A brief summary of the new Housing Decree-Law of the Balearic Islands

The new Balearic Islands Decree-Law 6/2023 (“DL 6/23”) aims to solve the severe housing crisis the region is going through now. To this end, its main goal is to promote the construction of limited-price housing in the Balearic Islands by introducing a new type of housing typology, called limited-price housing (VPL), which is characterized by a maximum purchase and rental price, a maximum useful area of 90 m2, and its use as a habitual and permanent residence. I

The DL 6/23 establishes two types of VPL:

• VPL type 1: housing created from interventions in existing buildings that do not involve an increase in buildability.

• VPL type 2: housing created from new construction, which involves an increase in buildability.

To facilitate the creation of VPL, the DL 6/23 introduces a series of measures that allow it to go beyond the limitations established by urban planning in reference to uses, residential densities, buildability, and maximum heights allowed (all of this whilst grating Local Authorities to retain their current limits if they wish to).

These measures include:

• The conversion of commercial spaces into housing, both on the ground and on upper floors.

• The increase of residential density in multi-family residential areas.

• The division of single-family homes of certain dimensions.

• The possibility of building housing in unfinished buildings with expired licenses.

• The increase of the maximum heights allowed in areas with significant differences in heights between existing buildings.

• The adaptation of the buildability of public facilities and private equipment to that which is characteristic of the same area to also allow a change of use to residential and allocate them to VPL.

The DL 6/23 also establishes a special regime for the construction of public housing for rent or social housing, extending the maximum concession period to 75 years.

In addition, the DL 6/23 creates a new typology in the field of housing called housing with complementary common spaces, which responds to a historical demand for a new coexistence model in which private spaces are combined with others for community use.

Finally, the DL 6/23 incorporates two very important amendments:

1. First, it amends the Decree 145/1997, which regulates the measurement, hygiene and installation conditions for the design and habitability of housing as well as the issuance of habitability licenses (‘cédula de habitabilidad’), to facilitate the conversion of premises into housing and to decouple the habitability regulations then from any zoning issues.

2. Second, it modifies the Law 8/2012, of Tourism in the Balearic Islands to allow the closure of any residential properties that could be destined illegally to tourism rental.

It is important to note that all the previous measures are to be applied only on plots zoned as “urban”. Most of the soil of the Balearic Islands, which is zoned as “rustic”, remains thus unaffected by this legislation.

At this very early stage, it is hard to predict the impact of the new measures. Whilst the amendments regarding the habitability certificates and the illegal use of residential properties for holiday rentals seem to be powerful enough to develop tangible effects; it seems those effects will not necessarily go in the direction aimed by the regional legislator.

Given the current land cost across the islands and the scarcity thereof, the incentive to develop VPLs seems weak. Additionally, the number of commercial spaces that could reunite the adequate conditions to be converted, effectively, into residential spaces seems questionable.

All in all, any measure aiming to tackle the current housing crisis in the Balearic Islands is always welcome. It is now for the developers and land and property owners to have their say.