Madrid’s city council has presented the Plan Reside initiative, designed to regulate short-term rentals in the city in order to preserve the residential nature of the city centre, reduce the loss of the local population and promote a better balance between tourism and the daily lives of locals.
Madrid Mayor José Luis Martínez-Almeida said the plan aims to expand housing, organise tourist accommodation and improve coexistence between residents and visitors. This follows the ban on issuing new permits in Madrid in the spring.
Under Plan Reside, individual tourist rentals will no longer be allowed in residential buildings within the city’s central zone, known as “Almendra central”.
This means that only entire buildings can be used for tourist accommodation, eliminating the possibility of scattered short-term rentals in residential structures. Licensed tourist rentals, already operating in these buildings, will be allowed to continue, but no new licenses will be issued for individual scattered units in the historic center.
The plan also prohibits the conversion of commercial properties into tourist accommodation in core areas. However, buildings not intended for residential use, such as commercial premises or hotels, can be converted into tourist accommodation without restrictions, as these conversions do not affect the supply of housing. In some non-central areas outside the historic centre, individual tourist rentals will be allowed, provided they have separate entrances.
Madrid’s city centre, the “Centro” district, has seen a sharp increase in tourist rentals in recent years. The area has 6,755 short-term tourist rental units with more than 25,000 beds, representing 42% of all accommodations of this category in the city.
Impact of short-term rentals
The increase in short-term rentals is attributed to the need for landlords to deal with the impact of renting on their lives. Landlords earn an average of €19,737 per year from tourist rentals compared to €10,138 from long-term residential rentals.
Since 2017, the number of short-term rental properties in Madrid has doubled, reaching a total of 16,100 units offering over 55,000 beds. However, only 1,131 of these properties are fully licensed. Hence the city focusing on curbing illegal tourist rentals, protecting the residential fabric of central Madrid, especially in the Centro district.
Tension caused by the influx of tourists in residential areas is mounting and has lead to the Madrid Inspection and Disciplinary Services receiving constant complaints from locals.
Peaceful coexistence of residents and tourists
With Plan Reside, Madrid hopes to establish a more structured and professional approach to quality tourism that supports the local economy while promoting peaceful coexistence between residents and visitors.
Plan Reside replaces the previous regulatory framework from 2019, which the current municipal authority considered ineffective in controlling the increase in illegal rentals. The previous regulations allowed tourist rentals on ground floors, which often led to the conversion of neighborhood shops into short-term rental accommodation. The new plan aims to address these gaps by defining specific zones for tourist rentals and limiting conversions that reduce local commerce and residential spaces.
It is reported that in 2023 Madrid received €13.4 billion in tourism revenue.
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