The Balearic government's emergency housing decree is a 'stellar' initiative that was promised within the first one hundred days of office. Finally approved on Monday and now published in the Official Bulletin, interested parties have up to two years to make licence applications and three years to carry out projects.
The decree envisages a range of potential actions, primarily conversions. These can be of existing properties in order to make smaller apartments, of obsolete hotel accommodation, of commercial premises. It establishes the concept of limited-price housing (HPL), meaning that homes created in accordance with this decree will be sold or made available for rent at prices stated in the decree. Depending on municipality, energy efficiency and the type of construction, prices for sale will be from 102,000 euros to 241,000; for rent the range is 385 euros to 1,070.
Reaction from the real-estate sector is generally positive. But there are caveats. Sandra Verger of the builders association highlights the HPL: "It is timeless. If an owner wants to sell after a few years, the price cap will remain and so they will lose money, because they will have made investment and incurred costs."
Luis Martín of the Proinba developers association believes that there is a problem with the limited rent prices. "It will be a deterrent for investors given the high interest rates."
Another aspect of the decree is the possibility of adding storeys to existing buildings. Martín points out: "It will be necessary for communities of owners to give unanimous approval. Technically it is possible. You have to look at the load calculation, the solidity of the building. Then there is what the town halls want. They will have a lot to say. Construction would have to be in tune with the height of the rest of the buildings and the width of the street."
Verger doubts whether there will be many projects to increase height. These would create inconvenience for people already living in buildings. And it would represent cost. She sees greater scope in the idea of dividing properties into smaller units. Even here though, there may have to be the agreement of all owners. Where this could be of particular value, she feels, is in inland villages and towns. A use could be given to large houses that are empty and subject to degradation.
The president of the real estate agents association, José Miquel Artieda, believes that demand for commercial premises conversion will be "noticeable", but he points to the cost of making them habitable. "A place worth around 100,000 euros will require a minimum investment of 30,000."
With the government introducing measures by which illegal holiday lets can be closed, Artieda feels that this will encourage a move to the residential market due to "inspections and sanctions". Promotion of coliving and cohousing - another ingredient in the decree - could, in his opinion, be particularly attractive for hotel conversion.
While there are reasons to be positive, Sandra Verger is one who doesn't foresee "an avalanche of projects". "This decree is not going to solve the housing problem."