The Tourism Intervention Plan that has been recently approved by the Consell de Mallorca, with the objective of being a planning instrument that regulates the main economic activity of Mallorca, brings news regarding ratios to distribute the holiday rental places.

The main premises are the following:

  • New licenses are limited to 000 during the next few years
  • The supply limit of 430.000 beds fixed by the Tourism legislation remains the same
  • The Consell de Mallorca will distribute the new accommodations with intensity criteria

The large touristic areas of Balearic Islands that overcome 120 accommodation places per hectare (10,000 square meters), will not be allowed to take in new ones – hotels or holiday rental places. The average of tourists per hectare in urban land for new touristic places is fixed at 25. In touristic areas it ranges between 30 and 120 tourists per hectare.

The Tourism Intervention Plan sets a maximum capacity of touristic accommodation in Mallorca of 430.000 places, that are divided in 315.000 for hotels and 115.000 holiday rentals. In the areas considered as second home, licenses will be allowed if 12 places per hectare are not exceeded. All this respecting the average of 25 tourists per hectare of urban land in Mallorca.

In the case of touristic areas considered of medium occupation, the limit is fixed at 45 places per hectare, and for low occupation areas, the number goes down to 30 places per each 10,000 meters. Cala Millor, Cala Bona, Son Moro, s´Illot and Calas de Mallorca are added to the list of saturated touristic areas. In these areas, new  holiday rental licenses will only be authorised during two months every year, one in low season and the other July or August. Furthermore, the saturated areas shall be  governed by Comprehensive Improvement Plans, with the aim of being reconverted.

Another issue that has been discussed lately is the well known agro-tourism, a way for farmers and ranchers to welcome up to six tourists in their homes and complement their activity. This is one of the most controversial issues of the Land Law that is currently on public display.

If you are an owner and need more information on holiday rentals in the Balearic Islands do not hesitate to contact us. At Ripoll & Mateu Solicitors Mallorca we advise, defend and represent our clients at all levels. Our greatest asset is an infrastructure of professional leaders in each field of action, especially Real Estate and Tax, as well as our international multilingual and multidisciplinary team.

Our 30 years of experience in legal practice in Mallorca, as well as our constant process of renovation, internationalisation and specialisation has led Ripoll & Mateu to become a clear example of service quality and hard work.

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The average price of luxury properties in this region was around 6,700 euros per square meter in the first semester of the year, what implies an increase of  3% compared to same period last year, according to the last real estate reports published.

The tendency has continued upwards, since the 6,500 euros of the first semester of 2017 and the 6,075 euros of the first semester of 2016.

Most of these properties have very specific characteristics. The luxury real estate sector focus on properties with a price range from 500,000 to three million euros and with an area of between 150 square meters and 500 square meters.

The average selling time of a luxury property during the first semester of the year has been 5 months at a national level, 10% less than the average in 2017, and only 2 months in the most touristic areas, the same selling time as in the second semester of 2017. By nationality, the French have been the fastest buyers of luxury properties, with an average of 2 months, followed by the British and German (3 months), Belgian (4 months), Scandinavian and Russian (5 months), Spanish and Italian (6 months)  and Chinese (8 months).

Regarding the Balearic Islands, the increase in prices has exceeded a year-on-year increase of 5% bordering in some cases levels of 10,000 euros per square meter. The good climate of the Mediterranean is the perfect claim for those seeking a second residence, buying or renting. Tourism demand is usually quite high, which encourages investors that seek the profitability of sun and beach tourism.

Foreign investors play a fundamental role in the Balearic real estate market. In the first quarter of this year, one out of every three properties sold on the islands was bought by foreigners and, together with the Canary Islands, the Balearic Islands are the preferred destination for foreigners to invest in housing in Spain, according to data from the Registrars Association.

The exposure of the Balearic real estate market to foreign demand remains high and growing. Although it is considered that in this situation there are still no clear symptoms of a bubble, it is not strange to think that the current price rises seem unsustainable and should begin to moderate during 2019.

