Overview of the Rules for Holiday Rentals

14 August 2018 - Daniel Cano

The scarcity of housing, excessive rents, repeat violations of regulations, angry residents and overflowing cities have caused the Mallorca Government to act in relation to holiday rentals. Consequently, the Government has attempted to establish a framework for holiday rentals by way of a complex set of regulations that must take into account a series of highly diverse needs.

Mallorca lives off tourism. It is one of the most important pillars of the island’s industry. It is unthinkable to speak of Mallorca without speaking of tourism and yet, the relationship between tourism and Mallorca has deteriorated in the past few years. This situation is due, above all, to the fact that each year it has become more difficult to find reasonable housing; AirBnB-type tourism has also reached Mallorca, and promises higher profits than long-term rents, in a market that is traditionally more for sale than for rent. The consequence has been intense debates regarding tourists and residents living together, business structures and, above all, the rental market, which has made it necessary to regulate the sector. This regulation is intended to fulfil the PIAT (Pla d´Intervenció d´Àmbits Turistics), published on 27 July. The plan foresees a maximum limit of 430,000 tourist beds on the island, of which 115,000 should be holiday rentals and the rest, hotels. Additionally, there is a map that distributes the island into different areas. These different areas are subject to different regulations in relation to holiday rentals. In some of the areas holiday rentals will not be permitted under any pretext (e.g. in heavily crowded areas or protected rustic land); in other areas only for 60 days per year and solely in one-family dwellings.

In contrast to the legislation in force in the past, in some areas, as exceptions, holiday rentals will be permitted in horizontal division; in general, however, the steps are even more complex than previously. One of the main differences of the new regulation, which is sure to be an important factor for some property owners, is that now they must purchase the beds (spaces) — unlike before, when one only needed to pay a fee per application. A bed in a one-family house will be worth EUR 3,500, while a bed in a multi-family house EUR 875. A bed in the areas in which rental is only permitted 60 days per year will be worth EUR 291.67. Furthermore, licences will be limited to five years in some areas and must be re-applied for once this term elapses. In new buildings, initially no licence may be requested, due to the fact that the properties must be used for a minimum of five years as private real estate. The processing of the application is rather complex and also depends on the cooperation of the various city councils to obtain the necessary documentation. All of this makes it relatively difficult to estimate how long the process will take from now on until one has a license in hand. In any case, it is wise to seek the counsel of a competent lawyer, who can advise you while navigating the bureaucratic obstacles.