José Miquel Artieda, president of the API association of estate agents in the Balearics, is warning of the serious problems that can be caused by so-called pirate tenants, individuals who have long-term rental contracts but sublet the properties to tourists.
He explains that a property can only be sublet with the express written authorisation of the owner and that any sublease amount must be the same as that agreed with the owner; "anything else is illegal". He points out that these properties lack the necessary licence to be marketed as tourist accommodation.
Artieda highlights several cases in Mallorca. Property owners have been taken by surprise when accused by the Council of Mallorca of engaging in illegal letting to tourists. He stresses the importance of having a valid rental agreement and the security deposit properly registered with the Balearic housing agency, Ibavi. Otherwise, it is virtually impossible to prove that the owner is not acting illegally, but is in fact the victim of fraud. Both residential and tourist rentals must be declared for tax; the former have a 50% tax deduction.
The Idealista property website points out that pirate tenants can reap significant financial gain by multiplying the rental price five or six times. "It's a lucrative business for them, but devastating for landlords, who face penalty proceedings, fines that can exceed €60,000, and interminable legal battles."
Juan R. Méndez, a lawyer specialising in this area, says: "There is a fundamental principle in administrative sanctioning law, the principle of responsibility, by which the person who actually commits the infraction should be sanctioned. The problem arises when the actual offender is unknown. The administration will attribute the activity to the property owner if it cannot find another responsible party, but during the appeals process, the owner can demonstrate that the property is rented to a third party."
Another lawyer, Alejandro Fuentes-Lojo Rius, adds. "The owner is not the one carrying out the illegal activity. Unless there were collusion, which doesn't exist because the contract prohibits it, they would not be jointly liable for the penalty." But this doesn't prevent the case from initially being opened against the owner.