Licensing laws and buying in PP

[Gp1602]

Hi everyone

We have visited PP now for several years and have started looking into buying a place there as we like it so much. The estate agent we have spoken with seems very unsure about licensing laws if we rent out an apartment when we are not there. They advised that if it is not for commercial purposes it is legal?
Does anyone know if this is the case?
We have rented private villas ourselves and there is a lot of choice, are these people breaking the law?

Thanks

 

[SENOR CIGAR]

Like most things in Spain and especially Mallorca it is a very grey area.Every lawyer,estate agent and gestor will give you a different opinion as to the legality of renting out .Its a bit like having Sky TV there which everyone has but not legal acording to Sky!!

The Senor

 

[codex]

Really interesting question, I'm afraid I've been lurking for a while, this is a great forum I've just not had anything to contribute to date.

We're looking at properties we may be able to rent out, but after hearing reports about huge fines in the canaries for non licensed properties I'm very wary of buying any property that doesn't have a license. Having read various posts on this and other forums I know that even if they aren't fining people at the moment, they may well start.

I suppose the question then becomes how difficult it would be to get a license for a property if it's not already licensed. Also, how could you check whether a property is licensed and who could you ask as to whether a license is likely to be granted for a property? My initial thought is that you could make it a condition of the sale that the property becomes licensed, but how practical is this?

 

[SENOR CIGAR]

The main problem is that although you seem to need a license you cant get one because they wont issue any!!
The Senor

 

[Gp1602]

Thanks for the advice. I have been advised as you say that you can not get a license any more so it seems really bizarre!
I do not understand how the government can take taxes from you every year on the rentals you make even though the rentals are illegal.
I will see a solicitor I think and see what they say. Will post the advice!

 

[eleanor]

Be very careful too as some communities have it written in that renting in certain blocks is not allowed. We have friends who bought in Los Flores and were told not to worry about this as it was just something they put into the contract but every one ignores it and all would be fine! It wasn't! After buying he found that the majority in the block didn't rent out and that many objected and enforced the contract. This caused him great difficulties as he bought to rent obviously needing rental money to help with the purchase, was not allowed to rent as it was in the contract and is now having terrible trouble selling on as renting is not allowed!
Please therefore do keep this story in mind and check out what is in the community contract too before buying. If it says renting not allowed then you must assume that it will be upheld. The written word is stronger than the spoken!
Good independent legal representation as always is recommended.

 

[Gp1602]

Thanks Eleanor. We are looking at Bellresguard and it appears that a lot of people rent them out but we are anxious about having someone knock on the door and land us with a hefty fine?!
I will seek advice from a solicitor in the port

 

[Smiddy]

Licensing Laws

Be very careful too as some communities have it written in that renting in certain blocks is not allowed. We have friends who bought in Los Flores and were told not to worry about this as it was just something they put into the contract but every one ignores it and all would be fine! It wasn't! After buying he found that the majority in the block didn't rent out and that many objected and enforced the contract. This caused him great difficulties as he bought to rent obviously needing rental money to help with the purchase, was not allowed to rent as it was in the contract and is now having terrible trouble selling on as renting is not allowed!
Please therefore do keep this story in mind and check out what is in the community contract too before buying. If it says renting not allowed then you must assume that it will be upheld. The written word is stronger than the spoken!
Good independent legal representation as always is recommended.

Good advice Eleanor! The section I've highlighted also applies to the blocks of our apartments, a rule i'm personaly in full agreement, for various reasons, but appreciate others will not agree. But my advice would be to anyone who's thinking of buying, wherever, if you can't afford to buy without factoring in possible rental income, then you can't afford to buy.

