Monday, August 21, 2017

The Disappearing And Reappearing Rentals

The threat of hefty fines for advertising illegal rentals on websites such as Airbnb has clearly had an effect. Over the first four days following the rentals' legislation coming into force, one website - HomeAway - lost over 550 ads, 16% of the apartments in Mallorca that had been there. And the adverts are continuing to disappear.

But the websites themselves don't appear to be being especially proactive, despite the much higher fines that they could be liable for. An exception is Be Mate. It didn't have many apartments, but they have now all gone and so indeed has Mallorca. Anyone using that website won't even find the island let alone any apartments.

It could be that websites - the big ones with big pockets - will take a calculated risk. Hovering in the background is what has happened in Catalonia. Last December a court found in favour of Airbnb which had appealed a 30,000 euros fine imposed by the Catalonian government. The case revolved around the legality or otherwise of the website. The court deemed that it wasn't illegal.

A further case is in Barcelona. The town hall has fined Airbnb and HomeAway 600,000 euros each, greater than the maximum envisaged in the Balearic legislation. The outcome of appeals against these may prove to be of interest to the Balearic government - one way or the other.

The court's decision with regard to the 30,000 euros fine made reference to the difficulty of distinguishing between an accommodation service and a technological process. In terms of the latter there is no regulatory framework. The court erred on the side of prudence.

One wonders whether the Balearic government's fines of websites - as and when they are issued, which they are bound to be - will be enforceable. One thing's for sure, they will be dragged through the courts and may end up never been resolved. Where individuals are concerned, though, they will find it more difficult to challenge fines. A test case, one fancies, will happen sooner or later. And with Madrid minded to take aspects of the legislation to the Constitutional Court, legal process could well stall. To say the situation is a bit of a mess is an understatement.

In the meantime, though, it is clear that individuals have taken fright. Some are also looking to sell up or not go ahead with purchases that had been planned.

Back in Barcelona, the town hall has announced that since the start of this year it has opened 6,197 proceedings against owners of illegal rentals. The total number of sanctions, i.e. fines, is expected to be 3,473. In Barcelona the fines can be as much as 60,000 euros. In the Balearics, prior to the new legislation coming into force, there had been 600 proceedings.

Meanwhile, and in spite of "experts" having considered otherwise, there is evidence of owners shifting their flats to long-term rental. As an example, on one website - Idealista - the number rose from eight to sixty-one in the space of ten days.

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