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Tourist Rental Regulations

With the advent of social media and the Internet a whole new platform has opened up for rental landlords to contact new clients. This also opens up a new area that has to be regulated. Recently the director General of tourism in Madrid said that this area will now be regulated more closely. It is possible that the push to regulate Spanish tourist rentals more closely comes from the influential hotel owners who see private tourist rentals as a threat to their business. The authorities want to insure that the industry remains fair across the board and that those renting holiday rentals have no unfair advantage over hotels and other regular holiday accommodation businesses.

Holiday Rentals in Barcelona

Barcelona has restrictive regulations governing private tourist rentals. Firstly there is a moratorium on the issuing of any new short-term tourist rental licenses. Only homeowners who already have a property with a rental license can rent or those who purchase a property which com with a rental license. The rental license applies to the property not the landlord so when the property is sold the license reverts to the new owner. In addition the Barcelona municipality requires strict conditions to be abide by to insure that residents in the neighborhood are not negatively affected by tourist rentals and that neither tourist not landlords suffers any loss or damages as a result of low quality accommodation or bad contracts. 

However there is another way that the Barcelona town hall is trying to cut down on illegal rentals – they have requested the help of local residents who want to report illegal rentals to the authorities. The municipality also employs inspector who walk around neighborhoods chatting to locals and asking if there are any rentals nearby in order to trap unsuspecting illegal landlords. In 2017 the Barcelona municipality will increase the number of inspectors from 20 to 40. The aim is to increase this number to 80 by the end of the year and 110 by next year. The inspectors not only cruise neighborhoods but also surf the net looking for illegal rentals advertised.

Illegal rentals in Barcelona are still rampant as there is a high demand for tourist accommodation and a high number of landlords who are drawn towards this line of business because it is highly profitable.

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BCN Penthouse for Rent

This fully furnished property is available for rent. It is located in Mira-Sol, Sant Cugat del Valles, Barcelona. The apartment is conveniently located close to many amenities including a shopping center, schools and hospital. There is easy access to downtown Barcelona via the nearby AP-7 motorway and Valvidrera Tunnels. The surrounding area is residential and quiet. It is just a 5 minute walk to the nearest FGC station. From the apartment balcony there are views of Collserola. The penthouse covers 81m² and has 2 rooms with 1 bathroom. There is a fully equipped kitchen, parquet floors and built-in wardrobes. As the apartment can be rented furnished you can have access to a double bed, office desk, oven, stove, dishwasher, fridge, microwave, washer and dryer. In the living room there is a sofa and dining table, TV, DVD and there is air conditioning. Amenities of the building include a swimming pool, gardens, large parking and storage space.

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Rental Home Tax in Barcelona

The Catalan Generalitat (government) is looking into increasing the amount of tax tourists pay when staying in a Catalan vacation rental. Landlords collect this tax as part of the rental payment from the tenant and pass it on to the government. As the law stands all tourists staying in a Catalan rental have to pay a certain amount of tax for each day stay – this amount could soon be increased. At present the daily tourist rental tax in Barcelona is €0.65 but if the proposed changes are initiated the daily tourist rental tax will go up to €2.25. In other parts of Catalonia the increase will not be as dramatic as Barcelona’s proposed 250% increase. Instead the daily tourist rental tax in other parts of Catalonia will increase by €0.90.

With this new change tourists will in effect be paying the same daily tourist rental tax in a rental home as if they were staying in a five star hotel. With these new laws the Catalan government stands to profit an additional €180 million a year. The new law to raise tourist rental tax is still going through the government bureaucratic channels and if approved will be implemented in April 2017 just in time for summers tourist high season.

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Barcelona Holiday Rentals

Holiday rentals in Barcelona are always a hot topic in the Barcelona property market. There are several controversies over the issue of rental licenses, long term rentals, short term rentals and illegal rentals. Approximately 40% of vacation rentals in Barcelona are illegal; this means that they are not licensed by the municipality so they don’t pay tax on the profits earned and don’t have to abide by any legal requirements for rentals. However perhaps the biggest impact of illegal short term rentals in Barcelona on the property market in general is that the landlords can charge whatever they want, and so the price of holiday rentals in Barcelona is driven up. There is always a demand for short term rentals by tourists visiting Barcelona and the demand doesn’t not look like it will ease off any time soon. Tourism in Barcelona is booming. The problem is that the price of rentals in general gets pushed up due to illegal rentals and this drives the price of rentals up for local residents. A landlord with a property to rent would rather rent illegally to tourist and make more money than to rent to locals for long term and make less money. Vacation rentals are taking properties off the ordinary rental market. The financial returns on short term tourist rentals are 2-4 times higher than on regular long term rentals. For this reason home owners often prefer to break the law and rent to tourists illegally. A majority of the rentals are concentrated in Eixample and the Gothic Quarter. Many of the illegal rentals are in the Old Town. For every one legal rental in the Old Town there are four illegal tourist rentals.

