Barcelona’s STR Ban: A Dire Industry Threat and European Precedent?

The Mayor of Barcelona, Jaume Collboni  recently announced a groundbreaking plan to ban all short-term rentals in the city by 2029. This proposal, aimed at addressing housing shortages and reducing overtourism, has sparked significant debate and could set a dangerous precedent for cities across Europe, posing a severe threat to the short-term rental industry.

What is the mayor suggesting?

Mayor Collboni’s proposal seeks to eliminate all short-term rental properties by 2029, including those that already have licences and are listed on OTA platforms like Airbnb and Vrbo. This measure, while aiming to address housing shortages and reduce the negative impacts of mass tourism, presents a substantial challenge to our industry. 

The plan requires approval from the city council and must comply with Spanish national laws. If enacted, it would mark one of the most stringent regulations on short-term rentals globally, directly impacting thousands of property owners, businesses and workers in the sector.

Is the move legal according to Spanish national and EU law?

The legality of Barcelona’s proposed ban on short-term rentals, including its compliance with Spanish national and EU laws, hinges on several factors.

Compliance with Spanish National Laws: In Spain, short-term rentals are regulated at both the national and regional levels. Each autonomous community, including Catalonia where Barcelona is located, has specific rules for short-term rentals. 

The Spanish national framework allows regions significant autonomy in regulating these rentals, as seen in Catalonia’s established requirements for tourist households, which must be registered and meet specific standards such as having a certificate of occupancy and displaying a registration number​.

However, any ban or regulation must still comply with broader national competition laws. 

In the past, Spain’s Competition and Market Authority (CNMC) has challenged local regulations that excessively restrict short-term rentals on the grounds that they limit consumer choice and competition​. Thus, while Barcelona can implement restrictive measures, they must ensure these measures do not unfairly stifle market competition or violate national economic regulations.

Compliance with EU Laws: At European level, regulations primarily focus on ensuring fair competition and the free movement of services. The EU’s Services Directive aims to remove barriers for service providers operating across member states, including those in the short-term rental market. 

However, member states retain the right to impose restrictions for public interest reasons, such as addressing housing shortages or managing tourism impacts, provided these restrictions are non-discriminatory and proportionate​.

Barcelona’s proposed ban is already facing scrutiny to ensure it adheres to these principles and there is a strong possibility that these regulations could face legal challenges and might need to be amended to comply with EU law.

David Aguilar of Apartment Barcelona told us that although the news concerned him, he had faith that the courts in both Spain and in Europe will take the side of the STR industry.

The European Commission has openly criticised Barcelona’s restrictions as being unsuitable and disproportionate.

Jaume Collboni must now demonstrate that the ban is necessary and balanced, addressing specific public interest issues without unduly restricting market freedoms. If challenged, the measure could be subject to review by European authorities to ensure compliance with EU regulations.

 

The Numbers: how many properties are we talking about?

Barcelona capped short-term rental licences to 10,000 properties but it’s thought that there are more, with approximately 15,600 (54,000 rooms) registered on Airbnb. The properties are mainly concentrated in popular tourist areas like the Gothic Quarter and Eixample. 

These holiday rentals are a significant part of the city’s accommodation options for visitors. The proposed ban would have a drastic impact on the city’s accommodation and tourism industry.

 

Consequences for Owners and Tourism

Short-term Consequences: For property owners, the immediate impact would be devastating. The loss of income from renting their property could lead to financial hardship, particularly for those who have invested in properties specifically for short-term rentals. These owners would be forced to shift to long-term rentals, which typically generate lower returns.

The tourism sector could also suffer a short-term decline. With fewer accommodation options, especially affordable ones, some potential visitors might opt for other destinations. This reduction in tourist numbers could adversely affect local businesses that rely on tourist spending.

Medium-term Consequences: In the medium term, the housing market might stabilise with more properties available for long-term residents. However, this shift would not necessarily translate to lower rental prices for locals, as market dynamics are influenced by various factors beyond the number of available properties.

Tourism might see a change in its demographic. With fewer short-term rentals, budget travellers could be discouraged, while higher-spending tourists who prefer hotels might take their place. This could benefit upscale hotels and businesses targeting a more affluent clientele but would still leave a gap for many low to mid-range local businesses.

We spoke to David Riba of Habitat Apartments in Barcelona, who told us that there has been “no dialogue from Barcelona City Council to local short-term rental operators and the ban is not supported by any studies in terms of how taking this drastic action will “help the creation of affordable housing in Barcelona. 

He believes that the answer is to, “Work on the 75,000 empty homes that exist in Barcelona and not on the city’s active tourist apartments that create taxes and provide jobs.”

David fears for his business and for the local sector: “It is likely that we will have to close our business based in the city of Barcelona and it won’t just be us. It will affect many businesses and workers in the sector, who will lose their jobs.”

And Andy Fenner of the UK’s STAA (Short-term Accommodation Association) said: “Unlike large hotels and cruise ships, which are often owned by multinational companies, the small local businesses in our short term rentals industry spread the benefits of tourism across the city. 

Communities in areas that otherwise would not benefit from short term rental tourism spending and the jobs it brings.  Barcelona needs to think long and hard before hitting the STR industry and putting hard working people out of work.”

 

Protecting short-term rentals from restrictive measures

As an industry, we must act swiftly and strategically to protect against such restrictive measures:

1. Lobbying and Legal Action: We must mobilise to lobby against these measures, highlighting the economic benefits of short-term rentals and their role in the tourism ecosystem. Legal challenges based on property rights and economic impacts can also be pursued.
2. Adapting Business Models: Property owners might need to consider offering mid-term rentals (1-6 months), catering to business travellers and digital nomads, who often require flexible accommodation options that are not subject to the same restrictions as short-term rentals.
3. Diversification: Investors should diversify their portfolios, including a mix of long-term rental properties and commercial real estate, to reduce reliance on the short-term rental market and mitigate financial risks.

