(Editor’s note: This is Pt. 2 of a two-part post about the pressure short-stay rentals are putting on residential real estate in Spain. You can see Pt. 1 here.)
Over-tourism is definitely a global problem. In areas where there are large numbers of people buying for investment and holiday rentals. Around the world this is causing issues, as it limits the housing stock available for local people and pushes up prices until they are out of reach for people from the local area.
Now, cities and regions are rethinking rules on holiday rentals.
The Supreme Court in Madrid ruled recently that if in your community statutes it isn’t permitted to run a business from your property, holiday rentals should also fall into this category. This has led to lots of fears and confusion among community presidents and owners.
I have an investment property on the Golden Mile, and this was recently discussed at a community meeting. There was absolutely no dissent against holiday rentals, about 75 percent of people said it was fine in a previous vote. However, they were very concerned about the Supreme Court ruling and interpreted that as requiring them to stop allowing it
I’ve spoken to various lawyers in Marbella who said the Supreme Court ruling has been misinterpreted and misadvised to the community presidents. According to the lawyers I have spoken to, the Supreme Court was talking about hotel-style commercial activities, with multiple apartments and paid staff members cleaning and servicing the guests. They’re not talking about you or me renting out your two-bed apartment for a week or a year at a time.
This is something that needs to be clarified to avoid extreme measures being taken unnecessarily.
Potential impact
What impact will it have on owners or buyers wanting to make income from their properties? It’s important to look at the news and the changes in a balanced way and know that there will not be a blanket ban on all holiday rental properties, but there will be more limits, checks and balances put in place.
This impacts our clients, as the majority would like to have the flexibility of having the option of renting to tourists. What we recommend is that if you’re looking at buying here, and that’s one of the things you want to do, is to make sure via your lawyer or via your agent, that you know whether or not it is allowed
in the community you are interested in.
We’re noticing that when people have a choice between a development that isn’t allowing holiday rentals and a development that is, people buy the one that is.
This is likely to affect property values in those communities that do not allow it.
The best 200 euros you ever spent
What I’m advising all clients to do at the moment, if they are at all inclined, or even if they’re not inclined to rent out short-term, is to get a tourist license, because that could be worth 20 percent at some point in the future.
There’s a current example in Ibiza where identical apartments – one with a tourist licence, one without are both on the market and there’s a 100,000 euro difference between the two. So that licence that you get just might be the best 200 euros or 300 euros you’ve ever spent!
However, changes are afoot to prevent you passing that licence to any new owners if you decide to sell your property. The new owners will have to apply for their own licence, which may be affected if the community bans holiday rentals in the interim.
What’s next?
When you read stories about this in the press, it’s important to be mindful and sift the fact from the headline-grabbing news. Also, be aware of the massive regional variations across Spain and ask an expert in the area where you want to buy what things are like there. It’s important to know that I’ve not seen any anti-tourist behaviour – and I don’t know anyone who has seen it – on the Costa del Sol.
This area is very much pro-tourism. Everyone seems to be living harmoniously at the moment, and it’s all good.
Any new legislation is going to get kicked around the courts for a long time – a long, long time. I can’t see there being a resolution to it. I think what’s going to end up happening is that it’ll get kicked back to the communities for them to self-govern, which is the most intelligent thing for them to do. I think what the development where I own a rental property would probably do is say, we’re going to charge holiday rental owners 20-percent more for the community fees, and we’re going to limit to seven days-plus. I believe that would keep most people happy.
If you’re thinking of buying a property over here, it’s super, super important to get the best advice. Do your due diligence. Work with an agent who has been here a while and knows what they’re doing; knows the developments. And speak with a lawyer.
Buying armed with knowledge is the very best thing you can do.
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See more about real estate here in Dispatches’ archives.
Sean Woolley is the founder and director of Cloud Nine Spain. With 20 years’ experience of helping clients buy and sell properties in Spain, he’s known as “The Property Doctor” and has contributed to a host of publications. He has recently written the book “From the Ground Up – The Insider’s Guide to Buying Spanish Property,” sharing his years of experience, real life stories, tips and tricks with buyers interested in investing in Spanish Real Estate.
