Executive summary

In Barcelona, Spain, the large amount of both legal and illegal short-term rentals throughout the country has driven up housing prices. As the number of illegal short-term rentals has increased exponentially and been blamed for worsening inflation, the Mayor of Barcelona, Jaume Collboni, has announced a ban on all short-term tourist rentals throughout the city. This brief will explore the history and context of this issue, the impact of this issue on society, and policy options going forwards.

Overview

This section will provide a brief overview of the gentrification,the moving in of affluent people, and its recent impacts on the community of Barcelona.

Pointed Summary

• Barcelona is currently facing a housing crisis.
• Some believe that the tourism industry is at fault, while others argue that endemic factors, such as lack of infrastructure, are to blame. 
• A range of policies has been implemented to tackle housing challenges, including initiatives to increase housing supply and measures aimed at reducing the number of accommodations designated for tourists.  

Relevance

Barcelona’s housing crisis has been a long time in the making, shaped by a confluence of factors that have created and exacerbated the situation. The resurgence of tourism following the end of the COVID-19 pandemic, combined with a heated housing market, has led to skyrocketing property prices. This surge in demand has made housing increasingly unaffordable for many residents, pushing the limits of what local families can pay. Consequently, the city saw a staggering 22% increase in the number of homeless individuals in 2022.In addition to tourism, systemic issues such as insufficient affordable housing options, outdated infrastructure, and inadequate support for low-income residents have further intensified the crisis. The resulting displacement and social fragmentation threaten the very fabric of Barcelona’s diverse communities. As these challenges mount, it becomes crucial to explore the underlying causes of this crisis and the potential solutions to restore balance to the housing market.

History

Current Stances

The stances on this issue can be split into three groups: anti-tourists, pro-tourists, and governmental voices. Anti-tourists push back against the growing rates of tourism throughout their city and country. Specifically in the Catalan capital, Spanish locals perceive gentrification to be a threat to their community and believe there should be hasher guidelines on tourists and investors in order to prioritize the needs of the residents. Ada Colau, the former mayor of Barcelona, aimed to decrease the detrimental impact of the tourism industry on residents, primarily rising long-term rental and mortgage prices. Before her tenure as mayor, she was a forefront activist involved with the Platform for People Affected by Mortgages (PAH), a Spanish grassroots campaign advocating for tenant rights that emerged in response to the housing crisis that followed the 2008 financial crisis. Among other causes, they advocated to which echoed her values on anti-tourism.Pro-tourists include property owners and most figures in the tourism industry. They vouch for the freedom of property use and believe that land-owners should not have to worry about property renting restrictions. One figure in the housing industry who is a pro-tourist is Emmanuel Marill, the Regional Director of Airbnb in Europe. Marill’s work focuses on outreach to local governments, asking them to work with landlords to find a system that does not put landlords at a disadvantage, as he believes that short term rentals boost the economy.Governmental voices vouch for finding a balance between anti-tourists and pro-tourists. Short-term rentals are utilized by millions of tourists every year and are essential to the tourism industry, a fundamental economic pillar of Barcelona. Governmental voices such as the Turisme de Barcelona care about creating sustainable tourism growth that does not come at the expense of local quality of life. These voices are strongly against illegal tourist apartments and believe in taking strict measures to eradicate them from Barcelona completely. Moreover, they believe that stricter licensing laws can better regulate tourism housing in a more governmentally friendly way. One figure that embodies the governmental voice is David Bote, the mayor of Mataro, a city that borders Barcelona. Mataro is often subjugated to the negative impacts of tourism in Barcelona, as tourists spill over from Barcelona to Mataro to find cheaper accommodations. He believes that finding a way to manage tourism pressures and short term housing within Barcelona is essential to ensure long-term tourism sustainability.