To this solid demand contribute a favorable economic cycle – the expansion cycle will continue – the lower level of unemployment and the positive evolution of employment, as well as better access to financing. Not forgetting the boost of investment in housing in a scenario of interest rates close to 0% in savings and even the negative profitability currently provided by fixed rentals in the short and medium term – the gross return for house rentals stands at 4.1% according to data from the Bank of Spain.

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On June 26th 2018 the BOIB (Balearic government’s official report) published the first Housing Law in the Balearic Islands, effective from June 27th 2018, and that, according to the Balearic Government, will make it easier for citizens to have access to housing.

The most important aspects of this law are the following:

– The law recognises the citizen’s right to housing and establishes mechanisms to facilitate it, like the increase of the public housing offer for social rentals, and establishing the government’s obligation to facilitate the access of citizens in vulnerable situations (accredited by appropriate entities) to this type of properties or other types if these are not available.

– It will be compulsory for major owners to grant access of their properties that have been empty/ closed for over two years to social renting if there are people in need of housing.

– Major property owners have three months to report all of their properties that have been empty for two years. Not doing this implies a serious penalty: from 3.000 to 30.000 euros.

– A universal and free housing support service goes into operation for all citizens. Its function will be to guide and assist citizens that are in a situation where there is a risk of losing their housing.

– The right of all citizens to basic supplies is guaranteed. Supply cuts can’t be made if the municipal social services recognise the difficult situation of the family.

– In order to encourage public renting, new properties built by public administration will be for renting and can also promote housing with formulas other than ownership (for example: housing cooperatives). The Law details the conditions of use of a social housing dwelling, which must be a regular place of residence. Social housing dwellings can’t be rented, except in some justified cases.

– The law also foresees the promotion of new formulas to make affordable housing available to the public. Thus, it conceives the cession of land (as a temporary cession of surface) to citizens’ cooperatives for the construction of housing. The people who, through the cooperative, have access to these dwellings won’t own them, but they will be able to use them for life.

If you need more information about the new Housing Law, do not hesitate to contact us. Our multilingual and multidisciplinary team will be pleased to assist you.

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The “Consell de Mallorca” authority has recently given definite approval to holiday rentals  zoning. This is going to put an end to the existing suspension of new licenses to carry out the activity. In fact, a new zoning proposal has already been prepared taking in consideration all reports and allegations.

At the moment, the Balearic Environmental Commission has one month to prepare their report, so from the second half of July new licenses could be requested.

However, it is important to take into account that the new authorisations are granted by the Tourism Agency, and that not only must the dwelling be within a qualified area according to the zoning approved by the Consell, it will also have to meet the requirements of article 50 of the Government’s Tourism Law.

These are:

  • Having a valid certificate of habitability.
  • In the case of multifamily residential buildings, the community of owners’ rules must not prohibit the activity.
  • Presenting the correspondent energy certification.
  • The dwelling must have individual water, electricity and / or gas meters.
  • It cannot be a social housing dwelling.
  • For properties situated in saturated areas it must be proved that it is the regular place of residence of the owner.

News:

  1. For new touristic properties, a spot should be bought from the Tourism Agency Pool in the same way that hotels do. The Tourism Agency must determine the price per spot.
  2. The “Consell Insular” should also write down a Tourism Intervention Plan (Plan de Intervención Ámbitos Turísticos – PIAT) that will determine the number of spots that can be granted in each zone.
  3. The new licenses will be valid for 5 years.

In regards to Palma, the town council took longer to approve the initial zoning, and as a consequence, the final zoning will have some delay as well. On August 1st, when the Government’s suspension finishes, licenses can be requested for single family dwellings, in accordance with the stipulations of the previous law.

If you need more information about the Tourism Law and holiday rental, do not hesitate to contact us.
At Ripoll & Mateu Solicitors Mallorca we advise, defend and represent our clients at all levels. Our greatest asset is an infrastructure of professional leaders in each field of action, especially Real Estate and Tax, as well as our international vocation and multilingual capacity.

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During last year, the city of Palma has experienced an exponential growth of the luxury tourism becoming Europe’s top city in “cosmopolitan tourism”.

