Recent changes in the tourism legislation of the Balearics, particularly in those provisions that affect holiday lettings, have created a much heated debate about what is legal and what isn’t, and has left many homeowners confused about the viability of renting their properties. Legal contributor Will Besga sheds some light on this issue.
By Will Besga, Mallorca Law
There is a Spanish general law (the Tenancy act) that regulates leasehold activities in this country. It has been said by some, rather erroneously, that leaseholds must have a certain minimum term, and that anything under one year, or six months, or eve a month, automatically classes your tenancy agreement as a touristic one, and therefore an illegal one.
This mistaken account shows the two points where the understanding in this issue has gone wrong. Let me take them in turn.
In regard to the term of a lease, you are perfectly legally entitled to rent out your house or flat for any period of time you like. It can even be 24 hours. More over, this leasehold can be done under the above-mentioned Tenancy Act. The key is that in this country, this Act covers ‘permanent housing needs’, that is, tenants seeking a lease of certain duration to call your property home, but it also regulates leases that might be agreed for purposes other than a permanent home for the tenant. There is nothing materially that distinguishes these two types, as they are subject to the same piece of legislation.
A leasehold, then, that is agreed for a week, for instance, clearly is not designed to satisfy a tenant’s need of permanent habitation, but it falls in the category of ‘purposes other than’ longer term habitation. Either way, the law protects your activities as a landlord and allows you to rent out your asset for any period of time without it being necessarily classed as a touristic rental.
Balearic regional law on tourist rental licences
After this general, Spain-wide law, there came a regional touristic-regulatory law. This very badly drafted piece of legislation does not, and cannot, affect the general tenancy act that we are by now so familiar with. What this law does, is to ban ‘touristic rentals’ UNLESS a license has been applied for and obtained. Last time I mentioned the conditions you have to fulfil to obtain a license: basically, only semi detached or detached houses, where certain services are provided, can be subject to a touristic license. This naturally means that you can always rent out touristically your house or semi, yet not your flat. The latter, you can only rent out non-touristically.
So we come now full circle: do you own a semi or a detached house? Then you can have the choice of renting out your property either as a touristic rental, by obtaining a license, COMPULSORY providing services and charging your clients VAT, OR you can rent out your property, without a license, therefore without providing ANY kind of service, and therefore without charging VAT. In this second case, the rental will be subject to the Tenancy Act. And in either case, the property can be leased for any period of time.
Do you, on the contrary, have a flat that you wish to rent out? No problem. In this case, you leasehold cannot be a touristic one, because you cannot get a license to rent an apartment TOURISTICALLY. You can, however, rent it out NON TOURISTICALLY, for any period of time, by NOT offering and NOT providing any kind of services. Again, your leasehold agreement will be one subject to the Tenancy Act, which, as we know, allows you to rent out your property for any term of time.
Thus, without a license, you must rent out your house or your flat (for which you can never get a touristic license) in a non-touristic way. So what does this imply, and how can you prove that it is a non-touristic rental?
Tourism inspectors will assume, because you are renting out your property for short terms, because it is in summer, and because Mallorca receives millions of tourists a year, that what you are doing is a touristic rental. Well, you may be renting it out to tourists, but this is just an unfortunate coincidence of words. To dissipate the assumption, you must pay attention to two things:
FIRST, to have a contract between you and your tenant that shows that you are subjecting your leasehold to the Tenancy Act, by including some criteria and leaving others out, and which describes what you are doing fulfilling the terms and conditions of the Tenancy Act.
SECOND, you must pay attention to how you advertise the property. A property advertised as a holiday home where some services are offered may tilt the touristic inspector into regarding your rental as a touristic one and, if you don’t have a license (if a house because you didn’t want to apply for it, and if a flat, because you simply cannot get it), then you will be severely fined. Adverts and contracts must be in harmony with one another and must steer clear of sounding as a touristic rental.
In sum: it is your property, and the law allows you to rent it out to whoever you please, whether a businessperson or a tourist, and for whatever period of time. You just have to use and apply the law appropriately, and you will have a trouble free season.
Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice.
Dan says:
My husband and I have just pulled out of buying a flat in Ibiza. The primary reason is that Madrid courts are looking to close the loophole making it impossible to rent a flat to tourists. I hope other buyers are also made aware of this before it is too late. The second reason, crazy seller STILL wanting the full asking price in this environment!
We are going to sit back and consider Greece.
God luck folks.
Will Besga says:
Hi Dan,
I understand your concerns. However, Madrid, with the new reform of the Tenancy Act (Ley de Arrendamientos Urbanos) , has not closed the possibility of renting out flats to tourists. What the new section is the Act does is to reaffirm that those TOURISTIC rentals from now on rely on the sectorial (ie, touristic) legislation of the given region. The tenancy act still allows you to rent out any type of property, flats included, if you do not engage in services, and provided that you have a contract that reflects the tenancy act and not the touristic legislation. Essentially: touristic rental? You need a license. Non touristic? (because you are not offering services), then no license but get a good contract that reflects what you are doing and careful with how you advertise your property.
Will Besga
Suzie says:
Please can you explain what services means? Are these the cleaning / linen / supply of welcome pack type services or are we talking water and electricity?
