Spain’s Housing Crisis: A Battle Between Tourists and Tenants

Government efforts to curb the proliferation of short-term rentals and holiday lets in Spain’s major cities have yielded disappointing results. Despite regulations intended to protect long-term residents, the market for temporary accommodations has surged, exacerbating an already severe housing crisis.

Between 2019 and 2023, short-term rentals in Barcelona, for instance, skyrocketed from a mere 2.1% to a staggering 14.4% of all rental listings. Madrid, another hotspot, saw a similar trend, with one in ten rental properties now advertised for short stays. This surge has coincided with a dramatic increase in housing costs, making it increasingly difficult for locals to find affordable and stable homes.

Barcelona’s experience is particularly instructive. Despite implementing a moratorium on new tourist accommodations and introducing rent control measures, the city has significantly shifted towards short-term rentals. This suggests that these regulations may have inadvertently incentivized landlords to switch from long-term to short-term leases, driven by the higher profits associated with the tourism market.

In contrast, with less stringent regulations, Madrid has experienced a more moderate increase in short-term rentals. However, the city still faces challenges related to housing affordability.

Short-term rentals’ flexibility and higher returns have made them attractive to property owners, even as long-term tenants struggle to find suitable housing. Moreover, loopholes in rental laws have allowed landlords to circumvent regulations and continue offering short-term lets under the guise of temporary accommodations.

The consequences of this shift are far-reaching. Not only has it contributed to a decline in the availability of long-term rental housing, but it has also led to increased housing costs, gentrification, and a decline in the quality of life for many residents.