This situation was backed up by the opening of new boutique hotels as well as the excellent gastronomic and complementary offers. This can be also extended to the real estate market in the island, especially the luxury sector, that is going through a very good moment these last few years, with a relevant increase both in number of sales and square meter selling price. These circumstances are especially visible in areas such as the centre of Palma and the southwest of Majorca.

When it comes to nationalities, Germans are still leading the investors list on the luxury real estate market, followed by the English and in third place, the Scandinavians, that show a special preference for Palma. Regarding this information, we have to highlight that 93% of the new residents of Palma in 2017 are foreigners. And again Germans stand out in the numbers, choosing to live in Palma and enjoy its quality of life.

All this that has been stated before contributed to a volume of real estate sales in the island last year similar to the numbers registered in 2007, just before the crisis started, when total transactions reached 4,800 millions of euros and last year ended with 4,500 millions.

In fact, real estate experts started to point out the shortness of luxury housing in the island. Especially in the municipalities of Andratx and Calvià, and some neighbourhoods in Palma, such as Santa Catalina or Terreno, where the Scandinavians have invested immensely during the last few years. The demand for this type of product and its shortness in the island is causing that there is now interest in some other areas that some years ago were not exactly attractive for investors but that are now being revalued, like Platja de Palma or Cala Major.

The German client is still the one claiming most of these properties in Mallorca, and it is responsible for 57% of purchases, followed by the British with 16% not allowing the Brexit to hold them back. The Spanish, with the country’s economical recovery, are next with 7%, followed by the 5% of the Swiss and 4% of the Swedes.
If you intend to purchase a property in Majorca from a foreign country like England or Germany, you should consider that both the jurisdiction and the processes to be carried out and the roles of professionals involved in it are different.

Throughout the whole process, the presence of a lawyer is essential to be responsible for providing obligatory advice to clients on legal, tax and legal liabilities acquired during the action of sale.
Ripoll&Mateu can fully assist you in the buying process.

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The last real estate market reports show that second-hand housing in the Balearic Islands has had the biggest price increase in the whole of Spain.

In April 2018 the average price was 2,567 euros per square meter. This number had a monthly increase of 5.57% standing out from other regions in the country. Interannually, it increased 12.97% which is also the most relevant increase nationally.

Palma was the regional capital that went up the most from one year to the next, with a 12.28% increase, and an average price of 2,501 per square meter.

At a national level, in April 2018 Spain registered an average price of 1,572 euros per square meter, casting a monthly increase of 1.09%. From last year to this year the increase was 3.01%

The upward trend in the price of housingconfirms the good health of the real estate sector, that also keeps casting positive numbers relating to purchases andmortgages.

We should also take into consideration that the Balearic Islands is the autonomous regionwhere the free housing transactions carried out by foreignershave greater weight. In fact, they represented 40.5% of the total transactions during the last semester of 2017. Moreover, the number of transactions has increased around 5.3% in the Balearic Islands during the same period of time. The average price per square meter for foreigners is 2,888 euros, what implies an increase of 12.1% and that the archipelago is the most expensive autonomous region.

The main reason behind this situation is the investment intentions. Investors prefer lower risk and good profitability. More and more people buy apartments with the intention of renting them out and that results in the increase of both selling and rental prices. To this we have to add the macroeconomic stability that we have since 2013, with the continuous increase of the GDP, which has stimulatedforeign investment. The investors focused on the areas where it is easier to rent: the coast and large cities.

In this sense, the Balearic Islands is the third most expensive autonomous regionin terms of average rental price, with an average monthly rental of 1,522 euros, behind Catalonia (1,603 euros) and only 27 euros below Madrid (1,549 euros). This important increase is known as the “rental boom” and is mostly due to the tensions between supply and demand, among some other factors.

If you intend to purchase a property in Majorca from a foreign country like England or Germany, you should consider that both the jurisdiction and the processes to be carried out and the roles of professionals involved in it are different. Throughout the whole process, the presence of a lawyer is essential to be responsible for providing obligatory advice to clients on legal, tax and legal liabilities acquired during the action of sale.

In Ripoll & Mateu Solicitors Mallorca, we offer our clients a comprehensive service in everything required for the sale of a property.

