Owners Beware: Holiday Rentals' Legislation

So, on Tuesday the Balearic parliament finally got round to debating the government's long-awaited holiday rentals' legislation. The debate took four hours, after which the amendments to the whole of the bill that had come from the Partido Popular and El Pi were booted out, as everyone, including the PP and El Pi, knew they would be. The legislation should be finally approved by the end of the month or early July.

The opposition parties set about Biel Barceló's bill. The PP said that the only ones who'll be happy will be the hoteliers. Álvaro Gijón observed that "for the first time in history, the hoteliers' federation and GOB (the environmentalist group) are in agreement". The legislation will, he argued, create more problems than it seeks to solve. It will be "ineffective, arbitrary and legally inconsistent".

Josep Meliá of El Pi said that the government wasn't regulating, it was "crushing" holiday rentals. The bill fails to respect municipal powers or the right of owners to offer rentals. Olga Ballester for Ciudadanos described the bill as an "absurdity" which imposes very difficult requirements for registration.

The right (and the centre-right) were thus at loggerheads with the left who were introducing the legislation. They themselves, the government parties and Podemos, haven't been in complete agreement, but the bill will go forward and, unless Podemos decide to pull the plug, it will be approved. There is more to the legislation than just the operation of holiday rentals. These other aspects will come into force immediately, the actual operation of holiday rentals' regulation will be delayed until early next year. That's because the island councils and the town halls have to decide on the zoning, which is perhaps the most important aspect of the law.

Biel Barceló assured parliament that the government does not anticipate an appeal against the legislation as there has been in the Canary Islands. Legal advice it has received suggests there will be no appeal, though he did add "in practice, we will see". The appeal in the Canaries was specifically to do with zoning, but the principle adopted in those islands wasn't the same as in the Balearics. The Canarian government had essentially wanted to zone rentals some distance away from resorts. The courts said they couldn't, so the legislation is being rethought.

In practice, the same may happen in the Balearics. It will all depend on how the zoning will ultimately be determined, but the legislation doesn't specify that zones have to be away from resorts.

There was some clarity from Barceló regarding existing licences, i.e. for standalone houses and villas. There has been a fear that zoning might mean properties being de-registered. Barceló said that licences obtained before the change in law will remain in force, though these will be subject to any new specifications in terms of standards. But if you own a house or villa that is currently legally registered for holiday rental, you should be able to breathe easily.

The legislation is of course really about apartments. Any rental property marketed via websites, which can be the likes of Airbnb or those of local estate agents, must have a registration number. At present, none do. Fines are up to 40,000 euros and they can be applied to owners and to those operating websites. The legislation will make it possible to register apartments and to market them openly and legally, but the process of registration cannot begin until the zoning has been concluded. Once it has, there will be all manner of requirements. There will, for instance, have to be individual water meters and the permission of communities of residents. Applications for registration will then have to wait for inspectors to turn up, and that can take months.

Then there is the tenancy act, the Ley de Arrendamientos Urbanos and its loophole. The legislation will tighten this to the point of trying to squeeze the life out of rentals. Although state law sets no minimum on the period of a let, the Balearic legislation will treat any rental of less than a month as being for tourist purposes. What this will mean is that an apartment which is rented out for less than four weeks must have a registration number. The property cannot be advertised on Airbnb or other websites without one. As the government views these rentals to be tourist, the burden of proof will be on the owner to show that it is not for tourist purposes. On top of this, there will be the deposits to be paid.

In a nutshell, if you are currently renting an apartment to tourists, then you need to be very wary. The tenancy act defence will be very much harder to adopt than at present, though one shouldn't rule out there being a legal challenge to this aspect of the legislation (and possibly to others). It may be that in the future, once the zoning process is over, that the apartment could meet requirements for legal registration. That, though, is for the future, as also will be what might happen if there is a change of government in 2019. The PP has said that it will repeal the legislation. Given, however, that it was previously opposed to liberalising the market for apartments, any repeal and different legislation wouldn't necessarily mean a more advantageous scenario.