Real estate: Mallorca wants to radically combat the housing shortage

The dream of owning a holiday home on Mallorca could soon burst for many Germans if the government of the Balearic Islands gets through with its radical plans to combat the dire housing shortage. The left-wing parties that rule the Mediterranean islands want to restrict property purchases by non-residents. This should be done in coordination with the Spanish central government and the European Union, according to an initiative that was approved by a large majority in the regional parliament in Palma on Tuesday.

The goal is a law “that provides for the necessary measures to restrict the purchase of homes by non-resident individuals or legal entities in order to prevent the current real estate speculation,” says the text. What the desired restriction should look like is not yet clear. But some left-wing politicians are simply calling for a ban on non-residents. The rights of the islanders will be protected, said the junior coalition partner Podemos Illes Baleares on Twitter.

More than half of the real estate buyers are foreigners

More than half of all property buyers on the Balearic Islands were foreigners in 2021 – the Germans are at the forefront, with 59 percent of all transactions carried out by foreigners. Originally, Podemos Illes Baleares wanted to put them in their place with a ban and enact a corresponding law without the involvement of Madrid and the EU. But that was too daring for Prime Minister Francina Armengol’s Socialists. The first thing to do is get the EU blessing.

The opposition criticizes the plans, saying they are counterproductive and incompatible with EU law. Many lawyers and brokers share this view. “This is unconstitutional and also contrary to European law, no question about it,” lawyer Manuel Stiff was recently quoted as saying in “Mallorca Magazin”. However, he still trusts the regional government “to pull it off”.

Meanwhile, the German President of the Balearic Association of National and International Brokers (ABINI) does not believe that a ban on non-residents can be enforced. Since the project would also affect mainland Spaniards, it would require a change in the Spanish constitution, said Hans Lenz in an interview with “Mallorca Magazin”. In addition, neither the public sector nor the local economy could afford it. According to him, 25 percent of the gross domestic product of the Balearic Islands and a good 100,000 jobs depend on the real estate industry.

Real estate prices have risen sharply

But nobody denies that there are problems that are getting worse and worse. There is a housing shortage not only in Mallorca and Ibiza, but also in many other regions of Spain and the EU. But real estate prices have risen particularly sharply on the very popular holiday islands in recent years. In the course of this development, rental prices also climbed to new highs. There are hardly any apartments in Mallorca for less than 1000 euros a month. Even a shared room in Mallorca usually costs at least 400 euros. According to figures from the Spanish statistics agency INE, the average monthly salary on the island is just over 1,900 euros.

This is not without consequences: no less an institution than the Supreme Court in Madrid stated: The lack of living space and the high costs “result in the fact that there will soon be no more doctors, no teachers, no more judicial officers” on the islands, it said it earlier this month when the court upheld a ban on holiday rentals of apartments in apartment buildings in Palma.

The housing shortage drives further frightening blossoms: squatting increases. Social housing in shipping containers is being discussed. Out of necessity, settlements of caravans are already emerging, which are getting bigger by the day. In the parking lot of the Son Hugo swimming pool in Palma, around 30 involuntary campers have gathered in recent months, almost all of whom have a regular job, but still have no money for a real apartment, as the “Mallorca Zeitung” reported.

Critics blame government

Critics say the government is primarily to blame, not the foreign buyers. Luis Martín, chairman of the association of Mallorcan property developers, complained in “Mallorca Magazin” that Palma had already painted over 53,000 hectares of building land on the Balearic Islands, on which 20,000 residential units could be built. Since Armengol took office almost eight years ago, 14 changes in the building law have also led to “chaos”.

But the left-wing government has definitely done something in other areas. Recently, for example, it was decided to support citizens when buying a property by having the public sector act as a guarantor when taking out a mortgage. There are grants for young people and low-income earners, and homeowners who own more than 10 properties can be “forced-let” if they have been vacant for more than two years.

The fronts are hardened. But new solutions are needed. Otherwise, the social tensions in Germany’s favorite holiday island will increase for better or for worse. The critics of the regional government know that too. “Personally, I think it’s not good for our society if the rich and poor continue to drift apart,” said attorney Stiff. “When this takes on extreme proportions, the poor will at some point go to the barricades.”