Holiday home prices could soar as tourism hotspot brings in new tax
Spain's government has proposed a new 21 per cent value-added tax (VAT) on short-term tourist rentals, doubling the rate for hotel rooms, in a bid to tackle the country's housing crisis.
The move aims to address growing concerns over the availability and affordability of housing for residents, as landlords increasingly favour more profitable short-term lets.
The proposed tax, which would apply to all rentals under 30 days, would impact a significant portion of Spain's tourism sector.
Last year, approximately a third of the 94 million visitors to Spain chose to rent homes instead of hotel rooms, which are currently subject to a 10 per cent VAT. No VAT is currently levied on short-term rentals in mainland Spain.
This measure forms part of a broader housing bill presented by the Socialist-led minority government. However, navigating the bill through a deeply divided parliament presents a significant challenge.
Housing Minister Isabel Rodriguez emphasised the intent behind the legislation, stating, "Homes are for living in (...) the measures seek to guarantee the right to rental housing for families."
The Spanish government faces the delicate task of balancing the economic benefits of tourism, a key driver of the nation's economy, with the pressing need to address public anxieties over escalating housing costs. The increasing shift towards tourist rentals has exacerbated the housing shortage, making it more difficult for residents to find affordable accommodation.
A Bank of Spain report this week said the country has a deficit of 450,000 homes. Half the housing stock in the Canary and Balearic islands is either tourist accommodation or homes owned by non-residents, it said.
Apartur, an association of tourism apartment owners in Spain's second city Barcelona, argues that shorter-term rentals should pay the same VAT as hotels and calls the proposed 21 per cent VAT rate discriminatory.
The bill under consideration also includes a controversial measure first announced in January to tax non-European Union citizens up to 100 per cent on property purchases unless it will be their primary home, as well as increasing taxes payable by owners of empty properties, including second homes.
"The sole objective is to put an end to these activities and leave (tourism) in the hands of hoteliers," said Javier Peñate, legal advisor to a holiday homeowners association in the Canary Islands, where short-term rentals already pay 7 per cent VAT, as do hotels.
Malaga and Madrid, while banning them entirely in Barcelona by 2028.
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Sobrino de Botín has proudly held the coveted Guinness World Record as the world's oldest restaurant since 1987. Exactly three hundred years after it opened its doors in the heart of Spain 's capital, Botín welcomes droves of daily visitors hungry for Castilian fare with a side of history. But away from the well-trodden tourist paths, a rustic tavern named Casa Pedro makes a bold claim. Its owners claim the establishment on the outskirts of Madrid endured not just the Spanish Civil War in the 1930s and the Napoleonic invasion in the early 1800s, but even the War of Spanish Succession at the start of the 18th century — a lineage that would make Casa Pedro older than Botín and a strong contender for the title. 'It's really frustrating when you say, 'Yes, we've been around since 1702,' but ... you can't prove it,' said manager and eighth-generation proprietor Irene Guiñales. 'If you look at the restaurant's logo, it says 'Casa Pedro, since 1702,' so we said, 'Damn it, let's try to prove it.'' Guiñales, 51, remembers her grandfather swearing by Casa Pedro's age, but she was aware that decades-old hearsay from a proud old-timer wouldn't be enough to prove it. Her family hired a historian and has so far turned up documents dating the restaurant's operations to at least 1750. That puts them within striking distance of Botín's record. Clients and rivals Both taverns are family-owned. Both offer Castilian classics like stewed tripe and roast suckling pig. They are decorated with charming Spanish tiles, feature ceilings with exposed wooden beams and underground wine cellars. And both enjoy a rich, star-studded history. Botín's celebrated past includes a roster of literary patrons like Truman Capote, F. Scott Fitzgerald and Graham Greene. In his book 'The Sun Also Rises,' Ernest Hemingway described it as 'one of the best restaurants in the world." While Casa Pedro may not have boasted the same artistic pedigree, it boasts its own VIPs. Its walls are adorned with decades-old photographs of former Spanish King Juan Carlos I dining in one of its many rooms. The current Spanish monarch, King Felipe VI, dines there, too, albeit more inconspicuously than his father. But the similarities between the two hotspots end there. Casa Pedro was once a stop on the only road heading north from the Spanish capital toward France. Its clientele is largely local regulars, like David González and Mayte Villena, who for years have spent every Friday lunching at the tavern. 'It wouldn't change a thing for us,' Villena said about the restaurant someday securing the Guinness title. Botín, on the other hand, is a stone's throw from Madrid 's famed Plaza Mayor, where any day of the week, tour guides are herding groups around town — and often straight through the restaurant's front door. Antonio González, a third-generation proprietor of Botín, concedes that the Guinness accolade awarded in 1987 has helped business, but said the restaurant had enough history to draw visitors even before. 'It has a certain magic,' he said. Pretenders to the crown The question then becomes: How can either restaurant definitively claim the title? Guinness provides its specific guidelines for the superlative only to applicants, according to spokesperson Kylie Galloway, noting that it entails 'substantial evidence and documentation of the restaurant's operation over the years." González said that Guinness required Botín to show that it has continuously operated in the same location with the same name. The only time the restaurant closed was during the COVID-19 pandemic, as did Casa Pedro. That criteria would mean that restaurants that are even older — Paris ' Le Procope, which says it was founded in 1686, or Beijing's Bianyifang, founded in 1416, or the 1673-established White Horse Tavern in Newport, Rhode Island — aren't eligible for the designation. La Campana, in Rome's historic centre, claims over 500 years of operation, citing documents on its menu and in a self-published history. Its owners say they have compiled the requisite paperwork and plan to submit it to Guinness. A dream for Casa Pedro Guiñales and her husband couldn't consult archives from the former town of Fuencarral, now a Madrid neighbourhood. Those papers went up in flames during the Spanish Civil War. Instead, they delved into Spanish national archives, where they found land registries of the area from the First Marquess of Ensenada (1743-1754) that showed the existence of a tavern, wine cellar and inn in the small town as of 1750. 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