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03/09/2024

New Regulations for Tourist Housing in the Valencian Community: A Comprehensive Overview

On August 2, 2024, the Government of the Generalitat Valenciana introduced significant changes to the regulation of Housing for Tourist Use (Viviendas de Uso Turístico, or VUT) in the Valencian Community. This new decree has been enacted in response to the rapid growth of the tourism sector and its impact on local communities, aiming to ensure sustainable development and fair competition in the short-term rental market. Here’s a breakdown of the key elements of this new law and its potential implications for property owners and the rental business.

Why the New Regulations?

The Valencian Community has seen remarkable growth in tourism, which now represents 16% of its Gross Domestic Product (GDP) as of 2023. This growth, while beneficial to the economy, has also brought challenges such as housing shortages, conflicts between tourists and local residents, and the proliferation of unregulated short-term rentals. The government introduced these regulations to:

  • Ensure Sustainable Tourism: The regulations aim to balance the growth of the tourism sector with the need for sustainable development, considering the economic, social, and environmental impacts.
  • Combat Illegal Rentals: By tightening controls on short-term rentals, the government seeks to reduce the number of unregistered properties that contribute to the underground economy and distort the real estate market.
  • Enhance Quality and Safety: The new law sets minimum standards for quality, design, safety, and accessibility in tourist accommodations to ensure a high level of service and safety for visitors.

Key Provisions of the New Law

  1. Licensing and Registration Requirements:

    • All properties used for short-term rentals must now obtain a specific license and be registered with the Tourism Registry of the Valencian Community. This registration is valid for five years, after which it must be renewed, provided the property continues to meet all regulatory requirements.
  2. 10-Day Limitation:

    • One of the most significant changes is the introduction of a 10-day maximum rental period for properties classified as Housing for Tourist Use. Rentals exceeding this duration are now categorized as seasonal rentals and must adhere to different regulations. This change could impact property owners who rely on short-term rentals for income, as it restricts the flexibility to offer shorter stays.
  3. Zoning and Local Authority Powers:

    • Local city councils are empowered to regulate, limit, or condition the number of tourist rental properties within specific areas. These limitations are intended to prevent the over-saturation of tourist accommodations in particular neighborhoods, thereby protecting the interests of local residents.
  4. Quality Standards:

    • Although the current law does not specify detailed quality, design, or safety standards, it indicates that these will be defined in future regulations. Meanwhile, properties must meet existing residential standards, including requirements for hygiene, accessibility, and safety.
  5. Restrictions on Room Rentals:

    • The new law explicitly prohibits the rental of individual rooms within a property. Only entire properties can be rented out as tourist accommodations, and these must be immediately available for use.
  6. Tax and Reporting Obligations:

    • Property owners are required to report the cadastral reference of their property in all official documents related to the rental, including contracts with tenants. This measure aims to ensure transparency and compliance with tax regulations.

Potential Impact on the Rental Business

  • Increased Compliance Costs: Property owners may face higher costs due to the need for licensing, meeting regulatory standards, and potentially adapting to seasonal rental rules if they wish to rent their property for more than 10 days.
  • Shift in Market Dynamics: The 10-day limitation may push some property owners to shift from short-term rentals to longer-term seasonal rentals, altering the market landscape and potentially leading to decreased availability of short-term accommodations.
  • Stricter Local Controls: With city councils empowered to impose zoning restrictions, some areas may see a reduction in the number of available tourist rentals, potentially driving up prices and reducing options for tourists.

Conclusion

The new regulations introduced by the Valencian Community represent a significant shift in how short-term rentals are managed and regulated. While these measures aim to create a more sustainable and balanced tourism sector, they also impose new challenges and obligations on property owners. Those involved in the short-term rental market will need to stay informed and adapt to these changes to continue operating successfully within the new legal framework.

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