Month: May 2022

The shortest urban lease law in Spanish history

The reform mentioned in the previous post has been in force for only 35 days.

Royal Decree-law 21/2018, of 14 December, on urgent measures in the field of housing and rental has not been validated. The Congress of Deputies, on Tuesday, January 22, 2019, has annulled it, having voted against 243 deputies out of the 350 that the chamber has.

It is the shortest urban lease law in Spanish history, and maybe in the world history.

In our opinion, it’t not good news. The reform was not, of course, perfect. But perhaps the proof that it wasn’t the most effective is that it didn’t satisfy any of the two opposite extremes- neither the big landowners nor pro-housing activists.

The short life of this text still doesn’t solve the very serious problem of the short duration of the rental contracts in its reborn validity of 3 years. Nor is the shortage of affordable housing in certain cities and neighborhoods. We can’t ignore the fact that rents in Madrid and Barcelona have been increasing by more than 10% a year for years, and the rents available from families do so below inflation. It is obvious to any observer that the situation is not sustainable under any circumstances.

It is an essential pact for a fair situation in which the duration of contracts is reasonable, the rents are not extinguished with the sale of the floor, the real estate intermediation is paid by the person requesting the service in all cases, the requirement of guarantees is balanced for the parties, etc. But above all, what a landlord really needs to be able to rent safely is an effective administration of justice. Not a new law, but an administration of justice which effective. And that does not depend on the owners and tenants, but on the priorities of the public authorities when allocating interests and resources. It is enough that I apply to the administration of justice the same zeal and efficiency that has been applied in creating the telematic mechanisms, means and the power available to the Treasury General of the Social Security or the Tax Agency. Nothing else.

Who will be affected by a new amendment introduced by the Metropolitan General Plan in Barcelona?

We will share with you a brief analysis of the Amendments of the Metropolitan General Plan that affects the city of Barcelona which has aroused much controversy. Some people believe that it is an impermissible interference in the property right which will further increase the prices of flats. For others, it is nothing more than a way of fulfilling a constitutional obligation of public authorities to facilitate citizens access to decent housing. The (shortage of) housing is a key issue in the municipal elections which will be held in May 2019.

Here, you have a full text of the amendment published in the Official Newsletter of the Generalitat of Catalunya (DOGC).

Introduction and entry into force.

On December 12, 2018, the Subcommittee on Urban Planning of the municipality of Barcelona approved the Amendment of the Metropolitan General Plan regarding public housing protection in the municipality of Barcelona. Its objective ​ is to establish a special regulation regarding the use of housing, complementary to the urban regulations, which allows obtaining public protection housing to cover the needs of the population of Barcelona. The amendment came into force on December 14, 2018, (the date of its publication in the DOGC). There are two major characteristic changes included in the Metropolitan General Plan. One of them refers to the obligation to allocate 30% of a property development for public protection housing in the municipality of Barcelona. The other one relates to preemptive and withdrawal measures which will be considered by the City Council of Barcelona when a public flat is sold.

Content of the reform in Barcelona

In the first place, the approved amendment obliges anyone who possesses a multi-family housing with a surface bigger than 600m2 to allocate a minimum 30% of the constructed area to public housing. This obligation affects both a new development (construction and development of a new plant and a building extension with access to new premises or functional units) as well as the major development works, which includes:

1. Any global interventions in the building which entail any of the following actions: a) increase of a roof or built volume, b) increase of the number of existing houses, departments or functional units, c) change of main use of the building, d) general redistribution of spaces with modification of common elements.
2. The replacement of the building, even when the elevation or other structural elements are maintained.

• The successive or simultaneous completion of renovation or rehabilitation works whose cumulative cost is equal to or greater than 50% of the value of a new construction with similar characteristics.

The parcels resulting from the execution of industrial area or plots included in actions of endowment which have already incorporated the assignment of social housing are left out.

Secondly, social housing will be subject to a preferential acquisition in favor of the Barcelona City Council, subject to a period of two months from the day f receiving the notification. The City Council may decide to acquire a property which it is interested in to transfer, renouncing the right to a preferential purchase, if the interested seller does not respond to the notification. The Modification of the Metropolitan General Plan also raises some doubts regarding the location of the social housing which, in general, should be in the same building where the new work is performed, or major construction will be carried out. However, there is an exception for those cases where the works were carried out in different plots, but always in the same neighborhood, so that all the social housing could be located in a single plot.

