Rent Seeking in Palma

I like this:

The Spanish resort city of Palma, on the island of Majorca, is to ban flat owners from renting their apartments to travellers, becoming the first place in Spain to introduce such a measure.

The restrictions follow complaints from residents of rising rents due to short holiday lets through websites and apps.

Palma’s mayor says the ban, to be introduced in July, will be a model for cities suffering with mass tourism.

Suffering from mass tourism. Just as Rotterdam suffers from mass shipping and Las Vegas suffers from mass gambling.

Now having your hometown invaded by tens of thousands of knuckle-dragging grockles every summer can be annoying, but on aggregate the positives outweigh the negatives – especially on an island without much else other than tourism. But I don’t buy into the premise either:

The restrictions follow complaints from residents of rising rents due to short holiday lets through websites and apps.

Bollocks. Residents won’t be renting on a short-term basis, they’ll be on long-term leases at a much lower rent. Here’s the real reason:

Palma, like many other cities around the world, has seen an increase in visitor numbers driven, in part, by private rental accommodation offered through websites and apps.

Officials from the local left-wing governing coalition cited a study suggesting that the number of non-licensed apartments on offer to tourists increased by 50% between 2015 and 2017.

The left-wing government isn’t getting its cut.

Locally, there is resentment over tourism pushing up prices – rents in Palma have reportedly increased 40% since 2013 – but also about deteriorating conditions in neighbourhoods popular with travellers due to noise and bad behaviour.

This I can believe, but they could always stop advertising for more tourists, or increase local taxes to push prices up thus cutting numbers in favour of getting a better quality of clientele.

“Palma is a determined and courageous city,” Mayor Antoni Noguera said.

I’d be curious to see this chap’s property portfolio, wouldn’t you?

José Hila, Palma’s chief of urban planning, said: “There is a parallel between the evolution of vacation rentals and the rise in rental prices.

“All European cities are being transformed overnight by this type of offer. We need some order. There will be vacation rental in Palma, but only where there needs to be.”

Urban planner believes he knows which rental accommodation is needed where better than tens of thousands of people voting with their wallets.

Last year, Palma banned the advertisement of non-licensed flats, including hefty fines for owners and apps flouting the rules. Barcelona has taken similar action.

Did the people doing the banning have a personal financial interest in the licensing system?

But Pimeco, a local organisation representing small businesses, said the holiday rentals had “boosted consumption” and were an “important source of income” to many flat owners.

The holiday rentals association, Habtur, said not only owners would be affectedbut also restaurants and shops, warning that jobs could be cut.

This is basically the ruling classes protecting their rents, isn’t it? Naturally, the reporters at the BBC can’t see this and take the whole thing at face value.

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20 thoughts on “Rent Seeking in Palma

  1. I read the ‘travellers’ in that first paragraph totally the wrong way and thought ‘So what on earth’s controversial about that?’…

  2. Tim, ot but 5-2, and another cup a distinct possibility so perhaps now you understand, hehehe indeed.

    Magnificent performance, but why oh why did you concede 2 (almost 3) goals with 20 mins to go! That’s so Liverpool, since time immemorial. It’ll be a nervy game in Rome I think, but I don’t think they’ll stop you scoring. Mo Salah is the best player in the world right now, absolutely incredible. Much as though I don’t like LFC, they deserve this (far more than Man Utd for example) and it’s good to see an English team progress.

  3. Yes LFC do like to make things difficult and some of Klopps decisions difficult to understand given what happened at West Brom on Saturday. I’ll be at stoke game this week and I hope our rather thin team can put the league top 4 spot to rest and I can just enjoy watching Salah and co. football at its best as practised at the moment by Salah is a pleasure for any football fan regardless of team loyalty.

  4. I’ve listened to the same arguments made from the same sort of people around Queenstown in New Zealand. The arguments are usually that unlicensed holiday rentals pay less local government rates than the licensed ones and that the holiday rental industry is pushing up house prices so local workers can’t afford accommodation.

    The fact that without the tourist industry, there wouldn’t be any jobs for local workers (more often the workers are Tarquin and Jacinda doing bar work on their gap yah) and holiday makers generally don’t use local government ‘services’ to the same extent as residents seems to be ignored.

  5. Rents could be pushed up if the money to be made renting for short periods to tourists exceeds the rent obtained from long term rents to locals.

    However I suspect you are onto something. I always enjoy experiments in policy when I bear no cost. Will be interesting to see how it all works out.

