For many buying a second home in Spain is not just for a place in the sun for themselves but also for some potential rental income when the property isn’t in use, but as rules tighten around the country to combat the number of rental properties on the market its important to check out what the rules are in the area you are buying as there can be hefty fines if you get it wrong.

Madrid City Hall has announced it will temporarily suspend the granting of new licences for so-called tourist apartments in a bid to rein in a ballooning industry that’s impacting prices and stock of long-term rents in Spain’s capital.

Madrid authorities also announced they will not authorise the transformation of commercial properties into tourist accommodation in the centre of the city and will increase the fines for tourist properties that do not comply with regulations. Like many other cities in Spain, Madrid has been suffering from a rise in illegal tourist accommodation with thousands swiftly popping up across the capital.

One of the main obstacles for regulators is how difficult it is to find out exactly how many there are. Madrid authorities have counted 14,699 tourist establishments in the city, 92% of which are for tourist accommodation, but only 941 of these have a municipal licence, meaning the rest are illegal. According to the Inside Airbnb platform though, there are 25,543 tourist apartments listed in the city.

In order to combat the issue, Madrid City Hall will increase fines for owning and running one of these illegal holiday lets.

They will set the first penalty at €30,000, the second at €60,000 and the third level at €100,000. Those committing serious infringements or who keep renting out their flats without licences, even after warnings, may have to pay up to €190,000. Current fines are only €1,000 for the first infringement. If they still don’t comply, a second fine of €2,000 is issued, and if the situation persists, a third penalty of €3,000 will be given.

The number of inspectors to check on tourist rentals will also be increased by 15%, up to 75.

To help holidaymakers know whether or not an apartment they’re interested in is legal or not, the city will also publish a list of flats with licences and their location on an official website.

Spain’s Housing Minister Isabel Rodríguez recently called on the 17 regional governments to implement restrictions on short-term holiday lets in areas where rents for locals have spiked, as the national government continues to look for ways to address the country’s housing crisis.

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