Mallorca Insights

Mallorca's illegally built properties before legalization

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Balearic government prepares drastic change. Neptunus International Real Estate helps with the assessment

In the past, around 25,000 illegal properties were built in rural areas on Mallorca - many of which are now protected. Now the conservative Balearic government is planning to significantly simplify subsequent legalization. Dr. Dominic Porta from Porta & Associates works closely with the real estate agency Neptunus International Real Estate and analyzes the effects of the new measures. Experts estimate that they affect more than 25,000 buildings on the island that have been built illegally in recent years.

"Illegal" in this case means that properties or at least parts of buildings have been constructed without planning permission and approval. In other words, the same laws apply as in Germany, with the difference that illegal construction is not uncommon in Mallorca. In particular, the high costs for building applications and the fact that illegal construction is not punished per se have led many builders to avoid the bureaucratic process.

What happened to the illegally erected Mallorca properties?

Illegal houses on the Balearic island are neither eligible for a residence permit nor can they be renovated. This makes it just as problematic to sell them without having to accept enormous financial losses. In fact, they remain empty until they are legalized. However, this is not always possible or, if it is possible, involves numerous complex requirements under the applicable building regulations and even fines for building violations.

After around eight years, illegally constructed buildings can, under certain conditions, become eligible for grandfathering. In concrete terms, this means that they can neither be demolished nor fined, as the limitation periods for legal action have expired. However, it is important to emphasize that unauthorized buildings are still illegal and applications for conversion or extension are usually rejected. The only difference is that they are now protected from demolition by the injunction.

The result of this precarious situation is an ever-increasing burden for owners and municipalities. Many of the illegal buildings, which are protected, cannot be demolished, but also cannot be renovated, Sold or inhabited due to the unclear legal situation. This is exactly what the current government wants to change. It is working flat out on a new decree law that will facilitate subsequent legalization under certain conditions.

The government's plans for retrospective legalization of illegal buildings

Such a decree on legalization was developed back in 2014 on the basis of a draft by the then Balearic Minister of the Environment, Gabriel Company (also from the People's Party, PP). It ensured that numerous buildings were subsequently legalized. The result was that several million euros were added to the public coffers.

However, the law was overturned shortly afterwards by the subsequent left-wing government led by the socialists. Since last summer, however, the new conservative Balearic government has been planning to take up Gabriel Company's approach again. Deputy Prime Minister Antoni Costa recently emphasized: "This interventionist planned economic policy cannot continue."

A well-known case of a German entrepreneur who successfully filed a lawsuit was also decisive in getting the decree rolling quickly. He was unable to realize his construction project due to a short-term change from building land to "suelo rústico" (rural land) and was awarded 96 million euros.

What should legalization look like?

Gabriel Company's previous laws stipulated, among other things, that owners of illegally constructed properties could pay a fine and thus legalize them. The guidelines now planned are also to be based on this, albeit with changes. The basis for a new legalization should be the limitation period of the buildings. In other words, legalization could only be "bought" for those properties that are protected.

With regard to administrative and urban planning measures, it would be conceivable to outsource the granting of planning permission. Further details of the decree are not yet known, but experts suspect that additional requirements such as improving energy efficiency could also be part of the draft.

What are the benefits of legalization?

"Legalization would make it possible to obtain a new residence entitlement certificate. This would mean that nothing would stand in the way of an application for necessary renovation work and the properties could be sold without losing value Sold ," explain the real estate professionals at NEPTUNUS INTERNATIONAL. "This would allow numerous previously unused buildings to be transformed into sophisticated properties, which would not only benefit the island and many communities, but also the real estate market," adds the luxury real estate specialist. After all, demand from buyers remains high, but the supply of new buildings is unfortunately becoming increasingly scarce.

The government's next steps in this matter remain to be seen. A decision is expected in the coming days.

About Dr. Dominic Porta

Dr. Dominic Porta is a recognized expert in international commercial law with specialist expertise in Spanish real estate law. With his law firm in Mallorca, he advises clients of Neptunus International Real Estate, among others, on all legal matters relating to real estate.

www.anwaltmallorca.eu

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