Main points of the law on holiday rentals in the Balearic Islands

This post aims to be a summary of the main points of the holiday rental regulations in the Balearic Islands, reviewing what may be the main aspects when applying for a DRIAT (Declaración Responsable de Inicio de Actividad Turística) as regulated in Law 6/2017.

What is a holiday rental under the law?

The main novelty is the will of the Law to clarify what a "commercialisation of tourist stays in dwellings" is. While previously we said that it was subject to the interpretation of the "tourist supply channel", and established a presumption of tourist rental depending on the marketing channel (which was not defined), now the focus is on the rental itself.

Thus, following the regulation already contained in the LAU, the marketing is considered to be a holiday rental:

• Of the entire dwelling

• For short periods of time (less than one month)

• In conditions of immediate use

• And for profit.

Therefore, now the presumption of holiday rental does not place the emphasis on the marketing channel, but on the type of rental, practically eliminating the possibility of seasonal rental subject to the LAU, which was used as a cover for many flats.

Holiday rentals will be considered to exist, unless proven otherwise, whenever a property is rented for less than one month, in conditions of immediate use and a purpose other than tourism cannot be accredited.

What types of properties can be used for holiday rentals?

Under the previous legislation, only detached or semi-detached single-family dwellings (village houses), as well as those in which an analogy could be seen (semi-detached villas in horizontal division) could be used for holiday rentals, thus excluding flats.

In contrast to the previous regulation, which excluded flats, now any property is suitable for holiday rental, provided that the regulatory development allows it.

For this reason, it has sometimes been considered that, as they could not be used for holiday rentals, they could not be subject to tourism regulations and were never subject to penalties (in our opinion, wrongly understood, since the determining factor was not the typology, but the activity), but this express inclusion clears up any doubts there may have been. Now, therefore, flats in multi-family buildings may also be rented out, provided that they meet the requirements established in the Law, which, as we shall see below, have become more restrictive.

Where does the property have to be located?

Although any type of property can now be used for holiday rentals, it is necessary that they are located in "suitable areas" in accordance with the urban planning that is to be developed.

This concept of "suitable area" must be developed by the Plans of Intervention in Tourist Areas -PIAT- and Island Territorial Plans -PTI-, where the criteria for the delimitation of the "suitable areas" will be established and which, subsequently, will have to be transferred by the town councils to their respective urban plans by means of a non-structural modification of the planning.

The concept of "suitable area" is created, leaving it up to the Island Councils and town councils to determine where holiday rental activity can and cannot be carried out.

Furthermore, the Island Councils, within the scope of their competences, will be able to determine not only the suitable areas, but also the typologies, in such a way that it is possible that in one area a certain type of rental is allowed and in another it is not.

To do all this, the Law has set a period of one year from the entry into force of the Law (1 August 2017) and, during this period, no new licence applications will be allowed, which for all practical purposes implies a one-year moratorium "while we see what we do".

Therefore, and this is one of the biggest criticisms, it implies the approval of an indefinite law, since the criteria for determining suitable areas are not yet known and, in the meantime, any possible new start of activity is paralysed.

A maximum number of tourist places available on each island is established, so that once this has been reached, no new licences can be granted, even if the remaining requirements are met, if the places to be registered are not cancelled.

In the same way, these plans will also determine the number of tourist beds available on each island, establishing a ceiling of tourist beds for each island (in Mallorca 435,707 tourist beds (294,163 in hotels, 92,931 in holiday homes and 5,964 in the process), leaving a remaining 42,649). Thus, in order to start the activity, and as with certain hotel establishments, it will be necessary to "buy" the beds from an establishment that has been deregistered or to resort to the tourist vacancy exchange managed by the corresponding Regional Ministry.

What requirements does the property have to meet?

In addition to the above, a series of additional requirements have been incorporated in order to be able to use a property for holiday rentals, which must be accredited at the time of presentation of the Responsible Declaration of Commencement of Tourist Activity (DRIAT):

Town planning requirements

• To have the corresponding certificate of habitability in force.

• Not be located on protected rural land (unless otherwise provided for in the corresponding PIAT or PTI).

• Not to have any firm sanctions for serious or very serious urban planning infringements. Having been sanctioned, it may not be used for holiday rentals until the altered reality has been restored.

• Be at least 5 years old, as evidenced by the DON, first occupancy licence or municipal certificate.

Energy efficiency requirements

• As a general rule, meet certain energy efficiency requirements, which have to be developed by regulation. In the absence of regulations, the minimum ratings are as follows:

  • Rating F, for buildings prior to 31/12/2007.

  • Rating D, for buildings constructed after 01/01/2008.

• Control of water consumption and individual meters.

Requirements for properties in horizontal property

• The authorisation will in any case be temporary, necessarily expiring every 5 years (or the period determined by the competent PIAT/PTI). It may only be renewed if the property continues to meet the requirements established in the Law and regulations.

• Authorisation of the bylaws:

  • Holiday letting has to be expressly authorised in the articles of association.

    • If it is not authorised, but not prohibited, a simple majority agreement of quotas and heads is necessary to be able to practice it.

    • If it is expressly prohibited, a modification of the articles of association is necessary. The law expressly considers it to be prohibited if the bylaws state that the use other than as a dwelling is forbidden.

• Under no circumstances will tourist rental be allowed in dwellings that have been or continue to be subject to official protection or a price tax.

Can I rent my home if I live in it?

One of the novelties of the law is the creation of the modality of "rental of the main dwelling", thus adopting the recommendations made by the EU in 2016. In these cases, the commercialisation of tourist stays in the main dwelling is allowed, provided that the above requirements are met and with the exceptions that it can only be rented for a maximum of 60 days a year and that cohabitation with the owners is allowed, provided that it is indicated in the advertising.

This rental in the main dwelling may only be granted temporary licences, which will have to be renewed every 5 years, as long as all the requirements continue to be met.

The true collaborative economy is allowed: the possibility of renting the main home for a maximum of 60 days a year and even sharing the home with the tenants.

What about sanctions?

The sanctioning regime has changed little, except for the fact that the minimum sanction has been increased for those who carry out holiday rentals without the corresponding DRIAT or with a DRIAT presented without complying with the requirements, which, from €4,001 to €40,000, is now liable to a sanction of €20,001 to €40,000.

The minimum sanction for those trading without a licence has been increased and now faces a minimum sanction of €20,001.

On the other hand, having clarified the concept of tourism marketing channel with regard to platforms such as AirBnb, HomeAway or Rentalia, including Facebook, advertising by this type of company will be considered a very serious infringement, punishable by a fine of €40,001 to €400,000.