Tried Policy

In multiple cities around the world, there are restrictions on the establishment of short-term rentals. Most of these restrictions are against Airbnb due to the platform’s scale. Airbnb is a short-term lodging service often used by tourists, as Airbnb often offers better prices than hotels. For example, in Amsterdam, Netherlands, locals protested to the government that tourism was severely affecting their quality of life. As a result, Airbnb-style rentals were forbidden in the red light district and parts of the canal ring due to overtourism. However, this ban was overturned in 2021 when property owners testified that the Housing Act of 2014 did not provide a legal basis for probation of short term rentals. Today, all Amsterdam Airbnb owners are forbidden from renting out their property for more than 30 days in a year. Only landlords who have a special license are allowed to rent for more than 30 days. The lengthy and strict process of applying for a special license known as the “short term stay license” allows the government to strictly control the tourism housing industry. Another example is in Paris, France, where Airbnb is required to share renting data with the city to ensure compliance with the law and make it easier to detect illegal rentals. However, the volume of short-term rentals still continues to pose a challenge to this day.

Policy Problem

Stakeholders

‍The housing crisis in Barcelona has impacted various stakeholders, each with different interests and experiences. According to Hostify, many citizens, particularly low income families and young people, are directly impacted by skyrocketing rent and home prices. Real estate developers, foreign investors, and large corporations have driven demand for property in the city, focusing on turning short term tourist accommodations through platforms like Airbnb. This has led to fewer homes being available for long term residents, contributing to the housing shortage. As the home prices soar, they find it increasingly difficult to live in the city. Tourism, a major contributor to Barcelona's economy, is a double edged sword. While it fuels economic growth, The New York Times found that the increased demand for tourist accommodations has pushed property prices higher, making housing unaffordable for locals. Private landlords have benefited from the rising rent, but they also face scrutiny and pressure from the government to conform to regulations controlling the housing market. The city council, led by political groups such as Barcelona en Comu, has been at the forefront of trying to address the housing crisis through rent control and limiting the number of tourist apartments. In reference to El Pais News, these policies face opposition from other political factions arguing for more market driven solutions. Housing activists, such as PAH have been vocal in reforms to make housing affordable for residents. They argue that housing is a fundamental right and that the commodification of homes is unsustainable. ‍

Risks of Indifference

‍Rising housing costs due to short-term rentals have forced low-income residents and young people out of the city, leading to a loss of diversity and a significant part of the city’s workforce. A study by the Barcelona Metròpolis found that the number of evictions due to rent arrears in Barcelona increased by 30% between 2019 and 2020, a number which has only increased since then. The drastic surge in housing costs has had a particularly severe impact on low- and middle-income earners. Another Barcelona Metròpolis report highlights that between 2000 to 2021, prices of new buildings skyrocketed by 150%, while rents increased by 100%. This dramatic rise far outpaces the growth in gross household disposable income, which has only risen by 25% in the same period. This disparity has rendered housing unaffordable for many residents, pushing them towards insolvency and ultimately displacing them from the cityFurthermore, the growing economic divide between those who can afford to stay and those who are forced out has exacerbated social tensions and created feelings of resentment and exclusion. A report by the Catalan News highlights the growing inequality in Barcelona, with the wealthiest 1% of the population owning more than 20% of the city's housing stock. This concentration of wealth not only underscores the disparities in housing access but also fuels a sense of disconnection between different socioeconomic groups. As long-time residents face displacement, community cohesion has suffered, leading to protests and calls for policy changes. The Christian Science Monitor reported in August 2024 that protests erupted in Mallorca, another popular tourist destination in Spain, echoing the grievances of residents in Barcelona. The protestors expressed concerns that the tourism industry was prioritizing short-term rentals for tourists over the needs of local residents, leading to housing shortages and rising rents. Additionally, Barcelona's tourism industry, a cornerstone of the city's economy, is not immune to the housing crisis. As noted in Architizer, the focus on short-term rentals for tourists has taken away from the availability of long-term rentals for residents who work in service industries that cater to tourism. This creates a shortage of staff, impacting the quality of service offered to tourists and potentially harming the very industry it was meant to support.  This shift has led to a significant shortage of affordable housing, making it increasingly difficult for workers to find suitable places to live. The impact of this housing shortage extends beyond individual residents; it creates a ripple effect that affects the entire tourism ecosystem. Service industries struggle to maintain adequate staffing levels, which can degrade the quality of service provided to tourists and potentially harm the very industry that drives Barcelona’s economic vitality. If this trend continues, it may lead to a decline in the visitor experience, further jeopardizing the livelihoods of those who depend on tourism.‍