How long have these limitations been applied?

This amendment will not be applied immediately. It is important to introduce a transitory regime especially:

• Those urban actions carried out under the protection of an urban license requested before the publication of the Modification of the Metropolitan General Plan don’t have any limitation, regardless of the date of the purchase of the property.
• The properties that have been purchased and registered in a public deed between January 1, 2016, and June 30, 2016, have two years to request works license without assigning 30% to social housing. However, they will have to prove that it won’t be economically viable. This accreditation must be done with a technical report followed by an economic study which, in turn, must be approved by the city council technicians. Anyone can see that this particular point is going to be the origin of legal conflicts.
• In licenses of works in real estate that have been subject to formalized transaction in a public document between July 1, 2016 and June 20, 2018, there will a postponement applied of two years to get the reservation of 30% in social housing.
• Any construction license (greater than 600 m2 etc.) requested after December 14, 2020 must comply with the obligation to incorporate the 30% assignment without any exception.

It is a very important nuance, because in accordance with the Spanish civil law you can acquire a property in a private document accompanied by an effective confirmation proving the possession of the property, in any ways: by physically occupying, renting, paying taxes, expenses or carrying out works, etc.

Importante reforma en los contratos de arrendamientos residencial en España

Ante el incremento exponencial del precio de la vivienda y la escasez de oferta de viviendas a precios asequibles en España, el Gobierno Central ha aprobado recientemente, con fecha 18 de diciembre de 2018, el Real Decreto Ley de medidas urgentes en materia de vivienda y alquiler. Dicho Decreto introduce importantes modificaciones en una diversidad de normas, destacándose entre ellas la Ley de Arrendamientos Urbanos (LAU), pero todas ellas enfocadas a adaptar la normativa a las circunstancias económicas y sociales actuales y fortaleciendo los derecho del inquilino.

Entre todos los cambios legislativos planteados por medio del Real Decreto Ley, cabe destacar las siguientes modificaciones:

Duración del arrendamiento

Aunque sigue existiendo la libertad contractual entre las partes para determinar los años de alquiler, la legislación prevé la posibilidad de que el inquilino pueda exigir que se prorrogue el plazo acordado hasta el mínimo legal en aquellos supuestos en los que se haya pactado un período inferior a dicho límite.

De esta manera, a partir de la reforma planteada, dicho plazo mínimo legal pasará de los tres a los cinco años (la misma regulación que existió de 1994 a 2013), incluso aumentándose dicho período a siete años (esto es completamente nuevo en derecho español) en los casos en los que el arrendador sea una persona jurídica (sociedad).

La renta (alquiler) se puede actualizar según inflación, salvo que el alquiler mensual sea de menos de 600€ al mes.

Prórroga tácita

Así como se amplía el período de duración mínimo del arrendamiento, también se amplía el plazo de prórroga tácita. Hasta la reforma, en aquellos supuestos en los que ninguna de las partes hubiera manifestado su voluntad de no renovar el contrato al llegar la fecha de vencimiento del mismo o de cualquiera de sus prórrogas, el contrato se renovaba automáticamente por un año.

De este modo, con la nueva reforma el plazo de la prórroga tácita pasará a ser de un único año a tres. O sea, se prorroga por tres años más de golpe (importante cambio)

Fianza

Otra importante modificación se centra en el artículo 36 de la LAU respecto a la obligación de prestar fianza por parte del inquilino. El Legislador pretende romper con el posible abuso del arrendador al exigir fianzas muy elevadas, ya que hasta la reforma se podía pactar cualquier tipo de garantía del cumplimiento adicional a la entrega de la fianza. En cualquier caso, tras la reforma, se limita la fianza como garantía de cumplimiento a un máximo de dos mensualidades, a excepción de aquellos contratos de larga duración.

Gastos

También cabe destacar como cambio importante que, en los supuestos donde el arrendador sea persona jurídica, todos aquellos gastos generados por la gestión inmobiliaria (agente inmobiliario) y de formalización del contrato irán a su cargo.

