Catalonia puts the handbrake on the tourist rental market

The Catalan government  has taken a further step in the regulation of the tourist housing market and adopted new measures to prevent properties being converted from residential housing to tourist accommodation in areas where access to housing is already a problem.

The significant increase in tourism in Catalonia, the proliferation of accommodation marketing platforms and the European Union's regulatory framework on the freedom to provide services has contributed to property owners choosing to use their homes as tourist accommodation. This has caused a  shortage in housing for residential use, and has made it more difficult to plan for the housing needs of the population in certain municipalities in Catalonia.

In response to this situation, Catalonia's government has promulgated Decree Law 3/2023, of 7 November, on urgent measures on the urban planning regime for tourist accommodation. This decree entered into force on 9 November 2023, although it still has to be validated by the Parliament of Catalonia.

The main purpose of this new regulation is to reduce the number of residential properties that are offered to the tourist rental market with the prospect that they will be rented back for residential use, thus increasing the number of dwellings intended to provide permanent residence. In addition, it seeks to promote balanced urban planning in municipalities with a high concentration of housing stock for tourist use.

Prior urban planning licence

Decree Law 3/2023 establishes that a prior municipal planning permission must be obtained for the opening of new tourist accommodation in municipalities with problems of access to housing and in municipalities where there is a high concentration of dwellings with tourist rental licence. This licence will be valid for five years and an extension may be granted, when permitted by the urban plan, for additional periods of five years. Until now, there was not a common regional regulation for the tourist housing market and, in the municipalities where there were no moratoriums, a statement on the new use of the dwelling to the local council was sufficient to obtain a tourist rental licence.

Municipalities affected

Decree Law 3/2023 shall be applied in all municipalities that fall into either or both of the following categories:

• Municipalities with a "stressed" housing market either because the average rent or mortgage burden exceeds 30% of the average household income or because the rental or purchase price has experienced a cumulative growth rate of at least 3 percentage points above the cumulative growth rate of the Consumer Price Index in Catalonia.
• Municipalities with a high concentration of dwellings with tourist rental licence. These are municipalities with an average concentration of five or more dwellings with tourist rental licence per 100 inhabitants.

Initially, there is a list of 262 municipalities that meet these characteristics and are subject to the new prior licencing regime. The list of municipalities will be revised every five years.

Requirements for a tourist rental licence

In order to grant new licences on residential land, the urban planning of the municipalities affected must expressly justify that there is sufficient land available to provide habitual and permanent housing for the resident population. Therefore, local councils must prove that there is compatibility between accommodations destined for tourism and those destined for residential use.

In any case, the law prohibits local councils from issuing tourist rental licences when the municipality where the dwelling is located exceeds the maximum limit of 10 tourist rental licences for every 100 inhabitants.

Thus, it will be up to the local councils to establish the formula to be applied to authorise or not a tourist rental licence, guaranteeing the principle of publicity, objectivity, impartiality, transparency and competitive tendering.

Previously approved dwellings

Owners of existing dwellings with tourist rental licence in the affected municipalities must apply for a new urban planning licence within five years from the entry into force of this decree law to continue operating legally, this is to say, before 9 November 2028. Within this five years, the local councils of the affected municipalities will be required to amend their municipal development plans and, therefore, be in a position to respond to these applications.

If the new licence is obtained, it will be valid for five years and may be renewed for a further five years provided that the requirements continue to be met. If the new licence has not been obtained within these five years, the tourist activity will have to be discontinued at the end of this period.

However, owners who can prove that they have made investments in the dwelling that cannot be written off within five years will be able to apply for an additional five-year extension (until 9 November 2033). The extension is not granted automatically but must be requested from the relevant local council between the fourth and fifth year of the entry into force of Decree Law 3/2023 (between 9 November 2027 and 9 November 2028).

The transitional five-year period and the possibility to extend it for a further five years are intended to serve as a full compensation mechanism for all owners who are affected by the loss of the tourist rental licence.

The same transitional regime will apply to those municipalities which meet any of the requirements to be included in the list of municipalities affected by Decree Law 2/2023 in the future. In this case, the five-year period for obtaining a new licence and the four-year period for requesting an extension to compensate for the loss of the licence will be counted from the date of entry into force of the order stating the new municipalities affected.

* This article was modified on 27 November 2023