The Balearic Islands Tourism Act, an absolutely flawed law

27 December, 2017

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Rosa Guirado

Act 6/2017, of 31st July, amending Act 8/2012, of 19th July, on tourism in the Balearic Islands, was enacted, regarding commercialisation of tourist accommodation in private homes, and barely four days later, Decree Act 3/2017, of 4th August, on amendment of the same Act 8/2012.

This Act reaches the summit of flawed legislation in terms of regional law concerning lease of homes for tourist use. This is not only due to the tremendous illegalities it contains, that may even cause the law to be unconstitutional, as we shall subsequently explain (matters that had been duly pointed out by the consultation bodies and companies that commercialise homes for the purposes of tourism), but also due to the regrettable passivity of the Public Authorities with regard to these.

This situation led to the Federation of Associations of Homes for Tourist Use and Tourist Apartments (FEVITUR) extending at the end of 2017 the documentation and, thus, the report filed in 2016 before the Secretariat General of the European Commission, to inform it of publication of different regional legislative bodies that are contrary to European Union Law.

There are three reasons why Act 6/2017 may be considered unconstitutional:

(i) due to it breaching Article 149.1.8 of the Spanish Constitution, as Act 6/2017 affects matters of Civil Law that, although it is true that these are within the scope of devolved legislation to development, as inherent to “wherever they may exist” civil law, the reiterated jurisprudence of the Constitutional Court has consecrated that such development must affect institutions that already fall under the discipline of the civil law that is the remit of the Autonomous Community. Thus, as there is no connection whatsoever between the in rem rights that exist in the civil law inherent to the Balearic Islands and regarding condominium property, it is not possible to validate development that, pursuant to a regulation with the rank of law, is performed by said regulations, because that would exceed the regulatory competences that both the Spanish Constitution and the Statute of Autonomy assign to the Balearic legislator.

(ii) due to it breaching Article 33 of the Spanish Constitution, that regards the right to private property and consecrates that the content thereof shall be delimited by social function pursuant to the laws, and that nobody may be deprived of their assets and rights except for due reasons of public utility and social interest, by means of the relevant compensation and pursuant to the terms set forth in the laws. Therefore, according to the reiterated constitutional jurisprudence, “all regulations that disproportionately reduce the powers comprising that social content of Article 33 of the Spanish Constitution must be classified as unconstitutional”, as is the case of Balearic Islands Act 6/2017.

(iii) And it breaches Act 17/2009 on free access to service activities and exercise thereof, that transposed Directive 2006/123/EC on services. The reasons in this case are extremely numerous, as there the Balearic law embodies a lot of nonsense, to which we shall refer simply by listing some items, although not exhaustively. In any event, one may point out that the actual recital of motives of Act 6/2017 foresees that there are imperative reasons of general interest (IRGI) to foresee limits to access to the (holiday lease) market, among which they cite consumer protection, that of the environment, the urban setting and social policy objectives, matters that would be just a mere quote if they did not attain the category of real juridical grounds to justify the general interest.

Now among the obstacles to free provision of services, there is notably the fact that the Balearic law:

dispenses with the principles of efficient regulation (justification of the general interest, need and proportionality),
foresees a maximum stay (of 60 days), without any justification whatsoever,
sets a maximum number of tourist places, without sufficient grounds,
restricts holiday leases to a territorial criteria that is arbitrary and disproportionate,
prohibits holiday leases of homes that are less than five years old, without justifying the need for that disproportionate criteria,
places a temporary limit on authorisations for another five years,
establishes a moratorium for detached or semi-detached homes and a territorial delimitation for the rest, all lacking in sufficient justification,
requires a registration number (that the European Commission and the National Markets and Competition Commission (CNMC) and the Courts, such as the Supreme Court of Justice of the Canary Islands, have declared illegal due to its disproportionate nature) along with an affidavit regarding commencement of the activity,
foresees a penalisation regime that is equally disproportionate, with fines of up to € 400,000 for commercialisation firms, and up to € 40,000 for people who rent homes,
establishes intervention schemes (PIAT and PTI) that set the maximum and minimum parameters for area, volume, etc., the tourism areas fit for commercialisation
and the maximum limit to tourist places, and limit the number of homes a single owner may commercialise to three attending – it claims – to imperative reasons of general interest.

On its part, Decree Act 3/2017, under the pretence of amending some omissions in Act 6/2017, has the main purpose of suspending commercialisation of legal stays in residential homes located in multiple family buildings, so it makes companies that commercialise residential properties in condominiums for the difficulties to get on the property ladder, thus blocking the stock of new residential units.

To sum up, the Government of the Balearic Islands has gone beyond its remit to such an extent that, by enacting this Law,

it has not only breached the Spanish Constitution
and Directive 2006/123/EC on services
and Act 17/2009, that transposed it,
but also Act 15/2007, on defence of competition,
and the principles of efficient regulation,
Act 20/2013, that guarantees the unity of the Market,
and ultimately, the Treaty on the Functioning of the European Union (TFEU) due to limiting the freedom of equal establishment throughout the whole European territory, one of the fundamental pillars on which the European Single Market is based.