AirBnb in Valencia
I am looking to buy an apartment in Valencia with a tourist license to rent out?Many people think of tourist rental when buying a property in Valencia. Should we rent out our apartment or not when we are not in Valencia ourselves? Isn’t that a wonderful idea? Enjoy the apartment yourself and achieve a good return.
Holiday rentals to tourists in Valencia
Probably searching for a property in Valencia, you have already learned and read about the new regulations regarding tourist rental in Valencia. Is the Airbnb era really over in Valencia?
The number of applications we receive from people who want to take advantage of the (in English) “Airbnb boom” in Valencia has increased enormously in recent years. Airbnb’s popularity started out small around the world, but grew more and more over the years; until it became a plague especially in the big cities. Just look at Amsterdam or Brussels. The same happened here in Spain in big cities like Madrid and Barcelona. The popularity of the Airbnb in Valencia grew slowly with Madrid and Barcelona.
How Airbnb started
First some background information before we look specifically at our “own” Valencia.
Airbnb and other short-term rental sites emerged from the concept of “couch surfing” in the early 2000s. For a small fee, people posted their couch or guest room on the Internet. All this with the idea of experiencing a city in a different way than in a hotel or hostel. At home with the locals. Live like the locals do. Over the years, the couches and guest rooms turned into whole apartments or houses. Often holiday homes, bought specifically for tourist rental.
Why cities do not like Airbnb
In itself, of course, anything but negative. You buy a home and can still earn back some of your investment. The problem only arises when there are so many homes available for short-term rental that it affects the market for long-term rental. The popularity of short-term rentals means that fewer and fewer homes are available for the longer term. Take, for example, starters or families who cannot afford to buy a home. In addition to the fact that there are few long-term rental options available, owner-occupied homes are also becoming more expensive due to the popularity and demand for homes. Buying a home will then only become more difficult for many people and tourism in cities will only increase, because the original residents are moving away from these neighborhoods.
And then the competition for the hotels. Hotels in Spain started to unite and threatened to leave cities with the regional authorities if nothing was done about this new and unfair competition for hotels. The central government in Spain relinquished responsibility for licensing Airbnb properties. This ensured that each region had its own rules regarding whether or not to obtain a rental license. 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 own regulations. We are particularly interested in Valencia.
Renting in Valencia
The neighborhoods most affected by the Airbnb hype in Valencia are El Carmen, Ruzafa, Cabanyal and Malvarossa. Every day in these neighborhoods you see large numbers of tourists walking through the streets with suitcases to check in or out at their temporary rental apartment. The prices for overnight stays in these neighborhoods have therefore increased enormously in the past three years. Sometimes even with 100%.
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 an obligation to register all tourist rental apartments with the “Register of companies, establishments and tourism professions”. After registration you received a license number and since a few years you actually need the license number to be able to advertise on Airbnb (and other portals). If the number is not listed, both you and the portal can expect a fine. And these fines are not bad for private individuals.
Why is the end of Airbnb really (almost) over? When we talk about this question we mainly mean Valencia city itself specifically. There are several reasons, but the main two at the moment are the lack of licenses being issued as well as the termination of existing ones when a property is resold to a new owner. There are other reasons we’ll look at later, but first we’ll focus on these two.
The license challenge
The new rules for obtaining a permit require that an apartment for tourist rental meets various criteria. One of the major changes comes from the law called 15/2018 and this law says the following:
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 favorable urban compatibility report issued by the town hall is necessary”.
This means that an official from the town hall comes to inspect the house and whether or not to issue a license. But then we immediately fall on the following; the lack of inspectors. And also: the laundry list of requirements that a home must meet in order to receive a license. Licenses are declined for many different reasons these days. Apartments located on the first floor or the ground floor (where it is assumed that all apartments located on these floors are still suitable for tourist rental) sometimes do not receive the permit if apartments located on the same floor do not already have a license. Even if not a single apartment on the ground or first floor has a license and all owners apply at the same time, you can forget about it. Because yes, nobody has a license at the time of application and you only get the license if the neighbors already have a license.
And then the second problem: licenses are lost when changing hands. Of course this does not always have to be the case, but the house will be re-inspected. And since the rules and the laundry list of requirements have been tightened, there is a chance that an apartment with an existing license will not pass the inspection round this time. Of course, it is not an option to keep the license in the name of the old owner, 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 by definition prohibited. The locals are fed up with, in many cases, noisy temporary neighbors. Spaniards are therefore moving away from popular tourist areas because they do not (anymore) see 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 something are checked. You can ask your lawyer about this, 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 can even forget a license if you own the entire property. And turn it into a hotel or hostel? No, that will not happen.
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 neighborhood where licenses are still issued, you can definitely give it another try. But above all keep in mind that there is always a chance that the application will be refused. It is a process of which the outcome can never be predicted in advance and it can be a long process (sometimes longer than a year).
Are there other options? Absolutely.
Many of our customers discover that medium (3 to 6 months) or long term rental yields more than tourist rental. Short-term rental to tourists not only has advantages, for example also think of organizing the many changes and costs of everything that goes with it, such as the entire house and rental management (key transfers, changing sheets, cleaning, repairs, etc. ).
Medium-term rental (aimed at expats, students or people who want to emigrate, but first want to rent temporarily) is a market where there is still a lot to be gained. Many offers for expats and anyone looking for a home for only a few months is not (yet) available. It also makes a difference that you do not need a license for this type of rental. 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 less is available for medium-term rental and the prices can therefore be used higher. With medium and long-term rentals, you are less flexible to enjoy your apartment in Valencia yourself, but it might be something to think about. Because you earn back on your investment that way!
Conclusion: it is still interesting to invest in an apartment in Valencia. In any case, the housing market is currently such that your investment in Valencia will soon be worth more with current price increases. Also renting out your apartment in Valencia can still give you a good return.
Whichever form of rental you choose, we are happy to help you find the right apartment: the Dream Properties Valencia team is ready for you!
We are here to help you find the best return on your investment. Please contact us.