New Government of the Balearic Islands Lifts Rent Restrictions and Ends Moratorium on New Tourist Apartments

El Cercle Mallorquí, the building of the Parliament of the Balearic Islands, was built in 1918.

The new government of the Balearic Islands has lifted rent restrictions and ended the moratorium on new tourist apartments, achieving its goals.

The newly formed government of the Balearic Islands, led by the PP party, has announced the cancellation of the Rental Law that set a cap on rent increases in areas with rising prices. Additionally, they will lift the tourist moratorium, which prohibits the creation of new hotel accommodations until 2026.

Yes! Mallorca Property, one of the leading real estate agencies on the island, views these actions with optimism as prices continue to change.

What's Happening in the Balearic Islands

The leader of the Partido Popular and President of the Balearic Islands, Marga Prohens, is the first woman in the PP to hold this post.

Over the past eight years, under the socialist government, the opportunities for island residents to acquire housing have significantly diminished. The previous administration implemented a series of unpopular laws to curb rising prices and limit tourist influx. Measures included a ban on hotel construction and the issuance of tourist licenses for apartment rentals, known as the tourist moratorium, which was set to last until 2026. However, this ban did not lead to price reductions but halted new construction projects and reduced job opportunities. Both business owners and residents who benefited from tourism were dissatisfied. Concurrently, a new Rental Law was introduced in Spain, allowing regions to set rent caps independently.

In July 2023, Marga Prohens, representing the Partido Popular (PP), assumed the role of President of the Balearic Islands.

Partido Popular (PP) is a Spanish political party located mainly on the centre-right of the political spectrum.

In her inaugural address, she declared the end of the tourist moratorium. She announced that her government would not enforce income restrictions on rental properties as stipulated by the existing Rental Law.

"We will not attack private property and will not allow measures and laws that lead to this and have proven unsuccessful where they were implemented. We will not dictate to people at what price they should rent their homes," stated Marga Prohens.

Balearic Islands and Mallorca - Leaders in Property Price Growth

The Balearic Islands are among the autonomous communities most affected by skyrocketing housing prices and gentrification (the displacement of permanent residents due to the conversion of properties into tourist apartments). As of July 2023, the average cost per square meter of housing in the Balearic Islands stood at €3,973/m2.

In some popular tourist areas, prices exceed this average by more than double. For example, the average price in the Son Vida district during this period was €7,358/m2, which continues to trend upwards.

Explore the current real estate market trends in Mallorca

Alongside the surge in property prices, rental costs are also rising in the Balearic Islands. The fastest rental growth is observed in Mallorca, with prices in the capital city of Palma increasing for the sixth consecutive month, reaching €14.5/m2 in July 2023. Meanwhile, in Calvià, the average rent has risen to €20.4/m2.

Property in Mallorca to Rent

What Will Change in the Balearic Islands

The newly formed government of the Balearic Islands is set to implement a series of measures to improve its residents' lives. Among these measures are tax reforms and reductions, which will benefit 80% of taxpayers in the archipelago. Additionally, the inheritance and gift tax will be abolished.

Discover What Taxes and Hidden Costs Are Involved When Selling a Property in Mallorca

The new government is counting on private and business initiatives to help lower prices. They intend to incentivize property owners to put their vacant homes up for sale and streamline bureaucracy. Furthermore, they have pledged to crack down on squatting by reforming the Balearic Islands' law, considering the occupation of properties by squatters as a severe offence. Their approach follows the principle of "protecting private property, prosecuting squatting."

Several new government measures also aim to improve the healthcare situation in Ibiza, which is significantly lagging behind Mallorca and is considered a "second-rate island" in terms of healthcare.

Balearic Battle: Ibiza vs Mallorca vs Menorca - Which Island Reigns Supreme?

The business sector has responded positively to these initiatives, with several development companies announcing plans to construct new hotels and residential complexes in Mallorca.

New Build Property in Mallorca