Threatening fines to curb residential tourism has therefore not led to a drop in long-term rental prices. The new law, which has been in force since August 2017, has not been able to achieve the measures taken by the government to bring apartments and single-family homes back into the regular housing market, say market observers, real estate agents and property owners' associations. The owners of the affected residential properties are waiting to see whether there will be a decision in their favor that will annul the fines and hope to continue to generate high returns from the next season by continuing to rent their property to tourists. It is also suspected that property owners hope to at least be able to keep the business going over the Easter holidays.

The sanctions provided for in the new tourism legislation against illegal holiday rentals are extremely high and range between 20,000 and 40,000 euros. These draconian fines can be imposed on apartment buildings that are listed on platforms such as Airbnb as tourist rentals - regardless of whether they are booked or not. But even that has not led to a change of mind among the owners of these buildings. Rather, many have decided not to lower their prices for the housing market in order to enable local customers to rent.

Many owners may also have invested in renovating their properties to make them more attractive to tourists. Or they bought residential properties straight away with a view to a lucrative return by marketing them on the tourist market and thus paying the corresponding mortgage. Unfortunately, this backfired somewhat for some and so the defiance is understandable.

No improvement in property prices for rental properties in sight for the time being?

The theory that many of them believe is that a court will eventually lift the ban on tourist rentals and declare it invalid, because the interference with the Ley de Arrendamientos Urbanos law is too serious and would make it impossible to implement the current sanctions.

Realistically, this situation means that the rental bubble in Mallorca will not collapse for the time being. In the best areas of Palma (centre / old town) and in many tourist areas, it is very difficult to find a residential property for less than 1,000 euros a month, or for 800 in the nearby catchment areas of Palma. Prices therefore remain out of reach for a large proportion of residents.

This fact also explains the long waiting list registered by the Balearic Housing Institute (Ibavi) so that citizens can rent one of the state-subsidized apartments, which are much cheaper than those on the free market. In this context, the government has also announced the funding of more buildings.

Let's see how this will develop in the coming year 2018. Whether there will be another influx of tourists like this year or whether the new law can have a positive effect on the housing situation for long-term rentals.