Thinking about investing in rental property? Proceed with caution!
Right now, there’s a political crackdown in Spain on tourist rentals, happening at national, regional, and local levels.
National Level:
The government is blaming tourist rentals for the shortage of affordable long-term housing. This, in my view, is a tactic to divert attention from the failure of the Property Law they passed in May 2023. Since then, available long-term rentals have decreased by 30%! The root issue is that there are few incentives for property owners to opt for long-term rentals over holiday or short-term leases. As a result, lower supply and high demand have pushed rental prices up by 8.6% across Spain, with increases of up to 20% in larger cities.
This new law (Ley 12/2023, 24 de Mayo) was intended to boost the rental market, especially for decent housing, but it has done the opposite. It reduced incentives for owners and bolstered tenant rights, making long-term rentals less appealing, particularly for owners with multiple properties. Landlords must now commit to at least a 5-year lease, which doesn’t suit everyone.
Regional Level:
In early 2024, the Junta de Andalucía introduced new regulations (Decreto 31/2024) tightening the requirements for tourist rental licenses. Now, each municipality must decide if a property is suitable for tourist rentals, creating uncertainty for investors and holiday rental businesses. In places like Malaga City and Fuengirola, almost all recent license applications have been denied, with new restrictions like requiring independent street entrances for apartments in shared complexes—an almost impossible condition to meet, which seems intentional.
Local governments are under pressure from residents who can’t find affordable housing. Banning holiday rentals, however, won’t make properties in prime areas suddenly affordable. More likely, they’ll be sold or rented out at higher prices. While regulation is necessary, clear, consistent rules are essential to provide legal certainty, which the current patchwork of laws does not.
Recent Court Ruling:
The Supreme Court recently upheld a law allowing communities of owners to ban tourist rentals with a 60% majority vote. This ruling overrides previous decisions by lower courts that had sided with tourist companies. While existing licenses remain valid for current owners, they become void when the property is sold if the community has officially banned rentals.
What This Means for Investors:
If you’re considering investing in a tourist rental, do your research! A property with an existing license isn’t necessarily a safe bet—the community of owners may have banned rentals since, or the municipality may have introduced new rules. Make sure to work with a certified and licensed estate agent to find a property that meets all the current regulations.
