Holiday lettings and tourist rental licences in the Balearics: FAQ for owners

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Tourist rental laws in the Balearics have long been some of the most restrictive in Spain, and landlords need to understand the differences in rental options and licences. The law is Balearic-wide, though enforcement varies from island to island. This FAQ tries to shed some light on this confusing subject.

Written by Will Besga, Lawyer

I have a detached house, can I obtain a license?

Whilst each case has to be looked at (for instance, is it really a detached house, or a townhouse?), the short answer is yes, you should be able to get one.

I have a semi-detached house, can I obtain a license?

If it is a real semi detached house, then yes. Be careful: is it a real semi, or is it classed as a semi but in reality it is a continuous row of semis?

Is it difficult to obtain a license? What are the criteria?

No, it is not difficult if you have a house or a semi. It must have a minimum ratio of three people per bathroom, and a maximum of 6 bedrooms.

To get the licence you just have to present the relevant paperwork (mainly floor plans) to the local tourist authorities, and get the licence immediately. Your lawyer can do this for you.

Does the licence go to the house or the owner, and how long does it last?

The licence lasts 6 years, after which it has to be renewed, and goes with the house, not the owner.

I have a terraced house, can I obtain a license?

No.

I have a flat, or a unit in a complex, can I obtain a license?

Again, no.

Do I need a license in order to rent out my house or semi?

No, you do not need one. With a license, you will be doing a touristic rental. Without a license, you will be doing a short-term rental under the terms of the Spanish Tenancy Act.

Does that mean that in an ordinary short-term rental you cannot rent it out to tourists?

No, not at all. A ‘touristic rental’ is a legal figure that arose in the Balearics’ Tourism Law. It means that it is a rental which provides services akin to those of a hotel.

So if I have a house or a semi, I can choose which type of rental I engage in?

Yes. But both are different and have different requirements.

And if I have a flat, I cannot choose?

No, you cannot. If you want to rent your house out during short periods of time, you have to do a short-term rental under the terms of the Spanish Tenancy Act, because flats cannot obtain a license.

What are the main differences between both types, the short-term non touristic and the short-term touristic one?

– Short-term touristic: essentially, you must offer a minimum of services to your tenants. You must also charge them VAT, which means that every three months you have to pay that VAT back to the state and also file income tax quarterly declarations.

– In a short-term let under the terms of the Tenancy Act, you cannot offer services. You do not charge VAT. You must pay attention where and how you advertise it, and you must have a carefully drawn contract.

Why do I need a contract to rent out my flat (or my house) without a license?

Because if you do not have a license, either because you will not be given one (if you are the owner of a flat or a terraced house), or because being able to do so, you do not want to obtain one (if you are the owner of a detached house or a semi detached house), you must prove that what you are doing is a short-term rental made under the Tenancy Act. This law has certain elements that you would not think of including in a short-term contract, but that tourism inspectors regard as important proof to differentiate between types of rentals. Seek advice as a contract is crucial.

If I have a detached house or a semi, should I do a Touristic let (with a license), or one under the terms of the Tenancy Act?

This depends entirely on you. Each has its differences. Generally speaking, it might be more straightforward for you to get a license, although this also requires some tax work.

In terms of advertising my flat on the internet, is it safe?

It depends where and how. Not through tour operators, for instance. If you do advertise, make sure that you advertise without any services being offered, and be careful what you include in the rent. The bottom line: it can be done but and it is safe if done appropriately, so as with the contract, seek advice.

Are inspectors checking how are properties being let?

Yes. Whilst they have limited resources, they nevertheless check, within their possibilities, whether houses or flats are rented out with the appropriate licenses or, if without licenses, in the appropriate manner.

What does the future hold?

In the short term, there will be no formal change of the law. The authorities have now recognised that the current system of laws always allowed the renting out of any kind of property to any kind of tenant for any period of time. What the laws forbid is to rent out properties in a touristic way (mainly, by offering services or advertising them in certain media, or both) without a license.

Whilst it is impossible to say with certainty what will happen in the long term, there might be a law that synthesises the current system and explicitly spells out what can now already be done. At any rate, given the social pressure and current practices, it is unthinkable that it will be forbidden to rent flats and terraces out for short spells of time.

+ More information on tourist rentals in the Balearics

Spanish qualified lawyer Will Besga studied at The University of Queensland (Australia), The University of Manchester (UK) and The College of Law (UK), and is now based in Palma de Mallorca. You can reach him by email: Will.besga@icaib.org.

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