New rules for vacation rental properties in the Valencian Community
On August 7, 2024, the Consell of the Generalitat Valenciana passed a new law to better regulate vacation rentals in the Valencian Community.
This decree modifies and supplements the Ley de Viviendas Turísticas GVA. It responds to the rapidly growing vacation rental market and aims to provide greater legal certainty for both landlords and users.
The new legal framework addresses the need to curb the uncontrolled growth of vacation rentals and make the sector more transparent and fair.
Why was a new law needed?
The Valencian Community has been a popular vacation destination for tourists for many years. In 2023, tourism accounted for 16M of the Gross Domestic Product (GDP)!
The vacation rental sector has seen explosive growth in recent years, driven by online platforms and increased tourism to the region.
The total number of registered tourist homes exceeded 100,000 last year, an increase of 160.4% for the period 2015-2023. In the first half of 2024 alone, 9,000 vacation homes were registered.
This exponential and uncontrolled growth led to problems such as unregulated competition, disturbances in residential areas, and pressure on the local population. This underscored the need for stricter regulations.
Key changes and objectives
Redefinition of vacation rentals
The decree clearly distinguishes between vacation homes, seasonal rentals, and residential use. Henceforth, only entire properties can be registered as vacation homes (Viviendas de Uso Turístico or VUT), provided they meet specific requirements. Renting out individual rooms is no longer permitted.
A property is considered a vacation home when it is made available for tourist use in exchange for payment, and for a period of no more than 10 consecutive days to the same tenant. Additionally, all stipulated conditions must be met.
This redefinition prevents confusion with rental agreements that fall under the Ley de Arrendamientos Urbanos (LAU).
New requirements and penalties
- Mandatory registration: Owners must register their properties by August 31, 2024, and submit cadastral references and documentation. The registration must be renewed every five years, with the property continuing to meet current habitability and building code standards.
- Certificate of authorization: For new VUTs, a declaration is required stating that the Owners' Association permits the tourist use of the property. If the owner changes, the license must be reapplied for, preventing speculation with licenses.
- Stricter penalties: Two new offenses have been introduced: Failure to provide identity information by the owner (serious) and renting out rooms (very serious), with fines up to 600,000 EUR. Existing offenses have been upgraded, such as failure to timely report an owner change (now serious) and overbooking reservations (now very serious). Owners are responsible for all violations that occur on their property.
Improved control and inspections
To combat illegal rentals, the law provides for a stricter inspection regime, supported by new technologies such as artificial intelligence. This technology will help identify unregistered homes and ensure landlords properly register their properties. Landlords are required to identify tenants and can be held liable for rule violations, including failure to comply with house rules.
Public-private cooperation
The law encourages cooperation between the government, online booking platforms, local authorities, and police to detect and combat illegal vacation rentals. This is an important step to ensure all landlords follow the same rules and that there is fair competition in the market.
Transitional arrangements
The decree provides various transitional arrangements to give owners time to adapt to the new rules:
- VUTs that were operational before July 1, 2018, retain their registration under the old conditions.
- VUTs registered between July 7, 2018, and the entry into force of the new law must comply with the new quality standards within 5 years and renew their registration in 2030.
- VUTs registered after the entry into force of the law must comply with the new regulations, with a new declaration required every five years.
Criticism and future impact
While the new regulations are intended to ensure fairness and safety in the tourism sector, there has also been criticism from the industry. For example, the Asociación de Viviendas de Alquiler para Estancias Cortas (AVAEC) has expressed concerns about the stricter requirements for vacation rentals compared to hotels. They argue that the regulations are unfair to smaller landlords, while the hotel sector has room to expand.
