In a real life example of how the law has been implemented recently, a community of property owners in the Eixample district of Barcelona voted to prohibit short-term rentals within their building. Using the provisions of the Ley de Propiedad Horizontal (LPH), the community required a 3/5 majority to pass the restriction.
The restriction was challenged by a landlord in the building who operated an Airbnb, arguing it violated his property rights.
The case went to court, and following the principles clarified by the Supreme Court, the community’s prohibition was upheld. The court ruled that the ban aligned with the law’s intent to reduce disturbances, preserve residential character, and prioritize the “social function of property.”
What Does the Ley de Propiedad Horizontal Say?
The LPH, as interpreted by recent Supreme Court rulings, allows communities of property owners (comunidades de propietarios) to regulate or prohibit short-term tourist rentals with a three-fifths majority vote. This applies under Article 17.12, which states that:
Communities can limit, condition, or prohibit short-term rentals if three-fifths of all owners AND three-fifths of ownership shares are agreed. (It’s 3/5 of ownership shares, as one landlord could own multiple holiday rental units in a building or residential complex.)
Unanimity is not required, which makes it easier for communities to implement restrictions.
This interpretation extends the law’s language, clarifying that “limiting or conditioning” rentals can include outright prohibition. The rationale is to balance property rights with the social function of property, prioritizing community harmony and long-term residential use.
How the law impacts real estate investment, home owners and communities
1. It’s easier to restrict holiday and short-term rentals
Communities now have a streamlined process to restrict or prohibit tourist rentals. This new interpretation of the law prevents single owners from vetoing community decisions and empowers communities to maintain residential harmony.
2. Property rights are not absolute
Spain’s Supreme Court emphasized that property rights are subject to legal and community-imposed limits. Owners cannot use their properties in ways that conflict with broader social or community goals.
3. A prioritization of long-term rentals
The law encourages long-term residential use, and aims to address Spain’s housing challenges, such as rising prices and limited availability for local residents.
4. Regional and local variations
While the LPH provides a national framework, regional governments and municipalities can impose additional rules. For example:
Barcelona also has strict zoning laws that limit tourist rentals in certain neighbourhoods.
The Valencian Community requires specific licences for short-term rentals.
Implications for holiday apartment owners
1. Loss of rental income
Owners relying on short-term rentals may see reduced income if their community imposes restrictions. They may need to change to long-term rentals or mid-term leases which could reduce income.
2. Reduced property value
Properties in communities with strict rental restrictions may lose appeal to an entire sector of real estate investors, which in turn could affect resale value.
3. Compliance requirements
Obtaining licenses, adhering to local regulations, and meeting community conditions add administrative and financial burdens.
Implications for tourism
The law seemingly aligns with Spain’s goal of sustainable tourism, and the aim to prioritize regulated accommodation over ‘unregulated’ short-term rentals.
While this could benefit some local communities and long-term residents, it will most likely:
Reduce the supply of tourist accommodation, and increase costs for visitors. (Greater Demand and Less Supply.)
Shift demand toward licensed hotels and alternative lodging options.
Naturally, none of the major national hotel chains in Spain have been ‘lobbying’ politicians for stricter sanctions on ‘unregulated’ tourist accommodations. Definitely not. No chance.
Opportunities for real estate investors
Despite the challenges, there are still some opportunities for the savvy investor.
- Invest in detached homes, and freestanding properties that are not subject to community restrictions.
- Target properties in areas explicitly zoned for tourism to avoid these limitations.
- Stable, long-term rentals in many coastal areas are less regulated, have high demand, and offer consistent income.
- Explore mid-term rentals that cater to digital nomads, expats, and seasonal workers. Leases of 1–6 months will often bypass community rules.
New Strategies for real estate investors in Spain
1. Research the community before buying
Review community rules and meeting minutes to identify potential restrictions.
Focus on areas and communities with clear and favourable regulations for your intended rental strategy.
2. Invest in new build developments
Early investors can influence community rules and ensure policies that are friendly to holiday rentals.
3. Purchase properties with existing vacation rental licences
Properties with existing tourist rental licences save you time and also ensure compliance in areas with strict licensing requirements. Make certain that the rental license is in fact transferrable to a new owner. Some are not!
4. Target buildings or complexes dominated by holiday rental owners
If the majority of owners rely on holiday rentals, it’s less likely that a three-fifths majority will vote to restrict or prohibit rentals. That said, you should still consider whether the building’s location and facilities align with evolving tourism trends.
As Spain continues to balance tourism and housing needs, it’s important to stay informed so that you can thrive in this dynamic market. Stay in touch with us at CBSAGE.COM for the latest news and laws regarding Spain’s residential real estate market.