Pisos turísticos

En materia de viviendas de uso turístico, los pisos turísticos son excluidos de la regulación de la LAU al ser considerados una actividad económica, por lo que quedan sujetos al marco normativo sectorial que regule el ejercicio esta actividad.

A su vez, se recoge una reforma del régimen de propiedad horizontal que habilita a la comunidad de vecinos a adoptar acuerdos para limitar o condicionar el ejercicio de la actividad del alquiler turístico de vivienda. También podrán establecer cuotas especiales o incrementando la participación de los gastos comunes de la vivienda. En todos los casos, se requerirá una aprobación de la comunidad de vecinos por mayoría cualificada de 3/5 partes.

Desahucios

En la reforma también se incorpora una modificación en el procedimiento de desahucio de vivienda cuando la Administración aprecie que existen indicios de una situación de vulnerabilidad, estableciendo que la determinación de la situación de vulnerabilidad producirá la suspensión del procedimiento hasta que se adopten las medidas que os servicios sociales estimen oportunas. Dicha suspensión durará un mes si el arrendador es persona física y dos meses si es persona jurídica.

Impuestos

Por último, se recogen una serie de medidas en materia económica y fiscal, introduciéndose tres medidas destacables respecto del Impuesto de Bienes Inmuebles (IBI): a) se exceptúa de la obligación de repercutir el impuesto al arrendatario cuando el arrendador sea un ente público, en los supuestos de alquiler de inmueble de uso residencial con renta limitad; b) se modifica la regulación del recargo previsto para los inmuebles de uso residencial desocupados con carácter permanente incrementándose el recargo hasta un máximo del 50%; y c) se crea una bonificación potestativa de hasta el 95% para los inmuebles destinados a alquiler de vivienda con renta limitada por una norma jurídica.

En materia fiscal, también cabe destacar la nueva exención del Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados (AJD) e la suscripción de contratos de arrendamiento de vivienda para uso estable y permanente. Esta es una importante novedad, es la primera vez que se establece esta exención.

En conclusión, el Legislador intenta revertir la situación respecto a la oferta inmobiliaria actual, incentivando a posibles arrendadores y arrendatarios a alquilar viviendas intentando frenar el incremento exponencial del precio de la vivienda. Se trata de un conjunto de medidas que entraran en vigor a partir del día siguiente a su publicación en el Boletín Oficial del Estado, por lo que ya son de aplicación, aunque es incierto saber hasta cuando seguirán en vigor teniendo en cuenta las constantes modificaciones que sufren las normas como la LAU. Las medidas han sido objeto de protesta por los sectores más progresistas (que abogaban por una limitación de los precios máximos de alquiles), como por los inversores institucionales (fondos de inversión) que han presionado con fuerza para evitar la duración mínima de 7 años y la limitación de garantías, entre otros puntos.

What to do if your tenants have filed for bankruptcy or if they occupy your property illegally

We are going to deal with two special cases which any real estate investor should be prepared for: renting a property to a company which has undergone bankruptcy and the “squat” phenomenon.

The first of them refers to a situation when the company has been declared insolvent (“concurso de acreedores” in Spanish law) within the meaning of the European Regulation 2015/848 on bankruptcy proceedings. This exceptional situation has direct consequences on the owner of the offices or an industrial warehouse where that company has performed its activities.

Let’s start with the financial consequences as the owner will probably stop paying the rent (if it hasn’t already done it). Debts due to the non-payment will enter the “ordinary basket” of debts of the company and will not be the first to collect since the owner is not a privileged creditor such as for example the Tax Office, the Public Treasury or banks with mortgage guarantees. Statistically, in this situation, the possibilities of collecting the debt are very low.

Second, and this is possibly more serious, the lease agreement can’t expire due to the tenant’s non-payment. The Spanish insolvency law doesn’t allow (neither the owner nor the tenant) to terminate the contract simply by declaring insolvency of the tenant. It can only happen on request of the insolvency administrator who will apply to the court to rescind the contract only if the administrator considers that breaking the contract is beneficial to gather the maximum number of creditors. On the other hand, if the bankruptcy administrator decides that the rented office, business or industrial warehouse is essential to guarantee the continuity of the company’s activity during the proceeding, the owner will have to comply with such ordinance.