Nonpartisan Reasoning

‍Former Mayor of Barcelona Ada Colau and her party, Barcelona En Comu, advocate for rent control and limiting short term rentals. According to The Guardian, they argue that these measures are essential to prevent rising housing costs and displacement, helping residents stay in the city. Opposition parties and pro-business groups favor loosening restrictions on development and tourism rentals. They argue that increasing the housing supply and encouraging investment will naturally reduce home prices and boost economic growth. The New York Times states that the tourism industry opposes tighter rental restrictions, emphasizing that tourism is crucial for Barcelona's economy. They believe regulations could harm revenue, jobs, and foreign investment, and propose expanding housing options in other areas. Housing Activists and groups like the PAH demand stronger interventions, such as public housing and strict limits on foreign ownership. They argue that housing is a human right, not a commodity, and call for bolder policies to ensure affordability.

Policy Options

Before addressing specific policies, we need to focus on maximizing the impact of policy changes in the future. This starts with recommending a fundamental shift in the cultural approach to housing. According to Brookings, Spain, and particularly Barcelona, have traditionally promoted homeownership. However, in today's rapidly changing world, homeownership may not be the most effective solution to the housing crisis. As reflected in the Affordable Rental Housing Plan, some progress has already been made. The previous Barcelona government, for instance, aimed to promote 148,000 rental units rather than pushing for outright homeownership.The ban on roughly ten thousand short-term rentals is a monumental first step in reducing tourist rentals, which have contributed to significant gentrification in the area. However, as Enikő Vincze, professor at Babes-Bolyai University, points out, simply banning Airbnb licenses and short-term rentals addresses only the short-term symptoms, not the underlying long-term issues, which is where other solutions come in, and can be coupled together, to be  used in tandem for maximum effectiveness.Another issue in Spain is the large number of empty homes, with owners holding onto them either for their value or waiting to sell at extremely high prices, so they can make a profit. According to Barcelona Metròpolis, there are around 10,000 vacant homes that could be used to temporarily and help permanently ease the housing crisis. Currently, fines are used to forcefully encourage owners to either rent or sell these properties, but as Bloomberg reports, these fines are mostly directed at large investment banks and only apply to homes that have been vacant for two or more years. To improve this first step, we recommend two possible routes: increasing the fines or shortening the time frame before a fine can be applied.One of the simplest solutions to address housing demand is to increase the supply, as basic market economics reports. If demand doesn't decrease, the local government can build or allocate land for public housing, insofar as conditions permit, as outlined in many of the articles referenced above. Another  major factor in gentrification is the rising rent for local tenants, either gradually or suddenly, which reduces housing affordability for residents. To address this, various policies can help. For example, one policy in Spain fully described by the Molina Solicitors limits rent increases to 3%, for the year of 2024. However, this policy has a major flaw: it only applies to existing leases, allowing landlords to significantly raise rents when switching tenants. To improve this, we recommend a policy that ties rent increases to inflation and prevents large rent hikes when a new tenant moves in, like in the city of Benalmadena. Alternatively, the existing policy could be modified to meet these criteria, instead of writing entirely new policy.Lastly, we have a case study from another Spanish city, Benalmadena, which, like many tourist hotspots, struggles with gentrification. The mayor recently announced that due to a 12-fold increase in beds allocated for tourism, the city is now shifting its focus to promoting long-term rentals. According to Tony Byrant, the city plans to collaborate with real estate developers and the private market to increase the availability of long-term rental housing. In addition, in September 2022, the city launched a policy offering up to €6,000 in aid to long-term renters, to encourage and promote long term rentals instead of tourists.

Conclusions

In summary, Barcelona's housing crisis reflects a complex interplay of factors including the booming tourism industry, rising property prices, and systemic inequities that threaten the city’s socio-economic fabric. As various stakeholders voice their concerns, it becomes increasingly clear that addressing these challenges will require a balanced approach that takes into account the diverse needs of residents, tourists, and the economy. Ultimately, fostering a sustainable housing policy is essential for preserving the character and livability of Barcelona for future generations.

Acknowledgment

The Institute for Youth in Policy wishes to acknowledge Eli Solomon, Anagha Nagesh, Nolan Ezzet and other contributors for developing and maintaining the Policy Department within the Institute.

References

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