Santiago bans short-term rentals: 'My savings were there'

Santiago bans short-term rentals: 'My savings were there'

An owner invested €35,000 renovating an apartment in Santiago's historic center. Registered with the Xunta de Galicia (regional government), it operated for seven years until the city council declared it non-compliant. This is not isolated: new municipal rules ban tourist flats in the old town and much of the city, allowing them only on ground or first floors of buildings over six stories—a rarity in Compostela. The debate isn't whether tourism strains residential rents—few dispute this—but what happens to those who bought, renovated, and registered their properties when regulations allowed it.

The fading business and the missing housing supply

The logic behind the ban is simple: if owners can't profit from tourists, they will sell, returning flats to the residential market. In practice, affected owners argue reality is stubborn. "Owners won't rent to families or anyone but vacationers anymore," is a common refrain; antiestéticar of unpaid rents and illegal occupations has burned bridges with traditional tenancy. Selling is an option, but not at any price. Flats disappear from the market, lying dormant in investor hands, neither increasing supply nor lowering monthly costs.

Some argue the ban doesn't affect everyone equally. While small owners lose licenses, large projects proceed: the former Hospital Xeral university residence includes hotel rooms, and the Peleteiro estate, owned by Sareb (Spanish asset management company), aims for 40 tourist apartments and a shopping center, reducing public space to 243 square meters with no protected housing. Suspicions of unequal treatment linger.

Taxation and unfair competition concerns

Material lacks definitive answers on holiday rental taxation. However, hoteliers have long complained about competing with flats that avoid similar regulatory burdens and inspections. Growing support exists for increased oversight: inspectors issuing €100,000 fines to illegal dwellings and rewards for whistleblowers. Some calculate that €50 per tip could deflate speculation within a year.

The number of unlicensed homes remains vague. Thousands are estimated across Spain, with listings active on platforms despite lacking registry approval. The repeated advice is to report abusa: platforms don't always verify licenses, and councils act only upon notification.

Housing as a basic need: the uncomfortable truth

Contrasting narratives of ruined savers, another perspective reminds us that housing isn't just an investment. "Your right to take selfies abroad doesn't outweigh the right to decent, affordable housing," summarizes a widely supported view. Critics target the model's core: buying essential goods to resell at double the price generates private profit through inflation and resident displacement.

Diversification is the counter-argument. Those investing solely in tourist flats assumed regulatory risk, now materialized. Affected owners respond that rules changed mid-game: first encouraged to register, then banned from operating.

What the ban fails to fix

Tourism, foreign investment, and immigration alone don't explain rising rents. Targeting one factor leaves others intact. With supply frozen, prices continue climbing. The lingering question: if flats don't return to the residential market, who truly benefits from the ban?