    After all while it appears to be a ruling class screw, the electorate voted for these politicians do should bear the costs whether they realise it or not.

  6. Spot on Tim.

    I can definitely sympathise with the problems of excess tourist numbers eg Venice in July* but this is not what they are complaining about. The socialist mayor of Barcelona makes a similar complaint but also focuses on airbnb etc.

    It is just the socialists after their pound of flesh and indulging their desire to regulate the populace to death.

    *Venice has banned large cruise ships from the lagoon now but still wants the cruise passengers and their cash. If I lived there I’d rather take a 20% cut in my earnings and ban the cruise ships and their passengers altogether.

  7. Airbnb is causing massive demand destruction to the licensed hotel industry plus it is taking many long term rental properties off the market which is pushing up rents. Its happening everywhere and I like it.

  8. Tourism is increasing in Ireland too. It has made Dublin an overly crowded place. We have a housing crisis in Ireland down to a lack of building and mass immigration. However, ever increasing numbers of tourists, taking up spare rooms, and whole units of accommodation, are not helping either. Countries, to function properly for their own citizens, need to decide what the maximum levels of tourism are. In my view, Ireland has reached that stage. I wouldn’t be surprised if others have to.

  9. Tourism is increasing in Ireland too. It has made Dublin an overly crowded place.

    Sure, but Dublin (one hopes) is nor primarily a tourist destination. Palma basically is.

    Countries, to function properly for their own citizens, need to decide what the maximum levels of tourism are.

    Indeed, and Ireland seems to have made flogging this twee, Disneyfied version of its culture a major export, which does an awful lot to bring tourists in. My suggestion is they put a stop to that.

  10. “on aggregate the positives outweigh the negatives”: but no individual will be subject to the aggregate effect. So those who lose will want to change things.

  11. but no individual will be subject to the aggregate effect. So those who lose will want to change things.

    Exactly, but the job of an elected politician is in part to weigh the aggregate benefit against individuals’ drawbacks.

  12. Abacab may correct me if I’m wrong, but some Swiss communes fine you if you leave your second home locked up and unavailable for rent. Outside Xmas / NY and school holidays these places can look pretty sad. And the baker goes bust.

  13. Abacab may correct me if I’m wrong, but some Swiss communes fine you if you leave your second home locked up and unavailable for rent.

    The Haute-Savoie just next door doesn’t, thankfully.

  14. Bollocks. Residents won’t be renting on a short-term basis, they’ll be on long-term leases at a much lower rent.

    Tim, I agree with a lot of what you’re written here but there is something that you might want to consider as these people may well have a valid point.

    When I lived up in Val di Sole in Italy, (a mountain ski valley), it was extremely challenging to find a long term rental. The reason was that landlords could make far more money renting out the apartment during peak seasons and leaving it empty for the rest of the year, more than an entire yearly long term lease. And as a bonus they could have the apartment free to lend out to friends and relatives when it suited them.

    In other words, the long term leases on the lower rent were the problem. The only way that you could lock one down was to offer more money, enough that you were at least approaching what the landlord could make by renting it out during peak periods.

  15. “Palma’s mayor says the ban, to be introduced in July, will be a model for cities suffering with mass tourism.”

    Jeez man. I’ve been there a couple times (in the 90’s – 7 days leave, never touched a drop of water). Ive it weren’t for mass tourism, there’d be nothing on the island.

  16. When I lived up in Val di Sole in Italy, (a mountain ski valley), it was extremely challenging to find a long term rental.

    Fair enough, that’s a valid point. I’m not sure the mayor banning private rentals is the way to go though. If it were Switzerland you could trust him not to be looking after his own personal interests, but in Spain? No chance.

  17. “…the local left-wing governing coalition,,,”

    That says all that needs to be said.

  18. I appreciate your point about the hypocracy and cynicism behind this move in Palma and other major tourists destinations, but the increase AirBnB’ification of parts of certain cities does lead to problems. What it does to prices aside, I don’t want to live in a street or block of flats where a large bulk of ‘residents’ are transient and have no stake in maintaining the area as a nice environment.

    It also means that increasing parts of cities are just conceded to transients, further just becoming theme parks for tourists and playgrounds for the international rich (like many European cities already).

    I’m also hypocritical in this as when I’ve gone to cities with extortionate hotel prices (Boston!), AirBnB has been a great option.

  19. What it does to prices aside, I don’t want to live in a street or block of flats where a large bulk of ‘residents’ are transient and have no stake in maintaining the area as a nice environment.

    I’d agree with that.

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