Madrid Reside Plan 2025: New Rules for Vacation Rentals

In recent years, vacation rentals have experienced a notable boom in Madrid, as in many other large cities. This phenomenon, while bringing economic opportunities for owners and managers, has also raised concerns regarding coexistence, housing prices, and quality of life in the most affected neighborhoods.

To regulate this activity and protect residents' right to housing, the Madrid City Council has launched the Reside Plan, a regulation that imposes strict new rules for vacation rentals in the Spanish capital.

In this article, we explain in detail what the Reside Plan is, when it comes into force, what requirements it imposes, how it affects existing rentals, which areas of Madrid are involved, and what owners and managers must do to adapt to this regulation.

What is the Reside Plan?

The Reside Plan is a municipal regulation designed to limit and regulate vacation rentals in Madrid. Its main objective is to ensure coexistence in neighborhoods, prevent the indiscriminate proliferation of tourist housing in residential buildings, and preserve the right of Madrid residents to dignified housing access.

This plan establishes specific conditions for properties to operate as tourist rentals, imposing restrictions on location, type of buildings, and access conditions.

When does the Reside Plan come into force?

The Reside Plan was provisionally approved by the Madrid City Council on 21 May 2025, with the exclusive backing of the Popular Party. After passing through the municipal plenary, the text has been sent to the Community of Madrid, which must validate the document and approve it definitively.

If there are no delays in the procedure, the regulation is expected to come into force in August 2025. From that moment, all Tourist Use Homes (VUT) must comply with the new requirements to continue operating legally in the city.

This means that both new and old hosts must check if their accommodation meets the new conditions, as otherwise, they could face license loss or administrative penalties.

What requirements does the Reside Plan impose on vacation rentals in Madrid?

The Reside Plan imposes a series of restrictions with the aim of containing the uncontrolled expansion of tourist rentals and protecting the residential balance of Madrid's neighborhoods. These are the main measures established by the regulation:

1. Tourist homes and residents cannot share a building

One of the pillars of the Reside Plan is the incompatibility between tourist homes and permanent residences in the same building. This means that if residents or habitual occupants live in a property, there cannot be tourist apartments in the same block.

The only exception will be buildings intended exclusively for tourist use. That is, an entire block can be converted into tourist accommodation, but mixing uses within the same building is not allowed if neighbors live there.

This measure directly affects most VUTs located in residential properties in the center of Madrid.

2. Independent access: the only exception

The Reside Plan introduces an important exception for areas outside the historic center: if a tourist home has independent access from the street, it can continue to operate even if other people reside in the building.

But beware: this access must be totally autonomous. It cannot share a portal, stairs, elevator, or any other common element with residents. This significantly limits options in traditional buildings, where the structure does not allow for easy access division.

3. Forbidden to convert commercial premises into tourist homes

In the neighborhoods of the Central district, it will be expressly prohibited to transform commercial premises into tourist accommodations. This provision seeks to protect local commerce and curb the replacement of neighborhood businesses with apartments intended for tourists.

With this measure, the City Council tries to preserve the character and social function of the most saturated neighborhoods, where many premises had already been converted into disguised or re-purposed VUTs.

4. Tourist use allowed in rehabilitated buildings

The Reside Plan also contemplates a more flexible scenario for obsolete, uninhabited, or listed buildings that undergo a process of comprehensive rehabilitation. In these cases, tourist use may be authorized, but under certain conditions:

• The authorization will have a limited duration of 15 years.
• Tourist use will be conditional on the rehabilitation meeting urban planning and sustainability criteria.
• It will only apply if the building was not already occupied as a permanent residence.

This clause seeks to encourage urban regeneration and prevent dilapidated buildings from remaining empty or unused.

How does the Reside Plan affect vacation rentals already in operation?

At present, the City Council has not officially detailed whether there will be a transitional regime or exceptions for VUTs that are already operating legally.

This means that:

• Active tourist homes could be forced to cease their activity if they do not comply with the new criteria.
• It is unclear whether existing licenses will be maintained or if they will need to be renewed under the new conditions.
• Owners must be aware of the final approval by the Community of Madrid, which will confirm the final rules.

In short, there is a scenario of uncertainty for current rentals, so it is advisable to get ahead and prepare a Plan B if the property does not meet the known requirements.

