Madrid leads the way with fines up to €190,000 against illegal holiday lets

The Mayor of Madrid, José Luis Martínez-Almeida, has announced that the City Council has "immediately" decreed the temporary suspension of issuing new licenses for tourist housing (VUT) until the modification of the General Plan is approved, in the first quarter of 2025. They are implementing an action plan to "balance the rental market in the city," which includes various measures to prevent "residential desertification."

The mayor acknowledged the failure of the Special Lodging Plan, approved on March 27th, 2019, which has proven to be "ineffective" in preventing the proliferation of tourist apartments in the capital and correcting the consequences of their rapid expansion outside the law.

Therefore, the new municipal initiative includes, in addition to the freeze on new licenses, increasing the penalty for property owners operating properties illegally without the Council's authorisation, up to €190,000. They will also strengthen the team of inspectors, and publish an official list of licensed VUTs and their actual locations.

This action plan will start this Thursday and the set of measures it entails, which will be expanded with the Modification of the General Plan, aims to increase the supply of residential housing in the city centre, attract new residents; offer quality tourist accommodation to visitors; and to improve the lives of residents who may be affected by the inconvenience caused by holiday homes.

TEMPORARY SUSPENSION OF NEW LICENSES:

The initial approval of the Modification of the General Plan will be presented in September for public information, and it is expected to be raised to the Plenary in the first quarter of next year. Until then, licenses for VUTs in two types of uses are "frozen."

For residential use, licenses for dispersed VUTs are suspended, as well as permits for the transformation of commercial premises into housing in the commercial axes of the Central district. Likewise, licenses for VUTs in buildings other than residential areas located on the ground floor are suspended.

FINES UP TO €190,000

The Madrid Council does not have specific penalty regulations for tourist housing. Until now, the procedure followed, in the event of detecting irregular operation of a VUT, is governed by the Administrative Procedure Law of 2015, which provides for coercive fines ranging from €1,000 to €3,000.

However, from now on, when they verify that a property is being used for holiday lets without the correct license, the Madrid Regional Law on Land Use will be applied. Regional legislation classifies this as a serious offence incompatible with urban planning, for which fines of €30,000, €60,000, and up to €100,000 are provided. These fines are cumulative if the law violation persists, so they could add up to €190,000.

MORE INSPECTORS

Another line within this action plan will be the reinforcement of the inspection team. Currently, the Subdirectorate General of Inspection and Discipline has 65 employees for all inspection activities. This summer, the City Council will increase the staff by 15%, adding ten more people to the service.

Furthermore, to offer greater security and assurance to visitors who choose to stay in the city in a tourist apartment, the council will publish on its website, presumably in May, an official list of the 941 properties of this type that have a municipal license and their locations.

GROWTH AND IMPACT OF VUTS

The situation in Madrid regarding VUTs is as follows: there are 13,502 operating in the city, but only 941 operate with a municipal licence and a further 151 are in process. All these properties add up to a total of 47,589 tourist beds, 30% of the total holiday accommodation offered in the capital.

Tourist apartments in the city have increased by 41% since 2017. While in this time, 5,564 new vacation homes have been counted, during the same period, only 50 tourist establishments (hotels, guesthouses, hostels, etc.) have been created, resulting in 65% of the newly created places in this period corresponding to VUTs.