The Government of Pedro Sánchez announced this Monday its package of twelve measures to stop the rise in housing prices, which the leader of the Executive himself has defined as “the biggest problem of the middle and working classes in Europe and Spain.” Among the initiatives proposed, several refer to the proliferation of tourist apartments and methods to stop this spread.
The main novelty has to do with the tax burden applied to Tourist Use Homes (VUT): “We will propose to Congress that tourist homes be considered a business and become taxed as an economic activity, including the application of VAT in those areas. “where there are difficulties in accessing housing or tourist saturation.”
Today, these rentals are exempt from VAT and subject to the Property Transfer Tax (ITP), of 6%, when they do not include complementary services typical of the hotel industry such as laundry and daily cleaning. In cases where they are provided, the VAT is 10%. The Executive has not yet specified whether this reduced VAT of 10% (the one that governs hotels) would be generalized or the general rate of 21% would also be applied.
“What is not fair is that someone who has three tourist rentals pays less taxes than a hotel or workers,” said Sánchez, who advocates that “they be taxed like what they are, a business.”
In terms of taxes, another of their proposals is “a 100% personal income tax exemption for those owners who rent their home according to the Reference Price Index, without the need for them to be in stressed areas.” With this, Moncloa hopes to encourage not only landlords to put their properties in the traditional rental market and not in the temporary rental market, but also to do so at a more moderate price.
In addition, Sánchez advances a reinforcement of regulation and the tools with which to pursue fraud in seasonal rentals. It has materialized this in the creation of a fund for regional and municipal governments to strengthen inspections and control of illegal tourist homes.
Almeida tightens regulation, but facilitates the conversion of complete blocks into tourist ones
Last Friday, the Madrid City Council outlined the details of its Reside Plan, which brings together several measures in terms of housing and replaces the regulations governing tourist apartments approved during Manuela Carmena’s mandate.
The new legislative framework (which Cibeles intends to apply starting in the summer) is more restrictive in terms of the proliferation of housing for tourist use than the previous Special Accommodation Plan. It reduces the places where they are allowed and shields spaces where today these businesses could legally open until the suspension of licenses for tourist activity.
Currently, for an Airbnb apartment or other operator to operate legally in Madrid, it needs to be registered in the Community of Madrid registry and obtain an operating permit from the City Council, just like any other business. Now the municipal Executive, through this modification of the General Urban Planning Plan of Madrid (PGOUM), modifies the rules by which licenses are granted or not.
The plan seeks to separate tourist apartments from residential homes throughout the central almond, in the area that coincides with APE (Specific Planning Area) 00.01 of Madrid, that is, the historic center. It covers the districts Centro, Chamberí, Salamanca, Retiro and part of Arganzuela and Moncloa. In these areas, no building where neighbors live will be able to house tourist apartments, without nuances (until now they were allowed in commercial ground floors).
The exceptions come in the possibility of converting entire buildings into tourist apartment businesses. There are no changes in those for tertiary use (those dedicated to offices, for example), which may be transformed into this type of accommodation, as has already been happening. The Reside Plan allows “alternative use in buildings with existing non-residential use”, but also in “buildings with residential use on levels C and D”. That is, those located in the main commercial hubs. The project approved by Ahora Madrid allowed VUT to be opened in these places, although always with independent access, a condition that now disappears.
The exception raised by the City Council is therefore to allow the opening of complete buildings of tourist apartments in blocks for residential use on levels A and B, that is, those located inside the neighborhoods. Until now, Carmena’s regulation authorized it on the ground floor, ground floor and first floor, always with independent access. In practice, this reduced the properties that could be converted into Airbnb apartments to locals.
Thus, the Reside Plan will give the green light to tourist use as authorizable in buildings with levels 1 and 2 of protection, while for those with level 3 it will allow alternative use. The condition for the latter is that the property be rehabilitated and returned to residential use after 15 years, starting in 2040. Neighborhood associations and opposition parties warn that this measure can accelerate the purchase of entire residential blocks by part of investment funds to convert them into tourist resorts, with the consequent expulsion of their tenants. Even before the tourist incentive, this trend has been occurring in Lavapiés, Malasaña, Arganzuela or Chamberí.
Neither Feijóo nor Ayuso propose measures related to temporary accommodation
The housing measures for the autonomous communities governed by the Popular Party announced this Sunday by the party’s leader, Alberto Núñez Feijóo, do not include any intervention in the area of tourist apartments. The star agreement of the regional presidents of the PP is to reduce the Property Transfer Tax in their territories from 6 to 4% on the acquisition of habitual residence for young people.
Nor has the Executive of Isabel Díaz Ayuso foreseen any action regarding the VUT. The Minister of the Presidency, Justice and Local Administration, Miguel Ángel García Martín, stated this Monday that the Community of Madrid advocates continuing to increase the supply as it is the autonomy that “is building the most protected housing.” He highlights the commitment to “very important incentives so that there is more supply of rental housing at an affordable price” and calls on the Government of Spain to repeal the housing law to “accompany” the public administrations responsible for this matter to solve this problem.
Ayuso’s team did undertake some regulatory adjustments in relation to temporary rentals a few months ago, although at the moment it has not completed its approval. In September, the Community of Madrid announced that it was working on a decree that would veto tourist use in all public housing, according to the report studied by the Government Council. It will also prohibit tourist apartments in the communities of owners that have approved it in their statutes, thereby adapting the regional regulations to the content of several rulings on the matter from the Superior Court of Justice of Madrid.
According to what was advanced by the regional Executive, the decree will require that the owners of the provision of tourist accommodation services, and not the owners of the home, be required to present the responsible declaration for the start of the activity. Furthermore, the text will give the green light for town councils to “introduce, where appropriate, requirements on the compatible or complementary use of this type of housing.”
Tourist apartments and rental prices on the rise
Until October, there were 1,153 more tourist apartments without a license in the capital than in April, when the City Council suspended licenses and toughened sanctions. The number of inspectors is very low for the number of homes that open businesses with this format: although the City Council’s Urban Planning area has managed to get around 500 to return to residential activity, the pace of openings of illegal ones far exceeds that of closures. .
As of the end of 2024, the Community of Madrid is the second with the most expensive leases (17.90 euros per square meter), only behind the Balearic Islands (18.02), according to the annual rental price report published by apartments.com. The capital also occupies second place in the ranking of cities with 24.57 euros per square meter (surpassed by Barcelona’s 29.51). And among the provincial capitals, it is again second in the year-on-year increase in prices during 2024, with 24.87% (Valencia leads with 25.01%).
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