A New Decree That Changes the Rules
Madrid's housing market has been caught in an escalating tug-of-war between tourist demand — which converts residential apartments into short-term rentals — and the urgent need for affordable housing. This week, the Madrid regional government introduced a new decree that significantly tightens the rules for operating tourist apartments (known as VUT, viviendas de uso turístico).
What the New Decree Changes
The regional government, led by President Isabel Díaz Ayuso, has approved legislation that for the first time sets minimum room sizes for tourist accommodations:
- Apartments under 25 m²: maximum 2 guests
- Between 25 and 40 m²: up to 4 guests across at least two habitable rooms
- For each additional 10 m² with an independent habitable room: 2 more guests
A Market Already in Retreat
The numbers tell a clear story:
- In 2024, 1,153 tourist apartments were deregistered in the Madrid region
- In 2025, that figure surged to 3,053 — a 164.8% increase
- In just the first two months of 2026, another 341 units were removed
- Nationally, the supply on platforms fell 12.4% in November 2025 vs. the prior year
The Impact on Prices and Rents
The relationship between tourist apartments and rental prices is complex but undeniable. Madrid welcomed 11.2 million tourists in 2025, and the profitability of a short-term rental can be two to three times that of a conventional residential lease.
Data from our daily dashboard, shows that sale prices in Madrid rose by up to 18.9% in 2025, though forecasts for 2026 point to a moderation around 7%. In the rental market, pressure remains intense: the supply of rooms for rent grew 21% in 2025, a signal that many landlords are pivoting to less regulated formats.
Which Districts Will Be Most Affected
The new measures will have an uneven impact depending on the area. Districts with the highest concentration of tourist apartments will feel the effects first:
- Centro: 5.9% of housing dedicated to tourist use
- Salamanca and Chamberí: high concentration in neighborhoods like Recoletos, Lista, and Trafalgar
- Arganzuela and Retiro: recent VUT growth in areas like Delicias and Ibiza
What to Expect from the New Regulations
The decree's impact will be gradual. In the short term, it will accelerate the deregistration trend already visible since 2024. Homeowner associations will now have a more direct mechanism to block the conversion of residential apartments into tourist rentals.
In the medium term, we could see a partial return of units to the residential market, particularly in high-concentration tourist zones. However, the real effect on prices will depend on implementation speed, enforcement rigor, and whether landlords choose traditional leases or pivot to alternative models such as seasonal rentals.
What seems clear is that the era of unlimited growth for tourist apartments in Madrid is coming to an end. The question is no longer whether further regulation will come, but how much — and what consequences it will have for a housing market still searching for equilibrium.