Saturday, October 03, 2015

The Complications Of Holiday Rental Regulation

A key issue that the tourism minister, Biel Barceló has only partially touched on recently is that of the regulation of holiday rentals. Barceló had said that new regulation to cover private apartments would be needed prior to the introduction of the tourist tax. The fact is, however, that whatever pitfalls the government might encounter with introducing the tax they are nowhere near as large as those requiring the coherent and watertight crossing of t's and dotting of i's that rental legislation will demand.

To recap, the reason for there being a need for prior legislation of holiday rentals is two-fold. One is to be able to have as many accommodation units as possible subject to the tax, and the second is to try and avoid the cries of foul that will come from the hoteliers sensing the same discrimination as they did with the poorly implemented eco-tax of yesteryear.

The legislation, however, is far from straightforward, and an additional complication concerns the powers for tourism that the Council of Mallorca (and the other island councils) are to assume under a transfer of responsibilities from the government. Barceló and the council's president, Miquel Ensenyat, have met in order to map out how this transfer is to be made and what it will entail, and one aspect of it will be for holiday rentals.

Barceló has made clear his intention to reform the tourist law and to permit the commercialised rental of holiday apartments, something that is currently outlawed. The legal reform will presumably, however, have to establish the mechanism for decisions as to how this liberalisation will apply, and this is where the council (and ultimately also the town halls) is going to play a key role. The reform, or so it would seem, will not be universal. It will apply to tourist areas that the council will determine.

The simple way of doing this would be to apply the law to those parts of Mallorca already classified as tourist areas. These are easy enough to identify without the aid of official classification systems. But will it be this simple?

There are tourist areas of Mallorca where the reform would be particularly beneficial and indeed where it is pretty much essential: those resorts which rely heavily on private accommodation because of a lack of hotel stock - Puerto Pollensa, Colonia Sant Jordi, for example. Then there are resorts where the reform might appear to be less essential: the ones with high density of hotels - Alcudia, Palmanova-Magalluf, Cala Millor, for instance. Yet all of these resorts have considerable stocks of private accommodation as well. It would be most unlikely that they would not be included, but there is, within the Barceló drive to legislate, a potential inconsistency on his behalf. He has spoken of his concern regarding "saturation" in high summer, and one key reason why there is this saturation is the availability of private accommodation and the sudden dramatic increase in its supply, facilitated in no small part by internet rental websites.

Why, though, should the reform only apply to designated tourist areas? Perhaps this will not be the way the council goes, and there are good reasons why it shouldn't. Non-tourist areas are mainly those of the interior, but why exclude these?

Whichever way this reform goes, it may well be that it takes much of the current legislature (up to May 2019) to get it sorted out. Before it can genuinely be considered, the transfer of powers has to be nailed down and fully approved, and this is also not as simple as it seems. The previous government sought to do this but ran up against the issue of financing this transfer of responsibilities. The current government will not be as parsimonious, but Menorca and Formentera in particular will be agitating for vastly increased budgets to those proposed by the PP.

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