In such a case, if the contract continues to be valid, there are two situations which must be taken into consideration: the amount due to the rent payment calculated before the bankruptcy declaration is allocated to the group of debts which are paid last (scarce possibilities of their collection); the monthly payments calculated during the insolvency are included in the group of credits that have the highest preference (higher collection possibilities).

The second problem is the “squat” phenomenon. Definitely, it is not a minor matter. The causes are very diverse and shouldn’t be ignored by any investor who must take the appropriate measures in advance to avoid encountering illegal occupants in their property. If it happens, the law basically allows three approaches. We already warn you that none of them is perfect or fully satisfactory.

The first way is initiating a civil procedure to retrieve the property. The owner of a property inscribed in the registry should request the court to cease the proceeding against their property. Depending on the city, the procedure may last between 3 to 6 months. The court will impose a deposit on the occupants, order them to show their occupation title which will be then confronted with the owner’s and specify a date by which the occupant should leave the property.

The second way will be to go to a verbal eviction trial for precarious where the occupant is given the opportunity to oppose the claim and prove the possession of the occupation title (in this case no deposit is required) in order to finish the proceeding and get the judicial order.

The third way is initiating a criminal procedure due to usurpation. If the court convicts the occupant for that crime, they would also replenish the owner by possession if necessary. The procedure, again depending on the city, lasts between 6 months and 2 years, and is generally avoided due to a large number of files and complicated procedures (the usurpation only occurs when the property is occupied and used by their owner).

What is considered as “tenant insolvency”?

Tenant insolvency is a failure to comply with the obligation to pay the rent and other fees included in the property rent receipt (IBI Spanish: IBI – Impuesto sobre bienes inmuebles- English: Real Estate Tax, repairs or conservation works) by the tenant. This obligation is communicated in advance, usually at the beginning of the month.

What can a landlord do when the tenant fails to pay? Is there a way to seek justice in cases of tenant insolvency? The most common solution would be to make a pre-trial claim by means of a service allowing to prove that the payment has been made. The most common public postal company which offers such service is called “burofax”. There is also an option to make it with a help of notary; however, it’s less frequent and much more expensive.

If none of the above works, the owner can always file a claim in the court having jurisdiction over the rented property. This procedure is called an “oral judgment” and is regulated by the Civil Procedure Law. In order to that, it is necessary to hire a lawyer or a solicitor who will file a demand for eviction due to the lack of rent payment and claim the pending amount with the monthly interest on receivables.

Essentially, two things are requested from the court: ordering the tenant to pay the amount due (the amount of the claim) and hand over the property.

If the judge acknowledges the economic debt and the tenant doesn’t pay voluntarily after receiving the order to pay, they can resort to the usual means of execution: the seizure of tenant’s bank accounts, wages, other real estates, etc., until the debt has been collected. For this procedure, which is separate from the previous one, you also need a lawyer and a solicitor.

If the judge decrees the eviction, it is carried out on the day which is indicated at the beginning of the procedure, if necessary, with the assistance of the public force. However, it may even take a year- from the moment of filing a claim until the eviction comes into force.

In the next post, we will discuss two special situations which a real estate investor should be prepared to face: renting a property to a company which has declared bankruptcy; and the “squat” phenomenon.

Is there a reason to worry?

For a change, we will now focus on a rental crisis in Spain- a dispute between the owner and the tenant which may be initiated by both parties: the owner and the tenant.

Any investor should have in mind that disputes related to lease agreements are not unheard of in Spain. Property owners often complain that legal procedures are long and unsatisfactory. Occupants are also not free of worries due to the current housing situation. Spain, as opposed to other European countries, doesn’t offer a social housing system.

The Spanish Constitution of 1978 recognizes as a general principle the right to decent housing, but it is not one of the fundamental rights that can be enforced in court. It is a declaration of intentions, not a tangible right. The public authorities have no means, or no will to find them taking advantage of the situation when establishing the SAREB at the beginning of this decade (Spanish: Sociedad de Gestión de Activos procedentes de la Reestructuración Bancaria – English: Company for the Management of Assets proceeding from Restructuring of the Banking System) to respond to that legitimate social demand. This causes a visible and notorious clash of interests between occupants and property owners, especially in large cities.

