of course, that assumes that the statistics are used honestly – and that is a big assumption.

It also allows the government to collect income taxes on such properties. Many Airbnb properties are concentrated in the hands of a few owners, who are effectively operating as decentralized hotels.

In Malaga, for instance, 74% of all Airbnb listings are by companies and people with multiple properties. Around half a dozen companies have more than 50 properties and one has more than 178 properties.

Hotels must pay taxes on their income, why shouldn’t these decentralized hotels? Long term rental landlords must pay taxes on their income as well. Why not short-term tourist rentals? Evidence suggests that tax compliance for Airbnb’s are quite low, with one American study finding that it might be as low as 24%.

Total Bans in Communities

The greater threat to owners is likely to come from changes that grant new rights to property owners associations. These exist in many urbanizations and are legally mandated for all apartment buildings. In October 2024, the Spanish Supreme Court ruled that these associations could vote to ban tourist rentals in the community.

The current changes to the law flow from that decision, clarifying it and regularizing it. For instance, property associations will be not only permitted to ban all tourist rentals. They will also be able to impose community fee increases of up to 20% on community members who rent out their property as a tourist apartment.

This is supposedly to account for extra costs associated with tourists. However, the community association doesn’t have to demonstrate this extra cost.

Any ban on tourist rentals that is passed in a community will not be retroactive to those tourist properties that were previously registered with the government and therefore legal. They can ban all future tourist apartments.

Additionally, starting April 3, anyone who wants a tourist apartment license will need to have the explicit backing of the community association by 3/5 vote at a meeting with quorum.

New buyers of property also will not automatically have the tourist license of the previous owner. They will have to seek permission from the property owners’ association.

This likely is going to lead to a significant reduction in tourist properties over the long term. And that reduction will probably be concentrated amongst individual owners, rather than the big property holders.

As a secondary effect, it could create a downward pressure on house prices in heavily touristed areas. Potential buyers of second homes will find it more difficult to guarantee rentability prior to a purchase, making it a risk.

Many foreigners with vacation homes rent them out on Airbnb when they aren’t in Spain. This is a means to cover the costs of maintaining the property and to pay for their vacations.

Will those people now decide on other routes such as hotels – or will it reduce the number of tourists? There are many questions that we will only know the answer to over the next year or so – possibly longer.

What is clear, is that those who own unregistered tourist properties – or who want to convert their property to a touristic rental, even if only for part of the year – should do so soon. The deadline before these new amendments come into effect is coming up fast.

By Adam Neale | Property News | March 4th, 2025

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