Madrid is a city in constant transformation. Its urban dynamism, its appeal to tourists, and its role as an economic engine mean that decisions regarding planning and land use have a direct impact on the lives of its residents and on the development of the real estate market. In this context, the City Council has unveiled the RESIDE Plan, a new urban development strategy that aims to restore a balance between residential and tourist use in the capital, particularly in the historic center.

This plan comes at a critical juncture, marked by the growth of vacation rentals, pressure on the rental market, and the need to ensure sustainable coexistence between residents and visitors. For real estate developers, such as Culmia, understanding the scope of these measures is essential to anticipating trends, identifying opportunities, and continuing to contribute to the development of more livable cities.

Throughout this article, we analyze the main measures of the RESIDE Plan, their potential impact on Madrid’s real estate market, and how they may influence development activity—always from an informative and constructive perspective, in line with our commitment to the urban environment.

What is the RESIDE Plan?

The RESIDE Plan is an urban planning regulation promoted by the Department of Urban Planning, Environment, and Mobility of the Madrid City Council. Its main objective is to protect residential use in the city, especially in the historic center, and to regulate tourism, which has grown significantly in recent years, often without adequate regulation.

This plan addresses a complex urban reality: the proliferation of tourist accommodations, the conversion of commercial spaces into temporary lodging, and the gradual decline in the resident population in downtown areas. According to municipal data, more than 90% of tourist apartments in Madrid lack a license[1], which has created tensions among neighbors and made it difficult to access housing.

Key Measures of the RESIDE Plan

The RESIDE Plan introduces a series of measures that affect both the regulation of tourist apartments and the development of new housing. Below, we highlight the most relevant ones:

1. Ban on Scattered VUTs in Residential Buildings

One of the most significant measures is the ban on tourist accommodations in residential buildings in the historic center, even on ground floors with separate entrances. This decision aims to prevent tourists and residents from living in the same building, thereby reducing neighborhood conflicts and preserving the residential character of these areas[1].

2. Relocation of Tourism Offerings

VUTs must be located in entire buildings used exclusively for tourism, which will allow for better oversight of the activity and a more orderly coexistence. Outside the historic center, tourist accommodations must have separate entrances and be located on the ground floor, first floor, or basement.

3. Upgrading Obsolete Equipment

For the first time, it will be permitted to convert obsolete private community facilities into affordable rental housing or coliving spaces, provided that the property is renovated. This measure opens up new opportunities for residential development in areas where supply is limited[2].

4. Incentives for Changes in Land Use

The plan includes zoning incentives to convert office buildings into residential housing, a measure that could revitalize the market and increase the supply of primary residences in well-connected areas with good services.

5. Protection of Local Businesses

The conversion of commercial spaces into tourist apartmentsis prohibited in the historic center and on the main shopping streets. This measure aims to preserve the neighborhood’s commercial fabric, which has come under significant pressure due to the profitability of tourism[3].

6. Temporary Licenses for Tourist Use

In residential buildings located off commercial streets, tourist apartments will be permitted only if the entire property is used for this purpose. These licenses will be valid for a maximum of 15 years, after which the property must revert to residential use[4].

7. Tightening of the penalty system

Fines for operating an illegal vacation rental may reach up to 190,000 euros, compared to the 6,000 euros set forth in the previous regulations. This measure aims to deter illegal activity and encourage the legalization of vacation rentals[1].

Which areas will be most affected?

The RESIDE Plan establishes two distinct areas of action:

• Historic Center: bounded by the M-30, where the concentration of tourist accommodations is highest and the population decline is most pronounced.
• Rest of the city: where more flexible measures will be implemented, but always in accordance with planning and control criteria.

In the historic center, there are an estimated 6,700 vacation rentals, accounting for 42% of the city’s total supply[3]. This concentration has put significant pressure on the residential market, making it difficult for residents to find housing.

How might this affect the real estate market?

From the perspective of a real estate developer, the RESIDE Plan presents several scenarios that should be analyzed with caution:

1. Rebalancing the Relationship Between Tourism and Residential Development

The relocation of VUTs and the protection of residential use may help restore market balance, especially in downtown areas. This could lead to increased demand for primary residences and new opportunities for residential development.

2. New Rehabilitation Opportunities

The possibility of converting obsolete facilities and office buildings into housing opens the door to renovation and repurposing projects, which can revitalize the sector and meet the demand for affordable housing.

3. Greater legal certainty

Regulatory simplification and stricter penalties can create a more stable and predictable environment for real estate operators, reducing unfair competition and promoting responsible investment.

4. Impact on the profitability of tourism assets

Owners of VUTs in residential buildings could be affected by the new restrictions, which could lead to a shift in assets toward residential rentals or sales. This could influence property prices and availability in certain areas.

What challenges does the RESIDE Plan present?

Although the plan aims to improve community relations and protect residential use, it also presents some challenges that will need to be addressed during its implementation:

• Adapting the building stock: transforming existing buildings requires investment and planning.
• Licensing and administrative procedures: It will be crucial for the City Council to streamline these processes to facilitate the transition.
• Monitoring and oversight: Ensuring compliance with regulations will require resources and coordination among government agencies.

What can a real estate developer do in light of this new situation?

For a real estate developer like Culmia, the RESIDE Plan represents an opportunity to strengthen its commitment to sustainable urban development. Some areas of focus could include:

• Identify assets that can be transformed into strategic areas.
• Invest in renovation and coliving projects that meet new demands.
• Work with government agencies to ensure regulatory compliance.
• To provide housing that prioritizes residential well-being, energy efficiency, and urban integration.

Where can I find more information?

If you’re thinking about investing in real estate, renovating your home, or simply want to adopt more sustainable habits, we invite you to check out our Guide to Saving Money at Home. You’ll find practical tips for reducing energy consumption, improving your home’s energy efficiency, and helping to protect the environment.

Conclusion

The RESIDE Madrid Plan marks a turning point in the regulation of residential and tourist use in the capital. With measures aimed at protecting primary residences, regulating the tourism industry, and promoting urban renewal, this plan could have a significant impact on the real estate market.

At Culmia, we will continue to monitor these developments closely, focusing on solutions that create value for residents, respect the urban environment, and help build a more balanced and livable Madrid.