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Friday March 28, 2014

Why so many Mallorcans are going back to black

In Porreres, a small town in Es Pla, the central agricultural area of the island, I got talking with a Majorcan chum about the state of the economy and the old chestnut of winter tourism – or rather the complete lack of it, here in Majorca.

In recent weeks the local expat newspaper has been lamenting the fact that there’s been a 50 per cent fall in winter tourism since 2008. Recent figures reveal that just 190,000 tourists visited the island, as opposed to 383,000 during the same period back in the good old days barely six years ago. The main problem cited is the lack of winter flights, particularly from the UK, scant support from large tour operators and the fact that so many hotels close their doors during the winter season.

But of course there’s an elephant in the room that is neatly side-stepped by Majorcan politicians when it comes to the nitty gritty issue of why fewer holidaymakers than ever are visiting during the winter season. It has a lot to do with new laws affecting the letting of holiday properties on the island. In the past most homes could be classified for holiday rentals but now only detached houses are permitted by law to apply for a licence. This means that all apartments and terraced properties are no longer allowed to be advertised as holiday accommodation. There are stiff financial penalties for those who dare to break the law and government inspectors are being sent out in force to catch the dodgers. The only option left to owners of such dwellings is to offer long term lets which are rarely lucrative and usually demand a minimum six month rental period which doesn’t suit those wanting to rent for just a few months per year.

Of course as my companion in Porreres pointed out, desperate locals who depend on renting out apartments and small houses are now continuing to do so but secretly and only to reliable sources. He told me that he’d had to turn away many holidaymakers this winter who’d previously been aware of his adverts but now he viewed it as being too risky, instead only taking on loyal former clients who were complicit. So instead of paying taxes on such rentals as before, owners were now being forced to revert to ‘black money’ deals, receiving bundles of cash and keeping everything hidden from the authorities. As an exercise in shooting itself in the foot the Balearic regional government should be congratulated. It has successfully driven the rentals market underground and will as a consequence lose precious taxation and damage the local economy. ‘What else are we to do?’ my chum asked. ‘My family used to pay tax on the apartment we rented out during the winter and summer but now it’s illegal to do so, it’s safer just to take cash for bookings.’

Bizarrely – despite huge protestation from locals and expats alike – the Balearic regional government bowed to the wishes of the all-powerful local hotel lobby and created the new rental laws with the express motive of driving more business its way. But swathes of hotels island-wide close in the winter so tourists have few places to stay and many balk at the idea of paying the high prices demanded. The simple reality is that a vast majority of visitors would rather rent privately.

If the Balearic regional government believes, in its naivety, that penalising the rentals market will bring joy to the hotel industry it is sadly mistaken. Holidaymakers will neither be taken for fools nor coerced into staying in hotel accommodation against their wishes. Instead they will simply take their custom elsewhere – to other countries and resorts where it is welcomed. ‘Rather than lose crucial business during hard times,’ my Majorcan friend added, ‘Renting on the black illegally is now our only choice.’ Proof, if the short-sighted regional government needed it, that the issue of renting is rarely ever black or white.

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