At the moment there are 9,606 short term rental licensed properties in Barcelona and there is a moratorium on the issue of new licenses. However by examining online short term rental websites studies show that there are almost 16,000 rentals on offer in Barcelona.  With 9,606 licenses and 16,000 short term rentals on offer simple math shows that approximately 40% are illegal rentals.

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New Study of Spanish Property

A new study of the Spanish property market has brought to light some interesting facts about the Spanish rental market.

Average Spanish Rental Home: 90m² Apartment costing approximately €540 a month.

Spanish rental market will grow by 10% in 2016.

Rental prices in the Canary Islands, Cantabria, Madrid, Pais Vasco and Catalina are higher than the rest of the country.

37% of rental apartment tenants are single parent families.

28.5% of rental apartment tenants are single people.

23.9% of rental apartment tenants are a family of two adults or more with children.

Approximately 22.7% of Spanish residential property market is rentals.

Approximately 4.2 million primary residences in Spain were rented out in 2015.

The gross average return from rental properties in Madrid, the Balearic Islands and Cataluna is higher than in the rest of the country.

Gross average return from rental properties in Spain for 2015 was 5.4%.

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Private Rental Moratorium – Pros and Cons

An all time high of 70 million tourists are expected to visit Spain in the coming year. However this does not help new property owners who want to rent out their homes as tourist rental properties unless they buy a property which already has a tourist short term rental license. If you are lucky enough to find a property to buy which already has a license then you will find that the price is higher. Sellers can put their asking price up if the property comes with a short term rental license. Now that the Barcelona city hall has put a moratorium on new short term rental licenses the hotels can breathe a sigh of relief. Not long ago the hotel industry in Barcelona was up in arms about the damage illegal private rentals, online rental sites and the number of legal short term rentals in Barcelona was having on the tourist industry.

What is Good about the Barcelona Moratorium on Short Term Rental Licenses?

·         The hospitality industry gets a bit of breathing room, not having to worry about rentals flooding the market even more than they already are and “stealing” hotel guests.

·         Private residents, who were getting sick of finding noisy, messy tourists staying next door are protected from even more rentals opening up in residential areas and causing trouble.

·         Home owners with legal rentals, those with a rental license pay tax on their rental profits but illegal rentals do not. Legal short term rental landlords know that at least in the near future they don’t have to worry about competition on their doorstep.

·         The value of properties which already have a short term rental license has gone up.

The Down Side of the Moratorium on Short Term Rental Licenses

·         Honest citizens who want to open a rental property are forced to either do it illegally or pay the extra amount when buying a property which already has a license.

·         Surely growth in the tourism industry equals growth overall? What is wrong with more rentals. More rentals equals more tourists.

·         If home owners revert to renting illegally then the tourists and the home owner have no legal protection. If property is damaged or stolen the home owner cannot exactly go to court as he has to hide the fact that he was renting illegally. On the other hand tourists who are cheated out of their money, lied to or not given what was agreed when closing the rental deal have no legal recourse.

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Barcelona Rental Issues

Barcelona municipal officials are worried that the city is moving towards a crisis in the rental market, mainly because of the state of the holiday rental market. City Hall has been concerned with the rental market for quite some time; even before the election of Mayor Ada Colau, anti-eviction activist, the party used the rental issue as one of their campaign lines.

So what is the problem with BCN rents?

The problem with the rental market in Barcelona according to City Hall is the exaggerated high rents which seem to be continuing to rise. Barcelona rental prices are still low when compared to other European cities but the current trend resembles that which gripped the city during the rental price bubble. The average rent in Barcelona rose by 6.6% in 2015 reaching 727€ per meter squared. The increase in Barcelona rents in 2015 was the biggest increase in the country. City Hall would like to have more social housing to rent to low-income residents and they are encouraging landlords to do this by offering incentives to the owners of properties which are standing empty. The municipal government wants owners of properties which are standing empty to rent out their property in order to increase the number of social housing units available. However the municipality plans to offer incentives at the same time that they impose rent control regulations limiting the amount of rent landlords can charge. The enforcement of rent control is only planned for certain areas of the city.

Working with relevant authorities City Hall wants to regulate the maximum amount of rent landlords can ask in certain areas of the city. The intention is to make rental prices within the range of all sectors of the society. At present those in the low-income bracket are struggling to pay their rents, even in the cheapest areas of the city. An average of 25% of low-income tenants’ salary goes on rent. Although this may be manageable it could easily get out of hand if rents continue to rise unmonitored by the municipality’s new plan.

