Barcelona has been a popular tourist destination since hosting the 1992 Olympic Games, which helped short-term rentals become a thriving business. However, the downside of this boom is the rapid increase in rents, which most city residents cannot cope with. This is why Mayor Jaume Collboni announced that Barcelona would completely ban short-term rentals from 2029.
The announcement, reported by Bloomberg News, may seem like a drastic measure, but Barcelona residents and the city government say they are in dire straits. Idealista, Spain’s leading rental site, reports that rents in the city have increased by 14% in the last year alone. That makes Barcelona one of the most expensive cities in Spain, and many frustrated residents blame the surge in prices on the prevalence of short-term rentals.
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Much of the chaos dates back to the early days of short-term rentals in Barcelona. The international reputation of the city has continued to grow for years. Today, Barcelona welcomes millions of visitors a year, and many of them prefer apartments or short-term houses to hotels.
The Barcelona Tourism Observatory reports that more than 16 million people visited Barcelona in 2023. This has created a huge demand for temporary accommodation just as platforms like Airbnb (NASDAQ:ABNB) and VRBO, part of the Expedia Group (NASDAQ:EXPÉ), became global phenomena.
At the beginning, it was total freedom. Residents began subletting rooms in their apartments, and investors flooded the city to buy apartments only to turn them into short-term housing. Holiday rentsLandlords in the area who previously offered long-term rentals to Barcelona residents have started converting their properties into short-term spaces, as they can make much more money doing so.
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This coincided with Spain's announcement of a golden visa program that granted a long-term residence permit to anyone spending more than 500,000 euros on real estate. This announcement created an ideal situation: thousands of previously long-term rental properties were taken off the market in a short period of time. The situation is further complicated by the fact that Barcelona is a small city in terms of area and has little space for new construction.
The resulting pressure on the city's apartment stock caused rent prices on traditional year-round leases to soar. The Barcelona government responded by instituting a licensing process for all short-term rentals. The new policy included massive fines for anyone operating a short-term rental without a license and required owners to pay taxes on their income. However, the cat was already out of the bag.
According to Mayor Collboni, some 10,000 short-term rental permits have been granted. Unfortunately, rents in the city did not fall, and they increased even more dramatically after the COVID-19 crisis ended. Increasingly, residents began to express their frustration with rising rents. There was also the problem that many short-term renters didn't respect the fact that they were living side by side with city residents who weren't on vacation and didn't want to party all night.
All of this motivated Mayor Collboni's administration to take the drastic step of banning short-term rentals altogether. Barcelona's short-term rental licenses expire at the end of 2028 and the mayor has announced that they will not be renewed. The city also stopped issuing new licenses. This means that short-term rentals will cease to exist in Barcelona by 2029.
At a press conference announcing the new policy, Mayor Collboni said: “A greater supply of housing is needed, and the measures we are introducing today aim to provide more supply so that the working middle class doesn't have to leave the city because she can I can't afford housing. The news is welcome to residents increasingly exasperated by short-term rentals and what they see as out-of-control tourism.
The move comes amid growing opposition to short-term rentals from local governments around the world, although Barcelona’s total ban is perhaps the strongest measure yet. Mayor Collboni stressed in his press conference that the move will not be a miracle solution: “This measure will not change the situation overnight. These problems take time. But with this measure, we are marking a turning point.”
It remains to be seen whether other cities will follow Barcelona’s lead, but the aggressive approach has short-term rental investors around the world wondering. If other top tourist destinations start to adopt a similar approach, the days of high-yield short-term rental investment could soon be numbered.
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