Plan Reside Madrid 2025: New rules for vacation rental

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

To try to regulate this activity and protect the right to housing for neighbors, the Madrid City Council has launched the Reside Plan, a regulation that imposes new strict 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 dwellings in residential buildings, and preserve the right of Madrilenians to decent housing access.

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

When does the Reside Plan come into effect?

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

If there are no delays in the procedure, it is expected that the regulations will come into force in August 2025. From that moment on, all tourist use homes (VUT) must comply with the new established requirements to continue operating legally in the city.

This means that both new and old hosts must review whether their accommodation complies with the new conditions, as otherwise they could face loss of license or administrative sanctions.

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 regulations:

1. Tourist homes and neighbors will not be able to share a building

One of the pillars of the Reside Plan is the incompatibility between tourist dwellings and permanent residences in the same building. This means that if there are people registered or living habitually 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 transformed into a tourist accommodation, but mixing uses within the same building is not allowed if there are neighbors living in it.

This measure fully affects the majority of VUTs located in residential buildings 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 may 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 neighbors. This significantly limits the options in traditional buildings, where the structure does not allow for easy division of access.

3. Prohibited to convert commercial premises into tourist accommodations

In the neighborhoods of the Center district, it will be expressly prohibited to convert 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 attempts to preserve the character and social functionality of the most saturated neighborhoods, where many premises had already been converted into covert or reconverted 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 comprehensive rehabilitation process. 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 conditioned to the rehabilitation meeting urban and sustainability criteria.
• It will only apply if the building was not already occupied for residential purposes permanently.

This clause seeks to promote urban regeneration and prevent buildings in poor condition from remaining empty or unused.

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

For the time being, 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 dwellings could be forced to cease their activity if they do not comply with the new criteria.
• It is not clear whether the licenses already granted will be maintained or whether they will have to be renewed under the new conditions.
• Property owners must be aware of the final approval by the Madrid Community, which will confirm the final rules.

In short, there is a scenario of uncertainty for current rentals, so it is advisable to anticipate and prepare a plan B if the property does not meet the requirements that are already known.

Which areas of Madrid are affected by the new regulations?

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 higher 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 dwellings within residential buildings if they coexist with neighbors.
• Only entire buildings exclusively for tourist use will be allowed.
• In non-commercial streets, listed buildings can be fully converted for tourist use for a maximum of 15 years, provided they meet the 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 accommodations may be authorized, but only if they have independent access from the street.
• VUTs will only be able to be located on ground floors or first floors, minimizing contact with residents.
• It is still prohibited to share common elements of the building.

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 being repeated.

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

The impact of the Reside Plan for owners, investors, and professional managers is significant. Among the main implications, the following stand out:

Loss of tourist license

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

Possible economic sanctions

Operating outside the legal framework may entail significant fines. Although the new sanctioning regime has not yet been published, if the previous criteria are maintained, sanctions 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 reform the access, relocate your investment, or even change the use of the property (for example, to long-term traditional rental). In many cases, the tourist model will cease to be profitable if the urban 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 homes from the tourist market, especially those located in buildings with permanent residents and without independent access. However, this does not mean that you have to abandon your activity or give up making your property profitable.

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

Explore areas with less regulatory pressure

If your current home does not meet the new requirements, you can consider relocating 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 may open up new opportunities for you in emerging areas that still have tourist demand and more affordable prices.

Consider the possibility of modifying access

One option worth considering is whether your property allows for a renovation to create a direct access from the street. This condition becomes key to continue operating legally as a tourist accommodation outside the historic center.

Consult with 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 term if it allows maintaining tourist activity.

Consider other rental formulas

If tourist rental is no longer an option for your property, it's a good time to consider alternatives such as temporary rental (by months), corporate rental or even coliving. These models are less regulated, offer stability, and remain attractive to certain tenant profiles (displaced professionals, international students, remote workers, etc.).

In addition, they tend to require less rotation, less maintenance, and allow relatively stable income without the need for tourist licenses.

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The Reside Plan redefines the legal framework for vacation rental in Madrid, and does so with stricter criteria that force many strategies to be rethought. The impossibility of sharing a building with neighbors without independent access, the prohibition on converting commercial premises and the limits in the historic center represent a profound change in the current tourist model.

Faced with this new scenario, the key is in anticipation and adaptation. Analyzing whether your property meets the new requirements, assessing viable renovations or exploring new areas and even other rental models, will allow you to continue generating profitability without leaving 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 transform it successfully.

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