The areas with the biggest problem of rising rents are those where tourists like to stay. Landlords prefer to rent out to tourists (legally or illegally) as tourists tend to pay more and so a shortage is created in the rental market for residents. With a higher demand than supply in rental homes for permanent Barcelona residents the owners feel free to raise their rents. The municipality sees a connection between tourist short term rentals and the issuing rents in the city for permanent residents. To further solve the rental problem the municipal government has put a moratorium of issuing any new tourist rental licenses. Only those properties which already have a tourist rental license may legally rent out their property for short lengths of time.

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Elegant 3 bedroom apartment for rent in Barcelona's old quarter. This property has been recently renovated, and furnished to a high standard with exquisite taste. #barcelonalettings #barcelonaapartment #barcelonarealestate #barcelonarentals #luxury #lifestyle #interiorismo #interiordesign #barcelonainspira

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Barcelona Tourist Rental Licenses

Having a tourist rental license for your Barcelona property will increase the value of your property. Barcelona sees seven million tourists a year, all of whom need a place to stay and many who choose to rent a Barcelona apartment or house. Since 2014 there has been a temporary prohibition on issue of new short-term rental licenses in Barcelona. This has created a greater demand in the market for tourist rentals. The dearth of short-term tourist rentals in Barcelona is mostly felt in the city center. Barcelona currently has approximately 7,000 licenses and this supply shortage has pushed up the price of permits. Without a short-term rental permit Barcelona landlords are prohibited from renting to tourists for less than a specific period and if rented illegally there is a risk of heavy fines. The latest reports show that having a tourist rental license raises the value of a Barcelona property. Not only will property owners with a rental license for their house or apartment be able to profit from ongoing rental income but they can also ask more when selling.

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Reyes Magos BCN Rentals

Renting During the Barcelona Epiphany Celebrations January 2016

The Three Kings Day (Reyes Magos) is one of Barcelona’s most popular and interesting annual events. Together with other countries across the world Spain and Barcelona celebrate the arrival of the Three Kings. This celebration on 6th January means that in Barcelona Christmas continues into January! The Christmas lights, the atmosphere and parties are ongoing throughout the first week of January. The Three Wise Men from the Biblical story of the Nativity are the central figures in the celebration in Barcelona which includes a big parade (La Cabalgata de los Reyes Magos), parties, traditional foods and gift giving.

Just as the Gospel of Matthew tells of the three wise men making their way from the east to Bethlehem to give gifts to the new born baby Jesus so the three kings arrive in Barcelona and hand out gifts to the local children. The Three Kings arrive by boat at Port Vell at about 5pm and the parade begins along a 5km route until it reaches the Montjuic Magic Fountain at about 9:30pm where there is a firework display and more celebrations. The parade floats and costumes figures parade through the streets accompanies by music as the characters throw candy to the onlookers. The traditional Roscon de Reyes is a round cream-filled cake topped with candied fruit. Hidden inside the deserts are dry fava beans and a small figure of a king. Whoever gets the cake with the king figure is king for the day and whoever is unlucky enough to get the cake with the beans has to pay for the dessert!

This is an excellent opportunity for homeowners and landlords to provide short term rentals to visiting foreigners. Visitors will be clamoring for an apartment in Barcelona for January so that they can experience this special festival. If you are a Barcelona home owner or someone looking to rent property in Barcelona contact Coldwell Banker real estate agency for the best service and properties in the city.

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Spanish Rental Laws

Spain is now the most popular European destination for vacation rental properties. Three years ago the Spanish government excluded vacation rentals from the Ley Arrendamientos Urbano (LAU) and regulating the rental industry became the job of regional governments. Out of Spain’s 17 regional government authorities only 11 have to date published any laws regulating the vacation rental industry. Each region has its own set of laws for vacation rentals and the laws are not standardized throughout the country. This means that vacationers who have stayed in a holiday rental in one area of Spain can not presume that the regulations will be the same if they then stay in a different region.

Spanish Regions with Unregulated Holiday Rentals

The holiday rental property industry is not regulated in Andalusia (due to be implemented in 2016); Castile-la Macha; Castile & Leon; Extremadura; La Rioja and Region of Murcia. In these unregulated regions property owners can still rent out their property for short-term accommodation under the original national LAU so long as the region has not introduced any policy outlawing holiday rentals. In this case a legal contract between the landlord and the tenant still needs to be drawn up. If it is illegal to rent in the region then the landlord cannot advertise the property as a vacation rental in any way or form – not in print or online.

Read more about Spanish regions where holiday rentals are regulated...

