REGULATION OF SHORT-TERM HOUSING RENTALS IN SPAIN 701 or oblige operators to inscribe into a public registry before commencement of any business activity32, what– according to the Services Directive – amounts to an authorisation scheme. Authorisations limit competition insofar as they prevent, delay or discourage entry from new operators; b. Quotas: quotas seek to limit the number of operators below the competitive level, usually in order to prevent externalities. However, they also reduce the intensity of competition and lead to supra-competitive profit by incumbent operators at the expense of consumers. These restrictions typically have three additional competitive concerns. Firstly, setting the quota is a very complex exercise, and quotas are not subject to frequent revision. In housing, quotas are not a very good indicator of the intensity of externalities, as housing is highly heterogeneous. Secondly, the award of licences does not usually follow a competitive process. Lastly, granting licences on a permanent basis prevents future competition; c. Territorial restrictions: these refer to absolute or partial bans on the territories where the activity can take place. For example, the Region of the Canary Islands prohibited touristic rental of all housing located in touristic land33. The cities of Barcelona, Madrid, San Sebastian or Santiago de Compostela have established different intensity of regulation according to spatial zoning; d. Temporary restrictions: these refer to time limits for the activity. For example, the Region of Madrid prohibited housing rentals for a period of less than five consecutive nights, protecting traditional operators from competition of housing rentals34. Conversely, the Regions of Galicia and Castile and León prohibit rentals for a period longer than 3 months35; e. Typology exclusions: these refer to bans on particular types of properties or rentals. For example, some regions prohibited the rental of individual 32 See note 30. 33 “Quedan expresamente excluidas del ámbito de aplicación de este Reglamento, las edificaciones ubicadas en suelos turísticos que se encuentren dentro de las zonas turísticas o de las urbanizaciones turísticas, así como las viviendas ubicadas en urbanizaciones turísticas o en urbanizaciones mixtas residenciales turísticas, conforme a las definiciones establecidas en la Ley 2/2013, de 29 de mayo, de renovación y modernización turística de Canarias” (Article 3.2 of Decree 113/2015, of 22 May). This provision has been annulled by the High Court of Justice of the Canary Islands, and the Supreme Court confirmed the annulment. 34 Article 17.3 of Decree 79/2014, of 10 July, of the Region of Madrid. This provision has been annulled by the High Court of Justice of Madrid. 35 Article 9.1 of Decree 12/2017, of 26 January, of the Region of Galicia. Article 4 of Decree 3/2017, of 16 February, of the Region of Castile and León.
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