Airbnb in Valencia
Many people consider tourist rentals when buying a property in Valencia (especially expats). Many expats are not in the country all-year-around, so it makes sense that they would consider Airbnb in Valencia for periods when they’re not in the property themselves.
We can appreciate the benefits of this idea. Enjoy the apartment yourself AND achieve a good return.
Holiday Rentals for Tourists in Valencia
When searching for a property in Valencia, you’ve likely read about the new regulations regarding tourist rental in Valencia. Is Airbnb in Valencia over?
The number of applications we receive from people who want to take advantage of the ‘Airbnb boom’ in Valencia has increased enormously in recent years. Airbnb’s popularity started small worldwide but grew enormously as time passed. This was undoubtedly true in Spain’s big cities like Madrid and Barcelona, and the popularity of Airbnb in Valencia grew along with its larger counterparts.
How Airbnb Started
First, let’s look at some general background information before looking at Valencia.
Airbnb and other short-term rental sites emerged from the concept of “couch surfing” in the early 2000s, where people posted their guest rooms online for a small fee. Much of the premise revolved around experiencing cities and travelling differently – at home with the locals, living like the locals.
Over the years, the sofas and guest rooms turned into whole apartments or houses. Often, these were now holiday homes bought specifically for tourist rental.
Why Cities Don’t Like Airbnb
On the surface, Airbnb sounds like a fantastic idea. You buy a home and earn back some of your investment. However, the long-term rental market is often negatively affected when so many homes are available for short-term rental. The popularity of short-term rentals means fewer homes are available for the long term. This can be very difficult for families or starters who cannot afford a home.
In addition to fewer long-term rental options, owner-occupied homes have become more expensive due to the popularity and demand for property. As such, buying a home has become increasingly difficult for many people. Meanwhile, whilst residents are moving away from more expensive neighbourhoods, tourism in these areas is increasing.
It’s also important to consider the increasing competition for hotels. As a result, hotels in Spain started to unite and threatened to leave cities if nothing was done about this unprecedented influx of competition. The central government in Spain relinquished responsibility for licensing Airbnb properties, meaning each region has its rules regarding rental licenses. Madrid, for example, stated that each stay in a tourist rental accommodation should last at least five days. This is to guarantee the weekend and city trip stays for the hotels. However, this rule was challenged, and the regulations were repealed.
Each Spanish region, therefore, has its regulations. Let’s take a look specifically at Valencia.
Renting in Valencia
The neighbourhoods most affected by the Airbnb hype in Valencia are El Carmen, Ruzafa, Cabanyal and Malvarossa. Every day in these neighbourhoods, you see large numbers of tourists walking through the streets with suitcases to check in and out of their temporary rental apartments. The prices for overnight stays in these neighbourhoods have increased enormously in the past three years – sometimes at over 100% increases.
The first version of the law on rental permits was passed in 2009 and later amended in 2015. With the introduction of this law, it became required to register all tourist rental apartments with the Register of Companies, Establishments and Tourism Professions.
After registration, you receive a license number you need to advertise on Airbnb (and other portals). You and the portal will receive a fine if the number is not listed.
So, why is this posing such a challenge to Airbnb in Valencia? There are several reasons, but the main two are the lack of licenses being issued and the termination of existing ones when a property is resold. We’ll look at the other reasons later, but first, we’ll focus on these two.
The License Challenge
The new rules for obtaining a permit include various criteria the property must meet. One of the significant changes comes from the law 15/2018, which states:
La vivienda turística en la ciudad de Valencia:
“cualquier vivienda que quiera inscribirse no lo podrá hacer sin el informe favorable de compatibilidad urbanística por parte del Ayuntamiento de València”.
“For any property registered for tourist rental, a favourable urban compatibility report issued by the town hall is necessary”.
This means an official from the town hall comes to inspect the house and decides whether or not to issue a license. However, a lack of inspectors has made the process extremely difficult.
What’s more, the list of requirements is pretty extensive. Licenses are declined for many different reasons. For example, first-floor and ground-floor apartments (where it is assumed that all apartments located on these floors are still suitable for tourist rental) sometimes do not receive the permit if other apartments on the same floor do not already have a license.
And then the second problem: licenses are lost when the property is sold. Of course, this is not always the case, but the house will need to be re-inspected. Since the rules and list of requirements have been tightened, an apartment with an existing license may not pass the inspection round again. Of course, keeping the license in the old owner’s name is not an option, as the latter will still be responsible in case of violations, insurance issues or complaints.
And then another problem: many Owners’ Associations have the statutes amended so that tourist rental in a building is prohibited. This is because many locals are fed up with noisy temporary neighbours. As such, Spaniards are moving away from popular tourist areas because they don’t like the idea of everyday life in a building full of noise and holidaymakers. Please note: make sure that the statutes of the VVE where you want to buy are checked. You can ask your lawyer, who will guide you through the purchase process.
And then the saturation. In some parts of the city, as we described earlier, there are so many apartments with a tourist rental license that no more licenses are issued. Not even on the ground floor or the first floor. In El Carmen, you won’t receive a license even if you own the entire property.
Possibilities for Rental and Return on Investment in Valencia
What we want to achieve with this story is to paint a realistic picture of the rental market in Valencia. If you think the property meets all the criteria and is located in a neighbourhood where licenses are still issued, you can try it. But do keep in mind that there is a chance your application will be refused. Unfortunately, the outcome of the application can never be predicted, even if the property seemingly meets the requirements. Moreover, applying can be a very long process (sometimes longer than a year).
Are there other options? Absolutely.
Many clients discover that medium (3 to 6 months) or long-term rental yields a higher return than tourist rental. Moreover, it comes without the level of management needed for short-term tourist rentals, such as regular cleaning, repairs and critical transfers.
Medium-term rental (aimed at expats, students or people who want to emigrate but first want to rent temporarily) is a potentially lucrative market. The tenants often deal with the house very differently than during a holiday stay, and in addition, you can often expect 20-30% more income than with long-term rental. This is because fewer medium-term rentals are available, and the prices are therefore higher. It’s also beneficial that you do not need a license for this type of rental.
With medium and long-term rentals, there is less opportunity to enjoy your apartment in Valencia, but it might be something to consider. Just think, you can earn your investment back!
Conclusion: it is still lucrative to invest in an apartment in Valencia. In any case, your investment in Valencia will soon be worth more with the current price increases. Also, renting your apartment in Valencia can still yield a good return.
Whichever form of rental you choose, we are happy to help you find the right property and the best return on your investment.