Marco Celani of the Italian association, AIGAB (Associazione Italiana Gestori Affitti Brevi) said: “Short-term rentals are a real opportunity for European cities to fight the negative demographic trend and offer an effective contribution to families who struggle with inflation. Politics and the hotel sector should stop fighting ideologically STR, instead look to harmonise European laws in order to have a common framework.”

 

A European Precedent?

The proposed ban in Barcelona has caught the attention of other cities facing similar issues. Mayors in Amsterdam, Paris, and Berlin have expressed support, viewing Barcelona’s move as a potential blueprint. New York City has also implemented strict regulations on short-term rentals, reflecting a broader trend towards tighter controls.

The Scottish self-catering industry has been decimated by the introduction of draconian regulations in the last 18 months with dire outcomes for many owners and property managers. Fiona Campbell, CEO of the ASSC (Association of Scotland’s Self-Caterers), said:

“Potential policy options that arise from discussions around the management of tourism in communities need to be evidenced-based. However, banning all short-term rentals is exceptionally rash and there is a lack of data underpinning it.

Popular visitor cities like Barcelona can strike an appropriate balance between the needs of local people while ensuring the tourism sector continues to flourish in a sustainable manner.

Regulating the market out of existence will not magically lead to thousands of affordable and available properties for residents. Scapegoating short-term rentals simply doesn’t work. The solution lies elsewhere: building more homes.”

And Marie Pistinier, Vice President of the EHHA (European Holiday Home Association), said: 

“Barcelona’s regulatory measures on short-term rentals, which have capped licences at 10,000 since 2014, have not curbed the continuous rise in housing prices. This raises significant questions about the effectiveness of such restrictions. 

While Barcelona’s approach might influence policymakers in other cities globally, it’s essential that these measures are supported by robust data and align with European laws. 

The short-term rental industry and associations like EHHA have consistently advocated for balanced regulations and harmonious coexistence with local communities. However, politicians often resort to imposing strict measures without comprehensive stakeholder engagement, taking the path of least resistance.

Balancing the needs of residents and tourism is indeed crucial. However, decision-makers must rely on accurate data and engage in discussions before making sweeping decisions. For instance, only 1% of Barcelona’s housing market is dedicated to short-term rentals. 

This restriction is unlikely to significantly alleviate housing issues, but it will certainly harm residents and businesses. The Spanish associations have always been willing to collaborate with the municipality, making these stringent measures perplexing and hard to understand.”

If Barcelona moves forward with the ban, it could indeed set a significant precedent. European cities with vibrant tourism industries and housing shortages might replicate Barcelona’s approach, potentially leading to a wave of similar measures across the continent. This would pose a substantial threat to the short-term rental industry in these cities, necessitating proactive measures from our industry to safeguard our interests.

Mayor Collboni’s proposal to ban all short-term rentals in Barcelona by 2029 represents a significant threat to our industry. While aimed at addressing housing and tourism issues, it could severely impact property owners, the tourism sector, and the broader short-term rental market. As the world watches Barcelona, our industry must unite and respond strategically to protect our future. If we don’t act now, this move could indeed shape the future of short-term rentals across Europe, to the detriment of our industry.

 

Official Statement from the EHHA (European Holiday Home Association)

The SCALE team spoke to the president of the EHHA, Viktorija Molnar who shared this official statement.

“Though we understand and respect the need of local authorities to regulate to address housing concerns, unjustified and ill-informed regulation will only exacerbate the struggles of local communities. 

For the last decade (since 2014), short-term rental (STR) licences in Barcelona have been restricted to only 10k, but rental and housing prices in the City have continued to rise. This extreme proposal will not have any effect on the housing crisis as less than 1% of homes in Barcelona are short term rentals.

The European Commission services recently raised concerns to the Spanish authorities that the restrictions laid down in the Catalan Decree, which the City Council of Barcelona seeks to implement, “are not suitable to attain the objective of fighting housing shortage and are disproportionate to that objective” and that they “seem to breach the EU’s Services Directive”.

In the EU, any local rules which aim to impose restrictions to the provision of the short-term rental services, must comply with the EU law and more specifically the Services Directive. The Services Directive clarifies that any such rules must be justified, non-discriminatory and proportionate.”

The European Commission wrote the following to the Spanish authorities: “The fact that STR activities and the population have increased in the last years in Catalonia and that this region is a popular tourist destination does not constitute evidence of the inflationary effect of STR activities on long-term rent levels in certain Catalonian municipalities or part of them.”

“The European Commission document which the European Holiday Home Association (EHHA) has a public access to relates to an ongoing investigation regarding a possible infringement of EU law.

We urge the City Council to engage with the broad STR industry and look for a solution that does not erode a key part of the tourism supply in Barcelona, with very negative side effects for local families, commerces, from bakers to cafés, cleaners, and everything in between.”

What can we do?

Now, more than ever, short-term rental owners and operators need to join forces with regional associations to create a united voice of reason. 

We can’t leave the fight to the key advocates and associations. They need your help and support.

All of us – as short-term rental professionals – need to take a stand in the fight for fair regulations and support our fellow professionals in Barcelona. 

Yesterday it was Scotland, today it’s Barcelona, tomorrow unfair restrictions could be coming your way.

Get involved with your regional association, write to local councillors, deliver key facts about the economic benefits of holiday rentals to our localities and unite with fellow local STR businesses, so our voice is stronger and heard.