A new law about rental licenses was released in August 2018, so a lot of the information in this blog post is now outdated. We therefore recommend you to read our most recent blog post on this subject – or that you head to our FAQ about rental licenses.
If you already rent out your property to tourists or are thinking of doing so, it’s vital you understand what rental licenses mean to you.
Our own Charlie Hill, Carlos Ripoll of Abogados Ripoll, the law firm we recommend all our clients use, and one of our other expert Mallorquin legal advisors helped me get to grips with the subject of touristic rental licenses.
A touristic rental license covers rentals advertised on websites like our rental listings, Airbnb or by tour operators and travel agencies and periods of up to two months.
Properties must pass a government inspection and meet all the requirements. The government are the only people who can approve or deny a license.
At the moment, apartments are not included in the types of property allowed to apply for a touristic rental license. According to the law, only detached houses not belonging to a community or ‘horizontal property’ (think condominiums) are included. It’s currently illegal to rent out an apartment to tourists and you could be fined between €20,000 – €40,000 if you do so. Owners and agencies will both be fined.
Touristic rental licenses oblige you to offer more than just accommodation, including housekeeping services like providing bed linen, towels and cleaning.
Licenses cover rentals of any duration up to two months. If a rental is for longer than two months, you don’t need a touristic rental license unless the property is offered by a touristic website and/or you include the services of cleaning, bed linen and towels. Rentals of over two months are regulated by the Law of Urban Rental.
It’s currently illegal to rent out an apartment to tourists and you could be fined between €20,000 – €40,000 if you do so.
Once you have a touristic rental license, you pay tax on any revenue to the Spanish tax authority. Tourist tax is paid to the Balearic tax authority. Properties with a touristic rental license receive a plaque that you are expected to display.
You could be fined up to up to €400,000 if you don’t adhere to the terms of license.
Now we know what a touristic rental license actually is, let’s take a look at the situation right now. I asked one of Charles Marlow’s legal advisors how long people could expect to wait for a touristic rental license.
‘The government has approved the zoning plan for each municipality on the island, but several detailed amendments were proposed,’ he told me. ‘We expect the final zoning plan by mid-June. This will establish the zones or areas where it will be possible to obtain a license. The rest of the current regulation will remain the same.’
Is it possible to say what licenses will cost? ‘Not at the moment. The government wants people offering touristic rentals to pay “according to their category”. We’ll have to wait until zoning is finally approved to know what this figure will be.‘
Can our readers do anything to guarantee they will receive a license? ‘Right now, we don’t know what areas are going to be included in the zoning as suitable for licenses. What people can do is update their occupancy (cédula de habitabilidad) and energy efficiency certificates so they’re ready for when zoning opens. Once that’s done, if your house is legally built, the rest of the paperwork is easy to obtain.’
The granting of licenses is suspended until August while the town halls and local governments determine all the areas in which touristic rentals will be allowed. During this time, it will also be decided whether licenses will be granted to attached houses and apartments. The local government of Palma has already announced that it won’t authorise more licenses for apartments and attached houses.
But, in May 2019, there will be local elections and it might be the case that changes are made. Government restrictions may also decrease.
I’m sure most of us will agree that it’s about time tourism in Mallorca was regulated more effectively. As Carlos Ripoll explained to me, ‘licensing touristic rentals guarantees tourists a certain standard of quality and protects owners who abide by the law. In that sense, it’s definitely a good thing.’
Introducing touristic rental licenses will presumably also help the government manage the number of tourists who come to the island.
But, as Carlos added, ‘There also needs to be some flexibility. Too much regulation could possibly have a negative effect.’
The granting of licenses is suspended until August while the town halls and local governments determine all the areas in which touristic rentals will be allowed. During this time, it will also be decided whether licenses will be granted to attached houses and apartments.
For Charlie Hill, partner in Charles Marlow and our resident property expert, ‘The law makes sense as a way to make sure people feel comfortable and safe when they’re renting a property. It enables property owners who have a license to receive a rental income they can count on. But there’s also the danger that families who’ve previously made a living from renting out property may no longer be able to do so, which would be a disaster for them.’
Charlie continued: ‘We shouldn’t forget that Airbnb has been fantastic for the island and it’s one of the reasons why Mallorca has seen such impressive growth in year-round tourism. Before Airbnb, the kind of city breaks that people now take in Palma would have been really expensive. Personally, I think it’s a bad thing that Airbnb has lost so much of its stock.’
How does introducing touristic rental licenses affect Charles Marlow’s clients, I wondered. ‘We don’t really see our clients on the West Coast of Mallorca investing in property for a rental income. This is a much more purchase-driven market. Having said that, investing in a €5 million property on the West Coast that you can rent out in July and August for, let’s say, €15,000 a week is obviously highly attractive. This is one of the reasons why we have a flourishing rentals business.’
And how can Charles Marlow help clients who need a touristic rental license? ‘Although it’s important to remember that only the government can tell you whether you’re entitled to a license of not, we can offer informed advice. We pride ourselves on our network of experts on all Mallorca property-related subjects – people like Carlos and the legal advisor who answered your questions. So, we’re always happy to put people in touch with an expert.’
If you have a property on the West Coast and you’d like to know more about Charles Marlow’s rental service, please read here, call +34 971 636 427 or email firstname.lastname@example.org.
This article does not constitute legal advice and is intended as a basic guide and for informational purposes only. It is not a substitute for taking professional legal advice suited to your particular circumstances. We recommend always consulting a qualified solicitor for professional guidance before taking action.