 

[Gommar Goffer]

Hi Gp - strictly speaking, by the letter of the law all rentals of apartments are illegal, however you can get licenses for stand alone villas so if you can afford a villa then buy one.

on the other hand if apartments were not let out there would be a glut of them on the market and the mallorcan economy would collapse because 40% of the holiday makers would go elsewhere

 

[Gp1602]

Hi Gommar Goffer

Sadly I can not afford a villa! But my thoughts to rent are not to pay for the apartment but to generate an income from when we are not there.
I am just really shocked that it is all illegal! Like you say it would cause a problem if visitors could not stay in private apartments, we always have done as require the extra space with 4 children!
Thanks for advice.

 

[codex]

Some great advice on here. We were actually thinking of selling up in the UK and moving to Mallorca. We'd buy a much smaller place for ourselves and a very small villa to rent out. Obviously this would technically be a commercial proposition, we'd be letting it as a business to form part of our income in order to afford to live. Obviously if we couldn't get a license and it were illegal to rent it out, then there would be absolutely no point in buying a property!

This is obviously an issue for Mallorca, they want private landlords who pay their taxes, but for some reason seem unwilling to give out licenses. I suppose this way they can have it both ways, if they want to turn a blind eye and collect your tax they can, if they decide it's not in their interests for you to rent out (eg objection from neighbours) then you've got no license and they can not only stop you from renting but also fine you!

I'd be really interested to know whether they are issuing licenses for certain types of property, and if so what the criteria are.

 

[andrew711]

Codex, If a villa has been registered as tourist accommodation, then the licence should transfer if it were sold. Registrations for villas as holiday accommodation were closed in 2007, unless someone can tell me otherwise, meaning that unregistered villas cannot be put onto the rental market. The new tourism law allows for exceptions, e.g. an owner who has more than one property on a single plot of land can apply to extend registration to properties not previously registered. Otherwise, a villa (or house) that was not registered in 2007 cannot now be registered. (This, incidentally, is why Pollensa's mayor was keen to get special dispensation for a mechanism for houses/villas in Pollensa under the new law to be registered. He didn't get the dispensation.)

I'd make the point that property of whatever type can be rented out for residential purposes as opposed to holiday lets. And coming to apartments, the new law (if not previous laws) is unequivocal. If an apartment block is not categorised as tourist accommodation, then individual apartments cannot be rented out as holiday lets for commercial purposes. Communities constitutions etc are frankly irrelevant, as the law establishes that "habitations" under the horizontal property regime (e.g. apartment block communities) can "under no circumstances" be categorised as tourist stays or commercialised as such.

 

[codex]

Andrew, another great answer. It would be so difficult getting this information if we were talking to estate agents, or just turning up on the island and trying to dig for it.

I think that makes it fairly clear that if you're looking to buy a property to rent out as holiday lets on anything like a commercial scale then you need to buy one that already has a license.

Interestingly, and I don't know how true it is, I've heard that in the Canaries they authorities are trawling the big advertising sites like Owners Direct and if your property is listed then you are considered to be letting it commercially, thereby you couldn't argue it was just friends and family you were letting to.

 

[Gp1602]

Thanks Andrew. I have no idea if it's classed as tourist accommodation but I presume a solicitor dealing with it can find that out.
Thanks all for advice

 

[codex]

Oh, another point, does anybody know how to check whether a property has an official license? Not that I'm suggesting that I wouldn't trust the word of an estate agent

 

[Sparky]

I would think your solicitor would be able to find this out .

 

[andrew711]

It might be useful to know that the new tourism law has been released in English. It is long as it covers all sorts of things, but it does cover what is and isn't holiday accommodation. Happy reading.

Go to this link and there is a further link to the ENG (English) PDF:

El Govern

 

[Gp1602]

Andrew that's great. Thanks so much

 

[codex]

That really is a great find! I've scan read through it, or at least some of the more salient points with regard to buying rental property. Not sure I fully understand the implications as yet, will try and get my head around it by reading more thoroughly. Have some initial thoughts, but don't want to mis-inform anyone so won't post yet.

 

[pollensacare]

thanks everyone for taking the time to post, I will print the document for bed time reading and hopefully this will answer some of the confusion and questions I also have