Thank you for a most informative article.
Jack says:
Hi Will – what is considered a ‘tourist service’ for an apartment rental then? Does this mean providing things like prepared breakfast, maid service, laundry, offering access to island tours, etc would make any rental a touristic one in the eyes of the government?
Is there a Balearics Government website here I can I find a list if these touristic services defined, to ensure that any apartment rentals and ad listings are within the Tenancy Act?
Thank you
Jack
Will says:
Hi Jack,
All those things you mention are indeed touristic services, although there are more things you have to be careful about.
At any rate, there is no list of things anywhere: you simply cannot offer any services. Beware: all the stages of the rental must be done correctly: if you do advertise, the adverts cannot have some keywords and make it sound like a touristic rental, how you go about operating the rentals is also important (what is the involvement of the house management company, if any?), and all paperwork must be suitable: ie, a contract that falls under the terms of the tenancy act and which is purposely drafter for short terms lets.
I hope this helps.
Will
Suzie says:
Hi Will
Can you point us at a typical example of a Spanish tenancy agreement?
Many thanks
Suzie
David Harper says:
Hi Will
If I buy a detached house in the Balearics and apply for a touristic licence do I automatcally get one or can it be refused?
Best regards
David
IAN ROLFE says:
I have a country detached house in Mallorca.
1. Can anyone tell me specifically what paperwork is required to apply for a tourist license.
2. Is the license in the name of the property or the owner. So, if I sell the house, does the license go with it, or does the new owner have to apply for this independently.
3. Is the cost for this a standard cost or dependent on the number of bedrooms, size of the house etc.
4. How does one go about obtaining this license?
Thanks to anyone who can help
Ian
David Blatt says:
My wife and I are considering renting out our villa in Ibiza next summer. In your article you refer to Mallorca. Do the same laws apply to Ibiza, and if not, what are the differences?
I look forward to hearing from you by return.
Regards
David Blatt
Mark Stücklin says:
David, it’s a Balearic-wide law, so the same applies in Ibiza, in theory at least. However, in practise, I have found that enforcement is much patchier in Ibiza. You have a villa so you can get a licence, so you have the option of both “touristic” and “ordinary” rentals.
Charles says:
Hi,
I hope you can help we with this.
I own a haus in Catalunia with my 3 brothers. I am planing to move there on my own.
It is a 4 bedroom haus and was planning to rent out 3 of the rooms with overall 6 beds.
So the question is, is this allowed by spanish law and would this fall under ordinary rentals when I would not offer and services?
Thanks for any help
Regards,
Charles
Stuart R says:
Hi,
I have just returned from Ibiza and our complex managing agent mentioned that their maybe a potential change to the law surrounding holiday rental of apartments in February meaning this will become legal. He wouldn’t give any other details so wondered if anyone had any insight on these potential changes.
Regards
Stuart
Will Besga says:
Hi Stuart,
There is nothing in the legislative pipeline in Ibiza or in the Balearics as of yet that will change the status of touristic short term lets in flats. There is a Bill that may, if approved, make the granting of licenses more widespread, but this is in relation to semis and townhouses. But this bill would only reflect current practices of the tourism board. Apartments continue in the same position as before.
Best regards
Will Besga
Mariana says:
Hello Will,
I would be really interested if the legislation changed for apartmentos turisticos in Mallorca. Our situation is very rare. We own apartment that has tourist licence (it is listed as apartmento truistico) in Mallorca; however this licence could be operated only by company under the original law, not private individual. The tourist licence belongs to the apartment, not the company. I don’t understand why we cannot use the licence/apartment for tourist renting, but only company can operate on our behalf. Has anything changed reading this? Who can operate the tourist licence, owner or company?
Many Thanks.
Mariana
Mark says:
Dear All
Is it possible for a terraced house to obtain a tourist rental licence? Is their any mention in this legislation regarding terraced houses?
Many thanks, Mark
Mark says:
Oops! Forgot to say ” in Ibiza”.
Norman peacock says:
Is it possible for owner of detached villa on its own plot within a gated community of other houses to qualify for a Tourist license to operate in contravention of rules of community and other members/owners with tourists using community facilities such as pool and services.
Jeanette says:
Hi Will,
Could you please let me know that if you are on a small ( 3 villas) private estate and 1 of the villas rents out to tourists is there any way we ( the 2 other villas) can stop this villa being rented out? We are NOT a community but 3 private villas on a large plot of land all though we do all share the garden and pool!
The villa being rented out is semi detatched and rents out to 6 people but only has 2 bedrooms and 1 bathroom!
The guests have to use a sofa bed!
I know the owner has applyed for a tourist licence for 3 people but says that when 6 people rent it he does it as though its a private let??
We ( other owners) have complained on a number of times but the owner does not care about other 2 villa owners!
I live here full time and do not rent out.
The other villa owner uses his villa as a holiday home and also does not rent out!
We live in Menorca.
Many thanks and await your reply.
Jeanette.
Lena says:
Hi Will,
Can you advertise your property with no licence through agencies & rental websites if you specify you do not provide any services?
Thank you and looking forward to hearing from you.