Which areas of Madrid are affected by the new regulation?

The Reside Plan applies to the entire city of Madrid, but establishes different levels of restriction depending on the area. The limitations are stricter in neighborhoods with greater tourist pressure, especially in the historic center.

Historic Center

Includes the neighborhoods of Sol, Palacio, Cortes, Embajadores (Lavapiés), Justicia (Chueca), Universidad (Malasaña), part of Arganzuela, La Latina, and Huertas.

The measures here are very severe:

• Total prohibition of tourist homes within residential buildings if they coexist with neighbors.
• Only entire buildings exclusively for tourist use will be allowed.
• In non-commercial streets, listed buildings may be comprehensively converted for tourist use for a maximum of 15 years, provided they meet rehabilitation requirements.

Outside the historic center

In districts such as Chamberí, Retiro, Tetuán, Salamanca, Chamartín, Carabanchel, Usera, Latina, Moratalaz, among others, the rules are somewhat more flexible:

• Tourist homes may be authorized, but only if they have independent access from the street.
• VUTs can only be located on ground floors or first floors, minimizing contact with residents.
• Sharing common elements of the building remains prohibited.

These limitations seek to contain the growth of tourist rentals outside the center and prevent the saturation pattern already observed in more central neighborhoods from repeating.

What does the Reside Plan imply for owners and managers of vacation rentals?

The impact of the Reside Plan on owners, investors, and professional managers is significant. Among the main implications are:

Loss of tourist license

If your property shares a building with neighbors and does not have independent access, it will no longer meet the required regulatory requirements. This could lead to the revocation of the authorization as a VUT, which would imply having to close the accommodation or change your business model.

Possible financial penalties

Operating outside the legal framework can lead to substantial fines. Although the new sanction regime has not yet been published, if the previous criteria are maintained, penalties can range from €30,000 to €190,000, depending on the severity of the infringement.

Impact on profitability

The new restrictions could force you to renovate access, reallocate your investment, or even change the use of the property (e.g., to traditional long-term rental). In many cases, the tourism model will cease to be profitable if urban planning requirements are not met.

How to adapt to the Reside Plan if it affects your vacation rental

The Reside Plan introduces limitations that may exclude many properties from the tourist market, especially those located in buildings with permanent residents and without independent access. However, this does not mean you have to abandon your activity or give up profiting from your property.

Below, we present some strategies to adapt to this new regulation and redirect your business model:

Explore areas with less regulatory pressure

If your current property does not meet the new requirements, you can consider moving your investment or activity to other areas of Madrid where restrictions are more flexible. Outside the historic center, there are neighborhoods where it is still possible to operate legally if certain conditions are met, such as having independent access or being located on the ground floor.

This can open up new opportunities in emerging areas that still have tourist demand and more accessible prices.

Evaluate the possibility of modifying access

An option worth studying is whether your property allows for a renovation to create direct access from the street. This condition becomes key to continuing to operate legally as a tourist home outside the historic center.

Consult an architect or urban planner to find out if it is structurally viable and how much it would cost. Although it may involve a considerable initial investment, it could pay off in the long run if it allows tourist activity to be maintained.

Consider other rental formulas

If tourist rentals cease to be an option for your property, it's a good time to consider alternatives such as temporary rentals (by the month), corporate rentals, or even coliving. These models are less regulated, offer stability, and remain attractive to certain tenant profiles (relocated professionals, international students, remote workers, etc.).

Furthermore, they typically require less turnover, less maintenance, and allow for relatively stable income without the need for tourist licenses.

The Reside Plan redefines the legal framework for vacation rentals in Madrid, doing so with stricter criteria that force a rethinking of many strategies. The impossibility of sharing a building with neighbors without independent access, the prohibition of converting commercial premises, and limits in the historic center mean a profound change in the current tourism model.

In the face of this new scenario, the key lies in anticipation and adaptation. Analyzing whether your home meets the new requirements, evaluating viable reforms, or exploring new areas and even other rental models, will allow you to continue generating profitability without going outside the legal framework.

Although the regulatory environment becomes more demanding, those who anticipate change and plan with vision will be able to maintain their activity and successfully transform it.