Wednesday, December 14, 2016

Creating A Minefield: Holiday Rentals' Legislation

The draft text for the law governing holiday rentals in the Balearics has been published. The actual legislation is scheduled to be in place for the start of the next tourism season, whenever that is, given that the government is congratulating itself on shunting the season backwards to an ever earlier start; let's assume that the start means 1 May.

A great deal of choppy water will pass under the incomplete bridge of the draft before the legislation can be enacted. Of various interested parties - the Mallorcan hoteliers, the Aptur holiday rentals' association, GOB the environmentalists, Podemos, the Partido Popular - there is unanimity in that they all disagree with aspects of the draft. Not, as most say, they have had time to study it in detail; they object to parts of it anyway. Par for the course. Others will also chip in with their two centimos' worth: the island councils, for example, and some town halls - expect mutterings to come from Palma.

The headlines are: limiting rentals to buildings of ten years of age or more, so as to prevent speculation; allowing communities' owners to vote (by majority) against there being any holiday lets; increasing the minimum fine for illegal renting to 20,000 euros; insisting on certain standards, such as provision for those with reduced mobility (which could include lifts, the removal or adaptation of architectural barriers, kitting out bathrooms in an appropriate fashion); limiting the total number of places in accordance with the so-called "bolsa" of free tourist places that currently exists; allowing island councils and ultimately town halls to define where rentals might be and how many; prohibiting rentals on protected "rustic" land.

Straightforward the legislation will most certainly not be, but then we knew that anyway. How much it might prove to be an absolute minefield - of the legal variety - will become clearer over the next few weeks. One of the provisions - to do with communities' rights to veto lets - may well find itself in court. The government says that its legal experts and other experts at the university reckon that this will not constitute a violation of owners' rights. There will doubtless be other experts who argue differently. But the government wants to establish in law what has not until now been covered by legislation. Communities may already have been deciding against lets but they haven't had the power of law. Tourism minister Biel Barceló wondered a few weeks ago whether this would be possible; he now seems convinced that it will be. Moreover, he will be pleased to learn that fines have been going up because neighbours have been snitching. The government is anticipating a tenfold increase in fines' revenue next year, and the increased minimum tariff is only aspect of that.

It wouldn't in all cases be a shoo-in that communities would veto holiday letting. The decision would clearly depend on the profile of owners. But would a veto be effective, or will owners just carry on renting? The legislation, unless there is some appropriate wording, will surely clash with the national law on urban leasing.

Dealing effectively with this absurd loophole needs to be a priority. Let me cite an example. A rentals' operation in Pollensa (there are others of course) mentions holiday accommodation on Facebook but on its website does not; websites are what the inspectors tend to look at. All properties are rented in accordance with the urban leasing law, it says. Even if they are for a couple of weeks. Total farce. Plus, it is well understood that the non-provision of services (as required by the urban leasing law, meaning also that IVA - VAT - isn't charged) is abused. The tenant is given contacts to provide services. And who might they be?

As for the total number of places - those available in the "bolsa" - there are some 42,000 of these, ones that have not been taken up or made available to hotels. It is these free places that have some opponents in a lather, as they believe they will merely increase the level of tourist "saturation". The argument isn't that strong, as obtaining places legitimately via the bolsa would replace at least some of the currently illegitimate. But the issue of places is going to be fundamental to how this legislation proceeds and is implemented. Where will these places be?

There is a sense of the cart before the horse, and that is because the island councils will have their say-so and will do so in line with their PIATs - the plans of intervention in touristic areas. The Council of Mallorca, as an example, doesn't have one. It will have, but not until the end of next year at the earliest, and the Council isn't the main driver of this; the Balearic Tourism Agency is.

But the Council, as with the other islands, is to assume greater powers for tourism organisation. It is working with the agency on the development of the PIAT, but this seems the wrong way round: it should surely be the Council taking the lead. Assuming they agree on it, what then happens? The town halls - obvious ones like Alcudia, Calvia, Son Servera, Pollensa - will be affected and must be involved. Alcudia told me in the summer that there hadn't been any discussions.

The point is that the legislation will come in, and an owner could register a property fully legally to only then find that it falls outside the provisions of the PIAT. Something else for the courts to get their teeth into. And will these owners have handed over cash in order to acquire places from the bolsa? The rate for hotels is 4,000 euros. Barceló suggested a while ago that this charge would be waived but that it (or a lesser amount) could be established at a later date by the Councils.

The minefield, one suspects, is in preparation.

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