Cities start fighting rental crisis triggered by overtourism

With the stunning Sagrada Familia basilica, whimsical Parc Guell and the historic old town, it's no surprise that Barcelona is one of the most popular tourist destinations in the world.

In 2023, 15.6 million holidaymakers visited the Spanish city. Yet such high tourist numbers have seriously affected Barcelona, as locals struggle to find affordable accommodation because apartments are transformed into vacation rentals.

"This is the biggest problem in our city," Mayor Jaume Collboni said at a June press conference.

He then caused a sensation by announcing that the city would no longer renew vacation rental licenses and also not grant any new ones. 

Barcelona currently has more than 10,000 short-term rental apartments, but when the last licenses expire in November 2028, it will not have any. 

According to Collboni, rent in Barcelona has increased by more than two-thirds, or 68%, in the past 10 years, while the price of buying a property has increased by 38%.

"For people who earn an average income, this has become a real problem," he said.

How rental prices are tied to tourism

Konstantin Kholodilin, a researcher at the German Institute for Economic Research, studies the impact of vacation rentals on the real estate market.

"The more vacation apartments there are, the more rent rises," he said.

He said the rise is 2-3% on average, although this varies depending on the location. Vacation rentals have also increased real estate prices, as buyers are interested in investing in properties they can rent to tourists.

The vacation rental market has boomed since the emergence of Airbnb and other short-term rental sites. According to Eurostat, the European statistics office, online platforms arranged more than 700 million overnight stays in the EU in 2023. That's a 66% increase over the 440 million stays recorded in 2018.

According to the German Holiday Home Association, almost half of overnight stays made by tourists in Germany are in short-term rentals instead of hotels.

As a result, major cities around the world are putting restrictions on short-term rentals. New York's tightened rental regulations, which came into force in September 2023, are just as radical as those in Barcelona.

In New York, rentals for less than 30 days are now only possible if the apartment is officially registered and the landlord lives in the apartment. In addition, a maximum of two guests may be accommodated.

"Housing should be for New Yorkers, hotels should be for tourists," said Ben Kallos in 2021 when he was a New York City council member advocating for an end to short-term rentals.

Paris, Amsterdam, Berlin, Lisbon and other popular tourist destinations have also imposed tough restrictions on vacation rentals.

Saying no to foreign buyers

The fact that a growing number of people are buying property abroad in popular holiday destinations also contributes to tense housing situations. Recent protests on the Canary Islands, for example, were directed against property developers and agents targeting foreign buyers as residents struggle to access affordable housing.

Similarly, on Spain's Balearic Islands, every third property is sold to buyers who are not residents of Spain. Such sales pit Spanish earners against buyers from northern Europe with higher salaries.

Various countries, including Denmark, Finland, Croatia and Malta, restricted the sale of real estate to non-residents years ago to reduce the strain on the domestic real estate market.

Meanwhile, new EU regulations on vacation rentals also promise positive change. The measures will help facilitate data sharing between online platforms and the respective local authorities and help to combat illegal vacation rentals.

How effective are vacation rental regulations?

It remains to be seen whether laws regulating the vacation rental market will ultimately prove effective. According to Konstantin Kholodilin, studies have shown that both property prices and the number of vacation homes offered on rental platforms have fallen as a result of regulations in some cities. However, the expert is skeptical that regulating vacation rentals alone will ease the tense housing situation.

Barcelona's tourist apartments association Apartur is also highly critical of the city council's decision to abolish vacation rentals.

The association's chairperson, Enrique Alcantara, believes the law will simply lead to a growth in illegal rentals.

Alcantara points out that short-term rental apartments make up just 0.77% of the city's total housing and said the ban on them is nothing more than a "cover for the failure of housing policy."

This article was originally written in German.

Edited by: Benjamin Restle