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Although in the last two years symptoms have already been detected and very positive data has been recorded in the Spanish real estate sector, it is in this year 2018 when the housing sales figures are expected to reach their best data since the end of the economic crisis.

The figures expected for this year according to numerous studies would reach 550,000 transactions so that all expectations would be exceeded. In fact, in the first quarter of the year, the average price of housing completed in Spain grew 3.8% year-on-year driven by Madrid and Palma de Mallorca, which recorded the highest increases with 17% and 14.7%, respectively. Prices are rising at a good pace and recovering much of the value lost during the economic crisis when the price of housing sank. And it is estimated that the price of housing rises this year around 5 percent, which added to the increases of previous years shows a clear recovery of the real estate sector.

At the state level, prices rise moderately, construction slowly recovers, gaining little by little in numbers of workers and employed in the sector and sales are growing at a good pace, but this does not mean that there is a bubble in the market. What the data do indicate is that there is a shortage of empty flats in the center of large cities and in important tourist spots such as Mallorca or Alicante.

Another phenomenon to take into account is that according to Aptur, 60% of the owners who can’t regularize their situation choose to sell and practically all operations are carried out to foreign citizens.

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Another of the thermometers that marks the recovery of the sector, perhaps the most important, is the price of real estate. All the forecasts pointed out that the increases throughout this year would be around 2.5% to 6%, although in the big cities such as Madrid and Barcelona, and also in the Balearic Islands, the increases would be even more pronounced. Prices are growing at a similar rate (5%) to what they did in 2006, but they are still 40% below the highs of those years, except in large cities and islands, where that distance is reduced to 20 % or 30%.

Experts believe that the main levers that drive the demand for housing are the economy and employment, so they consider that the good prospects in the short and medium term in these two areas invite us to think of a residential market embarked on a path of recovery of prices and transactions. As employment stabilizes and wages increase, it is expected that it will also improve the access capacity to face the purchase of a house.

Similarly, the flow of investment, derived from the unusual context of low rates (attracted by assets adjusted in price by the crisis and with good prospects for profitability by rent), has led to intense growth in certain areas of these two large cities and in municipalities of great tourist attraction, such as Palma de Mallorca.

In Ripoll & Mateu Solicitors Mallorca , we offer our clients a comprehensive service in everything required for the sale of a property.

 

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The next month of July will be the first in which the flats and apartments of the city can’t be rented to tourists as holiday rentals

. This is a pioneering measure in Spain that has been activated after several studies and analyzes commissioned by the Balearic government have revealed that the offer of non-regulated tourist flats increased 50% between 2015 and 2017 until reaching 20,000 places sold in the city. These studies reflect that 48% of tourist rental flats are offered in periods of between seven and eight months, which vetoes possibilities for the entrance of long-term residential rental in the market.

According to data presented by the government team, the tourist rental offer has increased by 50 percent between 2012 and 2017 in Palma. Thus, the parallelism between the lack of rental housing throughout the year and the rise in prices due to the increase in demand for holiday homes has been highlighted.

Currently in the Balearic capital there is an offer in the market of some 11,000 tourist rental places, of which only 645 are licensed, all for single-family homes. Before the approval of the autonomic regulations in August of last year the places offered amounted to 20,000, but the high fines contemplated in the law caused the withdrawal of ads on the large platforms.

 

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In Palma, only tourist rental will be allowed in single-family homes, isolated houses or villas, except for those located in protected rustic land, in the vicinity of the airport and in areas of non-residential use such as industrial estates. After the aforementioned zoning process, the government has decided to consider the city as a single zone and maintain the restriction of this practice in flats and apartments throughout the territory. The Balearic Islands Government imposed a fine of 300,000 euros on this platform in February for hosting advertising for up to twenty homes in Mallorca that do not have the compulsory license for the holiday rental.

The new standard has been collected internationally and has not been well received by companies in the sector who argue that the impact of this new situation is going to harm not only those who obtained income directly from holiday rental homes but also for all the complementary offer.

In this way, the Spanish Federation of Housing and Tourist Apartments goes further, and plans to take legal action against this prohibition in the Balearic capital. In the same line, the Association of Small and Medium-sized Trade of Mallorca (Pimeco), has agreed that the vacation rental «dynamised the local economy and trade by the purchases of tourists who will now disappear at least from the center and also because the entrance of tourist rentals stimulated the consumption «.