The rent price is now the biggest problem in many districts of Madrid, Barcelona and their influential areas. During the last 3 years, the rent price has gone up by 10% per year, while the average income of families in the same period has remained the same or has been lowered.

Every long-term investor should acknowledge this fact, which requires a very careful analysis. The problem of the rental crisis does not seem to be interim or temporary and soon it will be the first improvement in the agenda of the municipal political parties if it’s not already. Planning a long-term investment based on questionable economic fundamentals (the average rent constitutes 50% or 60% of the family income) is quite risky. And whoever buys a flat for rent should be aware that the tenant who signs a contract with these economic parameters, may become insolvent. This is the issue that we would like to outline here.

Newspaper “El Mundo” May 18th 2018

The tenant may take a case to court if the rented property doesn’t meet their expectations (if there are faults or defects) or in cases when the owner doesn’t comply with the lease terms (fails to perform works, repairs). However, it is the owners who seek justice in court more often. Especially on the market where those who possess set up the rules.

The owners, in turn, usually file a court case due to improper or other than agreed use of the rented property by the tenant (for example renting an office for residential purposes); subletting rooms without the owner’s consent); but above all due to non-payment of the rent. Tenant insolvency is the queen of all causes for which the owners go to court in Spain.

In the next post, we will continue the topic of rental crisis and will explain what happens when the tenant fails to pay the rent.

We have finally reached the end of this series of articles summarizing the topic of lease agreements signed before 1995 in Spain. This section, however, will be devoted to lease agreements signed after January 1, 1995, when the current Urban Lease Law (LAU in Spanish) came into force and the compulsory extension became illegal. It was actually when the law forbade to sign new contracts for an indefinite period.

a) Residential Lease Agreements

Before we continue the topic, it is important both for the landlord and the tenant to understand what the term residential lease means, according to the Urban Lease Law (Spanish: “Ley de Arrendamientos Urbanos- LAU”). It Is said, that the LAU doesn’t apply for the contracts signed for less than a year, but the truth is that if the tenant proves that the leased property is their place of stay (for example in the municipal register or at the children´s school), the court recognizes that the LAU is applicable with all the implications.

The rule leaves the parties to set the term of the lease, although it imposes a minimum duration of three years (until 2013 the minimum duration was 5 years).

Likewise, the rent amount may be freely agreed by the Parties and may be updated annually (more or less) in accordance with the change of The Consumer Price Index, provided that the contract expressly states it.

Regarding the housing, it is worth mentioning that it is the obligation of the owner to make the repairs that are necessary to keep the house inhabitable conditions and all repairs, required by ordinary wear and tear, should be made at their cost. Also, the law grants the lessee a right of preferential acquisition in a case when the property is put on sale, although it can be excluded by agreement in contracts which agreed lease duration is longer than three years.

In 2003, there were various modifications to this provision, some of them are especially important and adopted in favor of investors and, obviously, with the detriment for the tenants. The first one refers to the contract duration- the change from 5 to 3 years as the minimum contract duration. The minimum contract duration of 3 years is for many tenants not long enough and causes many problems especially in countries like Spain where the concept of social housing hardly exists.

The second and very important amendment is that the lease agreement expires when the owner puts the property on sale. Until 2013, the buyer was supposed to take care of the tenant and respect the contract terms. After introducing the reform in 2013, the contract will only be respected if it’s registered in the Property Registry. However, not even 5% of the contracts in Spain are inscribed in the register. In practice, it means that in a case when the owner wants to sell the property, the tenant is completely unprotected.

b) Commercial Lease Agreements

When it comes to the rest of the contracts, which the law describes as use other than residential,” which applies to contracts for commercial purposes such as locals and offices, the will of the parties is of particular relevance. It is the parties who can agree the terms, rent amount and decide who will cover the conservation or the repair works. It is also possible to exclude the preferential acquisition right or regulate the assignment of the contract.

