MADRID – The controversial new Spanish housing law has been in force since the end of May. The law has prompted many homeowners to switch to short-term rentals.
They do this to avoid price regulation or the unwanted extensions of leases that the law includes.
10% of homes temporarily rented
The shift from permanent rental to temporary rental of homes continues to increase. This can be concluded from the most recent data from housing site Idealista. These show a 39% increase in seasonal rentals during the third quarter of the year. This form of rental now represents 10% of all homes on the market. The number of homes for permanent rental has decreased by 1%, with a decrease of 12% over the entire year.
Effects of new housing law very negative
The trend of increasing short-term rentals once again highlights the negative consequences of the new housing law, which was implemented despite much criticism from the real estate sector. It also shows that homeowners are not the problem, but are an important part of the solution. As already predicted, the ultimate effect of the new housing law will be very bad. In fact, the consequences are exactly the opposite of the desired goal. Market supply has decreased, housing prices have increased, pressure on the housing market has increased enormously and it is more difficult to get a home,” said Francisco Iñareta, spokesperson for Idealista quoted by the newspaper El Economista.
Short-term rentals are increasing almost everywhere
Among the well-known cities, Málaga has seen the largest increase in the seasonal supply of houses, with an increase of 126% compared to the previous quarter. Significant increases can also be seen in other cities: Seville (93%), San Sebastián (55%), Valencia (49%), Alicante (46%), Barcelona (45%) and Bilbao (41%). In Madrid, the supply of temporary rentals increased by 28% in the last quarter.
Idealista’s report shows that the supply of temporary rentals has also grown enormously in smaller markets. Until now, the phenomenon of seasonal rentals was virtually non-existent in lesser-known cities. However, a small number of listings have led to very strong increases in short-term rentals. This can be seen in the cities of Huesca (367%), Huelva (292%) and La Coruña (290%). In contrast, in only two provincial capitals did prices for temporary rentals fall in these three months: Zamora (-60%) and Palencia (-12%).
Temporary rental is covered by different laws
Why does the new housing law not affect seasonal rentals? The rental of homes for short stays is covered by other laws: the Urban Rental Act (LAU) and the Civil Code. If a home is rented for a fixed period (usually less than a year), the rental agreement is considered ‘for use other than residential use’. However, the reason for this form of rental must be explicitly justified in the rental contract. If this does not happen, it can be labelled as evasion of the law.
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Furthermore, Idealista reports the following: “seasonal rental, or short-term rental, falls outside the scope of the new housing law. Owners are therefore not affected by restrictive rules for rent increases or extraordinary extensions of a lease.”
Decrease in permanent rental
While the supply of homes for temporary rental increases, those for long-term stays continue to decline accordingly. The largest decline took place in Palma, where permanent rental offers were reduced by 19%, followed by Las Palmas de Gran Canaria (-18%), Córdoba (-14%), Oviedo (-14%), Castellón de la Plana (-12%) and Bilbao (-10%).
In the major markets, long-term rental supply also decreased in San Sebastián (-7%), Málaga (-6%), Alicante (-6%), Barcelona (-4%) and Madrid (-3%). Valencia (with a growth of 7%) and Seville (13%) are the only major cities where the long-term rental offer has increased. Conventional rentals, on the other hand, have increased most in Cáceres (75%), Cuenca (70%) and Soria (68%).
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