 

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If you are determined to invest in Mallorca or think that the island is the perfect place to settle, do not doubt that our services will be necessary for you.

We are a multidisciplinary law firm specializing mainly in Real Estate Law, Urban Planning and Administrative Law, as well as in other civil areas, such as general contracting, family law and civil procedure.
These are our strengths:

  • We advise, defend and represent our clients at all levels. Our greatest asset is an infrastructure of professional leaders in each field of action, especially Real Estate and Tax, as well as our international vocation and multilingual capacity.
  • We have 30 years of experience of legal practice in Mallorca but we’re in constant process of renovation, internationalisation and specialisation.
  • We’re specialist in property law in Mallorca, we offer our clients a comprehensive service in everything required for the sale of a property. acquiring a property in Mallorca is a very different process from other foreign countries and requires information and professional advice that facilitates the purchase while minimizing the risks. If you intend to purchase a property in Majorca from a foreign country like England or Germany, you should consider that both the jurisdiction and the processes to be carried out and the roles of professionals involved in it are different. Throughout the whole process, the presence of a lawyer is essential to be responsible for providing obligatory advice to clients on legal, tax and legal liabilities acquired during the action of sale.
  • For foreign investment, we offer legal assistance regarding funds from other countries for investment in real estate and business. Our team has extensive international experience and cooperation agreements with international firms.

This allows us to offer detailed advice in the field of internationalisation by providing services such as: International Trade Consulting, recruitment, formation of companies, subsidiaries and branches.

Advice on tax issues: tax incentives for the internationalisation of companies, income earned abroad, international operations, etc

  • We’ve deep knowledge of the Tourism Law of the Balearic Islands as well as the recent zoning process, do not hesitate to contact us. Our team of professionals will solve all your doubts and advise you in the most effective way.

You can contact us through our form in our website, we will attend with no obligation. Our team is committed to providing the best work processes to provide you with the best results, in a constant quest for professional excellence establishing external collaboration when circumstances require.

 

 

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The declarations may be submitted this year from April 4 through the Internet or telephone, but for face-to-face attention it will be necessary to wait until May 10.

In addition, the fiscal data consultation service and the reference number is advanced to March 15 with the aim of streamlining the campaign itself. The deadline for delivery will be July 2 and a few days before, on June 27, in the case of direct debits.

From April 4 you can submit statements that do not need to add information from the new app, while those that require modifications will have to be processed through its web program. Once modified, all can be confirmed through the mobile application of the Tax Agency.

One of the questions that can be asked is how the income obtained from vacation rentals is taxed. In this sense, we must take into account different variables.

In the same fiscal year it is necessary to differentiate two periods:

• The time that the dwelling has been rented, from which the full income obtained will be declared and the expenses specified for the rental can be deducted

• The period in which the property has been free, which will correspond to the income imposed by the Treasury for having a second property.

The net return for which the tax will have to be paid will be the result of subtracting the expenses from the income obtained. In other words, the cost of advertising for the property, the interest on the mortgage, repairs, some payments such as the IBI, the community, the rubbish rate or household insurance, etc. may be discounted. You can only deduct the proportion of the expense at the time that the rented property was held, except for the promotion of the property that may be deducted in full. To know what is to be taxed for the time that the house has been free, it is necessary to calculate 1.1% of the cadastral value (2% if the last cadastral review was made before 1994), divide that value between twelve months (or between 365 days) and multiply the result by the months or days that the rented property has not been. This will result in the attributable performance.

In the case of not declaring, the Treasury sends the taxpayer a settlement proposal, which includes the undeclared income to be included within a certain period. If it is understood that the action taken has been originated with the intention of fraud, a sanction may be imposed that would go from 50% and 150% of the undeclared.

At Ripoll & Mateu Solicitors Mallorca we advise, defend and represent our clients at all levels. Our greatest asset is an infrastructure of professional leaders in each field of action, especially Real Estate and Tax, as well as our international vocation and multilingual capacity.

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