Could Madrid turn into New York, a city without short-term rentals?

The mayor of Madrid, José Luis Martínez Almeida, has launched an unprecedented attack on the owners and managers of short-term rentals in the Spanish capital. On April 25, without prior notice according to affected parties, the mayor announced a freeze on licenses for these kinds of dwellings and stiffer penalties for whoever rents properties out without a license. Fines could range from €30,000 ($32,360) to €100,000 ($107,900).

Of the 14,686 short-term rentals registered by the National Statistics Institute (INE) in Madrid, around 8,000 lack a license. Does that mean they are illegal? No, according to Adolfo Merás, president of Madrid Aloja, one of the main groups affected by Almeida’s measure, bringing together 300 managers with a portfolio of 4,500 dwellings for tourists. Merás says these operators simply benefited from a fast-track procedure that was approved by the Madrid regional government, and which allowed them to rent out properties simply by filling out a form known as a declaración responsable (responsible statement).

“What we intend is for the fines to effectively have a deterrent effect so that the amount of the sanctions in no case compensates the gains that can be derived from an illegal activity in the field of housing for tourist use,” said the mayor during his public appearance.

“Madrid could become New York, a city without housing for tourists,” says Merás, who wonders where the 10.5 million travelers who visit the city of Madrid will spend the night. Then he answers himself: “In hotels — the main beneficiaries of Almeida’s decision, as in New York.”

In the U.S. city, hyper-restrictive legislation was passed in September 2023 that implied a de facto ban, preventing the rental of entire short-term accommodation for more than 30 days and only allowing rooms for a shorter period, and only as long as the host is present in the home. The tourist apartments have disappeared and the hotel business, as Merás points out, has rebounded strongly. This much was confirmed at the end of November by Robin Rossmann, managing director of STR, Costar’s data analysis subsidiary, during an annual hotel investment day organized by Cushman & Wakefield in Spain. “Since the ban went into effect, hotel prices in New York’s major central boroughs have skyrocketed by 10% to 20%,” he said.

Merás argues that tourist accommodation is not to blame for the lack of rental housing in Madrid; he also rejects accusations that it causes nuisance and problems for local residents, and argues that the growth of the resident population in Madrid has been dizzying and is mainly responsible for the difficulties in finding a place to live. “Of the 2.17 million more inhabitants that Spain has since 2016, 589,155 (27%) have chosen Madrid. It is as if all the inhabitants of Malaga had come to live here in that time,” he underscores. The latest housing census, from 2021, found that there are 1.32 million family homes in Madrid, of which 927,975 are owned and 317,766 rented. According to the calculations of the business organization, short-term rentals only account for 5% of the total. “Is demand going to disappear by removing 5% of the problem?” asks Merás.

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