There has been a significant change in the lease agreements signed after 01.01.1995; which, as it was mentioned in the last article, is a key date in the Urban Lease Act. This fact should be especially important for real estate investors interested in buying houses or residential apartments as you can still find contracts similar to those signed before 1995.

The main feature of lease agreements signed before 1995, which were subject to the Urban Lease Act of 1964, was a mandatory contract extension. Mandatory for the owner and optional for the tenant. As if this was not enough, there was a system of subrogation of the lease in favor of the widowed spouse and their relatives in case of death of the tenant.

The Law of 1964 continues defining the rights and obligations of the contracting parties but with some amendments. In 1994, the Transitory Provisions of the new Law were adopted limiting the contract subrogation to the most direct relatives (spouse and children); but, generally speaking, it could be assumed that these contracts expired in the moment of death of the tenant or their spouse.

Another characteristic of lease agreements signed before 1995 was that the rent amount agreed by the Parties wasn’t updated during the lease, which oftentimes brought the owner or the property manager a financial loss. After 1995, it was possible to increase and update the rent under certain conditions as well as transfer the property tax and supply costs on the lessee. The limitation of subrogation, the possibility of increasing the rent amount and transfer of particular costs on the lessee made the investments more reasonable and interesting.

The last but not least, the rule of 1985 established the freedom of choice with respect to the term agreed in the lease agreement, thereby eliminating the legal obligation to a mandatory contract extension, which from then on, only applied in cases where the Parties expressly requested it. Now, it’s obligatory to specify a date of the contract duration and the mandatory extension is no longer legal.

What happened in cases when the contracts where signed by a legal person? If the tenant was a legal person, the contracts were automatically extinguished in 5, 10, 15 or 20 years, depending on the rate paid for the Economic Activities Tax in 1994, which generated considerable controversy. On 01/01/2015 all such agreements for business purposes whose tenants were legal entities extinguished.

What you should know before signing a lease agreement in Spain

Spanish cities constantly attract foreigners driven by their vision of starting a business activity, investing in real estate or simply those who come to Spain in pursuit of better living conditions. However, as easy as it may seem, buying or renting a property may entail some difficulties especially for those who are not familiar with the Spanish law and the prevailing formal procedures, which will be discussed in this series of articles.

In addition to a serious shortage of housing for rent especially in bigger cities such as Barcelona and Madrid, there are also legal obstacles which every investor or a private person should have in mind before signing a lease agreement in Spain. The lease contract can be defined as an agreement, regulated by the Provisions of the Civil Code, that grants the lessee the rights to use the property owned or managed by the lessor for a specific period.

There are two main types of contracts- residential and commercial lease agreement. The key difference between these contracts is their purpose. The first type, as its name indicates, is restricted only for residential use while the other is signed for commercial purpose which may include a business activity, for example, sale or manufacturing of goods to generate profit.

There is a significant date in the legal rent regulations in Spain which is January 1, 1995. It is when the act on urban lease came into force establishing the right to change the term of the contracts and its extensions as opposed to contracts signed prior 1995 (which are still in force in many places). Such contracts had a very protective regulation for the lessee and limited for the lessor obliging him to extend the lease contract on the same conditions.

Both types of contracts will be taken under scrutiny in the next article together with the implications which they entail on the owner and the tenant.

How will the new hotel regulation affect the tourism industry in Barcelona?

After hearing and debating all the allegations, suggestions and complaints, the Plenum of the Municipal Council of Barcelona’s Town Hall has approved and published in a final form the Special Urban Plan of Tourist Accommodation (acronym “PEUAT” in Catalan) with a new hotel regulation. The agreement dates from January 26, but it has not been until March 6 (a month and a half later, an unusual situation) when it has been published in the Official Newsletter of the Province of Barcelona (BOPB). The new PEUAT is in force since March 6, 2017. For 2 months, it can be challenged through the contentious-administrative jurisdiction.

The PEUAT regulates the implementation and expansion of tourist accommodations in Barcelona, which include: youth hostels, collective temporary housing, houses for tourist use and hotel establishments. Special urban plans do not usually please the entire population given the diversity of political and economic ideas, but they do contribute to the organization of one of the fundamental activities of Barcelona: tourism.

