Experts today warned the new rules will deter Brits from buying holiday homes in Spain – and could see prices go up by a fifth
New Spanish legislation could lead to a ‘collapse’ in UK tourists visiting, according to experts. The Spanish government has introduced a new law requiring all landlords offering properties as holiday homes or seasonal lets to register in a new short-term rental registry system designed to monitor them.
However, industry insiders have suggested that Brits may choose to purchase holiday homes elsewhere due to these stringent regulations, and tourists may reconsider as prices could potentially skyrocket.
This week, from July 1, landlords face a fine of up to €500,000 if they fail to apply for a new rental code. The new law primarily targets rentals under 60 days, which Spain classifies as “short-term rentals.” Rentals longer than 60 days are not impacted by these new restrictions.
Property experts today warned that thousands of short-term rentals, including Airbnb, could be withdrawn from the market. There are fears that the laws could increase prices by up to 20% in popular areas and limit options for holidaymakers who might be forced into hotels instead.
They also stated that with “nearly half of the rental applications still stuck in bureaucratic purgatory, thousands of Brits face being locked out of the lucrative short-term market, their properties suddenly unable to earn their keep.”
A new register will require all properties used for tourism and short-term holiday rentals to have a mandatory registration code to operate legally.
Spain’s Ministry of Housing has disclosed that a total of 199,686 applications have been submitted so far, predominantly for tourist rentals. Out of these, 90,046 registrations have been given the green light, while 17,596 were turned down.
Meanwhile, just over 92,000 registrations are still pending. Pete Mugleston, Mortgage Advisor & Managing Director at Online Mortgage Advisor, said Brits letting out properties will look to Italy, Greece or Portugal instead of Spain.
He continued: “If you’re a Brit with a property in Spain that you let out through Airbnb, these changes will have you pulling your hair out. The Spanish authorities are doing this to combat locals being priced out of the housing market, due to the explosion in the short-term rental market in recent years.
“This will add another layer of complexity to renting out your property and will more than likely be the final straw for many, as they choose to sell rather than rent.
“The result is that Brits looking to purchase a holiday home abroad to rent out will now turn their attention to other countries, such as Italy, Greece or Portugal, where regulations aren’t as strict.”
Tony Redondo, Founder at Cosmos Currency Exchange, said prices could be raised by up to 20% in hotspots due to the law.
He added: “Spain’s new Airbnb law will delist thousands of short-term rentals. British buy to let owners face income loss when the unlicensed properties are removed. Those who try and register will face higher compliance costs or have to sell.
“Pivoting to mid-term rentals for digital nomads is an option. Reduced short-term rental supply could raise prices by up to 20% in hotspots, pushing tourists to hotels, especially in Barcelona. Other countries with more relaxed short-term rental rules, like Portugal and Italy, will attract investors, boosting tourism and property tax revenue.”
Meanwhile, Pete Mugleston, Mortgage Advisor and Managing Director at Online Mortgage Advisor, predicted that as a result, Brits with holiday lets might switch to Italy, Greece, or Portugal instead.
He elaborated: “If you’re a Brit with a property in Spain that you let out through Airbnb, these changes will have you pulling your hair out. The Spanish authorities are doing this to combat locals being priced out of the housing market, due to the explosion in the short-term rental market in recent years.
“This will add another layer of complexity to renting out your property and will more than likely be the final straw for many, as they choose to sell rather than rent.
“The result is that Brits looking to purchase a holiday home abroad to rent out will now turn their attention to other countries, such as Italy, Greece or Portugal, where regulations aren’t as strict.”
In response to the ministry’s actions, Airbnb has criticised the approach, with the Majorca Daily Bulletin reporting the company’s accusation of an “indiscriminate methodology” in compiling the list. Airbnb stated: “They are at odds with Spanish and European regulations.”