Saturday, March 05, 2016

Holiday Rentals: The Right Noises On Consensus

Regulation on holiday rentals can be expected within six months. This is what the Balearic parliament agreed on Wednesday, and they agreed without dissent. That it was the Partido Popular which made the proposal was not grounds for opposition. The PP has seen the light and the need for regulation; something that did not shine when the party was in power.

Knowing what this regulation might entail is anyone's guess. It will almost certainly offer owners of apartments the opportunity to finally be able to market properties as tourist accommodation in an open and legal fashion, but what might the attached strings be? We have previously heard that the government is considering some form of zoning system by which rental accommodation would be confined to specific parts of towns or resorts; this is certainly what is wanted for Palma. Other than this, there have been precious few hints, other than that - inevitably for this government - there will be attempts at consensus with all involved.

By this, it principally means the involvement of business, relevant associations and federations (Aptur, the tourist properties association, and the Mallorca Hoteliers Federation, as examples), town halls and others. What of, however, owners themselves, ones not represented by Aptur? And not just owners who might wish to rent out properties as holiday lets. There are the other owners to consider. Are there not? How far does consensus go? In a democratic sense, communities (i.e. for apartment blocks) should be able to decide whether there are tourist rentals or not on the basis of a simple majority. Some would be happy with the outcome, others not, and it would depend which way the vote went. But over and above this are the rights of an individual owner, regardless of neighbours. This seems to be at least one of the angles being taken by Més. Toni Reus, knowledgeable of matters in Can Picafort from his time as mayor of Santa Margalida and still a councillor as well as a parliamentary deputy, has spoken again of the "human right" to rent out without obstruction and so allow owners to derive legitimate additional income.

There is a great deal for the government to consider, and one trusts that the tourism ministry (along with the tax agency) have already been preparing the ground. Drafting, debating and approving regulation within six months is a tight schedule otherwise. And given how the tourist tax has provoked such argument among the so-called partners in government, one shouldn't rule out there being a repeat with holiday rentals.

An interesting aspect of the consensus that is to be sought is the emphasis apparently to be placed on involving online agencies. Which ones remains to be seen, but if the government is wanting to bring the likes of Airbnb into the discussions, then this would be a very sensible move. Whether administrations like it or not, they need to work with the internet suppliers and recognise how the market has changed since Airbnb and others made their presence felt. At present, these administrations prefer to seek legal action or issue fines (as has been the case in Barcelona). It is preferable to make these businesses part of the solution and not keep them on the outside as the problem. So if it is the government's intention to involve them, then the government should be applauded.

The PP had also proposed that tourist tax implementation should be delayed until the holiday rentals legislation is in place. The government was, of course, never likely to support this, and it didn't. But there is a curious situation unfolding whereby, on the one hand, the government may be moving towards a more liberalised market and, on the other, it is in discussion with the national finance ministry (and so the Hacienda) to look at how much tougher it can get.

The word coming out of the regional tourism ministry is that it is determined to track down properties that are being rented out (and not just apartments) with payment in black. But we have heard this before. The fact is that, although the ministry may therefore be more determined to get its inspectors out and about, it doesn't have that many inspectors. And these same inspectors will also be expected to undertake tasks such as checking on hotels and bars. One can possibly anticipate there being the announcement of a campaign some time during the season which involves additional inspectors being brought in from the mainland. The government did something similar in checking employment contracts and working conditions last summer by adding numbers to its employment ministry inspectorate.

Fundamentally, though, if the government wishes to get tough and show it is getting tough, it will want some good examples. Rather than single owners, the emphasis will surely be on the organised operators, which can take in vast sums and pay nothing by way of tax. And if these are indeed to be the prime targets, then the government should once more be applauded.

Another ingredient that the government may wish to take account of comes courtesy of the "Defensor del Pueblo", the Ombudsman. In the annual report, the office of the Ombudsman admonishes administrations for the "unreasonable" ways in which they have curtailed the freedom of individuals to offer properties for tourist rental. The report draws attention, for instance, to a six thousand euro fine issued by the Catalonian government to an owner who had not made the proper declaration of being the "accountable" person responsible for the property. It also directs comments towards the Balearics in opining that there appear not to be "public interest reasons" for the current legislation as it applies in the Balearics.

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