There is a current debate on this matter in which it is difficult to position. Even so, in our opinion, the decongestion of the urban center and the consequent expansion of hotel activity to the periphery is a good public policy objective. But the method chosen to achieve this goal is probably not the most appropriate. From our point of view, we understand that the way of stimulation and encouragement are stronger and more logical than the way of prohibition. Citizens and businesses in Barcelona bear the greatest tax burden in Spain by far, while the city is the least indebted of Spain, also with a large difference. This political objective of moving hotel business to less dense areas could be achieved with tax benefits on land tax, commercial tax, construction tax, and license fees for the hotels to be established in these areas and create jobs. In fact, that movement de facto is already happening with the adjoining town of Hospitalet de Llobregat, where there is no moratorium or restriction, and where they are incubating hotel projects for customers whose destination is Barcelona. The Catalan capital is a reference city in terms of investment, which has contributed to attracting foreign capital for the security, liquidity and profitability offered in investment operations, including the tourism sector. At this point (as in many others), the data contradict the political discourse: 2007 1Q Catalonia has attracted the larger chunk of real estate investment in Spain, overpassing even Madrid.

For years, the international hotel operators have mobilized their expansion teams to establish their flagship hotels in Barcelona. But with the definitive approval of the Special Urban Plan including the new hotel regulation, the hotels’ companies will face a new problem to install their establishments in the urban center of the city, since these are areas of negative growth or maintenance. Therefore, these areas would only allow the implementation of a new hotel in the case of purchasing an entire building that was previously dedicated to the same activity: tourist accommodation. Consequently, if we refer to the plan made public, the central area and the ring adjacent to the city is paralyzed in what new projects concerns.

As a summary, we could highlight the following main ideas about what the PEUAT establishes about the hotel regulation:

• Different areas are defined per their capacity to host new tourist establishments, based on four aspects: the intensity of the current offer of tourist accommodation, the ratio of places offered in relation to the resident population, the saturation of public space and the urban morphology.
• The installation of tourist establishments can only be located in buildings in which none of its entities is been destined to the use of housing since July 1, 2015. In addition, it is required that the entire building is intended to the touristic accommodation, with the only exception of the ground floor that can be used for other activities, as long as it is not used for housing.
• The establishments of tourist accommodation in its different modalities that have a capacity of more than 350 places, must redact and approve an integral Special Plan for its urban implantation.

With respect to the various delimited areas, there are different objectives and limitations:

• In the ZE-1 zone, defined as a natural decrease area, no new establishments can be implemented and the expansion of the existing establishments is restricted.
• In the ZE-2 zone, configurated as a maintenance zone, the extension of the existing establishments will not be allowed. But, if an establishment is dropped from the census, another can be implemented with the same number of places.
• Zone ZE-3 is configured as a zone of contained growth, so it will be possible to implant new establishments and expand existing ones, as long as the maximum density of places is not exceeded. In any case, a new establishment may be opened when there is a drop in Zone 1 or Zone 2.
• Zone ZE-4 is in the process of development, so it intends to increase the number of tourist establishments, but fulfilling some requirements. This zone is divided into three sub-zones: ZE-4a comprising the Marina del Prat Vermell area, ZE-4b comprising the Sagrera area and ZE-4c comprising the 22 @ Nord area. All of them have a number of tourist places that give space to new projects.

Barcelona, as happened in other world cities (London, NYC, Paris …) should grow in terms of tourism using their peripheral neighborhoods, that today still seem marginal and commercially not attractive for tourist. These areas are called to become neighborhoods with their own personality in the city. It is a new stage for risky visionary and disruptive entrepreneurs wanting to invest in these new areas.

The Catalan capital, due to its frenetic pace of constant evolution, is being a constant challenge for the current city administration. It is a huge challenge to satisfy all parties involved in this puzzle: on the one hand maintain the balance between the welfare of local citizens and stress caused by the sustained increase in tourists visiting the city; on the other hand, not slow down the biggest economic activity of the city (in GDP contribution and employment); all together combined with a change in the economic model in the city.

For more information, you can visit the following link developed by the Barcelona City Council which provides more information about the new hotel regulation in a very useful and visual way:

City Council guidelines- PEUAT