Spanish Regions with Regulated Holiday Rentals

In Aragon the vacation rental industry is regulated under the Decreto 80/15. Landlords can rent to tourists for a maximum stay of 1 month and single room occupancy is not permitted. In Asturuas the vacation rental industry is regulated under Decreto/34 2003. For properties in rural areas your property must be available in July, August and September in order for you to be able to rent it out in other months of the year. In the Balearic Islands the holiday rental industry is regulated under the Decreto 20/2015 (amended version); landlords are allowed to rent to a maximum of 12 guests/6 bedrooms. Holiday rentals have been regulated in Basque Country – Pais Vasco since 2013 under the Decreto 198/2013. Single-room occupancy is permitted for a maximum of 12 guests/6 bedrooms. In the Canary Islands holiday rentals have been regulated since May this year under the Decreto 113/2015. Guest details must be registered with the police and single-room occupancy is not permitted. In Cantabria the vacation rental industry is regulated under the Decreto 19/2014 but no single room occupancy is permitted and owners should have public liability insurance. In Galicia rental properties are regulated according to Decreto 52/2011. Single family homes can get licensed but apartments are not regulated. In Navarre tourist rental properties have been regulated since 2011 by Decreto Foral 230/2011 properties must be registered according to whether they it is built in the traditional style or whether it is a modern construction. In Valencia rental properties are regulated under the original Decreto 92/2009 which was updated in 2015. It is now compulsory to register holiday rental and if you have more than 5 holiday rental properties you must register as a tourist company.

Tourist Rental Properties in Madrid

In Madrid rental properties are regulated according to the Decreto 79/2014 and properties can offer a minimum stay of 5 days to tourists. This ruling has prevented many landlords from renting to tourists who usually want to stay for a shorter period. Single room occupancy is not allowed in Madrid and properties have to provide free WiFi. These rulings together with the fact that landlords applying for a holiday rental license have to present a floor plan stamped by an architect or surveyor make it very difficult for private property owners in Madrid to become holiday rental landlords.

Barcelona Holliday Rental Industry Regulation

In Catalonia the vacation rental industry is regulated and has been since November 2012 under the Decreto 159/2012. Despite this law holiday rental licenses have not been issued in the capital since May 2014. Licensed holiday rental landlords must photocopy the guest’s passports and take all guest details to log with the police. When advertizing the rental landlord must display his H.U.T. number. In addition Barcelona tourist rental properties must have a First License of Occupation. Landlords can register for free but the individual councils (ayuntamientos) may charge a fee for handling the registration. In addition the property owners must pay approximately €145 to have the rental property quality graded. Although there is a freeze on tourist rental licenses if you purchase a property in Barcelona which already has a tourist rental license the license averts to the new owner who can then rent out the property.

The number of visiting foreigners to Spain is on the rising and in the summer of 2015 the number of vacationers in Spain was the highest in many years. Holidaymakers are increasingly choosing to stay in holiday rentals rather than hotels for a number of reasons. When you stay in a Barcelona holiday rental property you can save money on your food by preparing your own meals; you are not limited by the number of people you bring to the property and you have the creature comforts of a home.

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Rental Price Trends in Spain

Despite the overwhelming optimism about the property market in Spain and the stabilization of house prices in relation to rental incomes rent continue to fall. Thise points towards a greater supply than demand. One of the sectors being blamed are illegal rental properties for creating an unbalanced supply and demand. We can also point our finger at homeowners who have not managed to sell their property and so have started renting instead.

In September 2015 the average cost of renting a home in Spain was 0.4% lower than 12 months ago in September 2014. This figure may not break the bank but it is an indicator of a trend we should be aware of. In fact that trend has continued for the last 30 months and looks like it will either continue to fall gradually or stabilize but a sudden up swing seems unlikely. Rental prices have fallen in all regions except Catalonia and the Balearics where rental prices are up by 0.2%. Valencia seems to be the hardest hit with rentals 0.8% lower than they were in September 2014.

The issue of illegal rentals and the rampant short term rentals in Barcelona has been recognized by the new mayor who aims to put a stop to it. She has already issued several statements about policy which could potentially insure that illegal rentals are stopped and that landlords obey the laws relating to taxes, standard control, rental rates and property advertizing. This may be bad news for homeowners who are renting out their properties but for holiday makers this is a good thing. According to the calculations of house values as a reflection of rental potential, a house can be valued as a multiple of its potential rental income. For this reason investors consider it bad news for the market if rental prices continue to fall as owners and vendors will see house prices falling.

However for home owners or potential buyers in Barcelona this does not seem to be a problem. The forever-popular holiday resort city appears to have plenty of room for rentals to thrive and home owners and sellers to obtain their asking prices.