Madrid's Reside Plan has halted tourist apartments in the centre but has caused their expansion to areas like Tetuán, Puente de Vallecas, and Ciudad Lineal, where there are now 824, 443, and 412 tourist homes respectively.
The Juanelo Street, in the heart of Lavapiés, is an example of the saturation of tourist apartments in central Madrid. With more than 20 tourist apartments in just 350 metres, residents coexist with luggage lockers and closing businesses. But the phenomenon is no longer exclusive to the Centro district: tourist apartments are moving to working-class neighbourhoods on the outskirts.
The Reside Plan pushes VUT to other areas
The Madrid City Council approved the Reside Plan in August 2025, which prohibits tourist apartments in residential buildings in the neighbourhoods of Sol, Palacio, Cortes, Embajadores, Justicia, Universidad, La Latina, Huertas, and part of Arganzuela. The measure aimed to protect the residential rental market but has had a side effect: Tourist Use Homes (VUT) are being displaced to humbler districts.
According to the latest data from the National Institute of Statistics (INE), the Centro district concentrates 4,338 tourist apartments, 40% of the total in the city (10,836). However, the price per square metre in the centre, which reaches €7,636 according to Idealista, and the new regulations have pushed investors to seek cheaper alternatives.
“There is a hypercentre that accumulates many VUT, which are spreading to other districts like Ciudad Lineal and Puente de Vallecas, where there are already worrying data,” explains Enrique Villalobos, president of the Regional Federation of Neighbourhood Associations of Madrid.
Tetuán, Puente de Vallecas, and Ciudad Lineal, the new hotspots
The Tetuán district is now the second with the most tourist apartments in the capital, with 824 homes. It is followed by Puente de Vallecas (443) and Ciudad Lineal (412). These traditionally working-class neighbourhoods with lower incomes are seeing the number of tourist apartments multiply, especially in areas close to the Metro lines 1, 3, and 5 and Barajas airport.
For residents of these districts, the arrival of tourist apartments means an increase in rental prices and a loss of local commerce. “In Tetuán, it is already noticeable: rents are rising, and tourist apartments are taking homes away from residents,” laments a spokesperson for the neighbourhood association.
The centre, saturated and expensive, expels investors
The Centro district, with an average household income that varies by €20,000 between Justicia and Embajadores, is “saturated,” according to experts. The supply of tourist apartments in the centre is so high that prices have skyrocketed: a penthouse on Juanelo Street can be rented for €600 a day. The Reside Plan has been a brake, but it has not eliminated the problem; it has merely shifted it.
In the central neighbourhoods where tourist apartments are still allowed, such as part of Arganzuela, pressure remains high. However, the trend is clear: investors are looking for areas with high connectivity and more affordable prices, like Tetuán, where the price per square metre is much cheaper than in the centre.
What it means for the average resident
For residents of Puente de Vallecas or Ciudad Lineal, the arrival of tourist apartments means less availability of housing for regular rental and rising prices. Many fear their neighbourhoods will end up like Lavapiés, where traditional businesses close and tourists occupy the ground floors. “There used to be local shops; now you only see lockers and tourist apartments,” laments a resident of Juanelo Street.
The Madrid City Council has announced it will monitor compliance with the Reside Plan and will consider expanding the restricted areas if the expansion continues. For now, INE data shows that the number of VUT in the city continues to grow, although at a slower pace in the centre.
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