Is the amount really much of an incentive? | MDB

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The Balearic government's new housing bill will to an extent complement the legislation on holiday rentals. One notable way in which it will do so is through a tax incentive for owners to rent apartments out on a long-term basis. This incentive is designed to alleviate the concern owners have about non-payment of rent, which is one reason why there is a reluctance to offer long-term contracts and a consequent preference for short-term holiday rentals.

Since the rentals' legislation came into effect during the summer, it has been apparent that there are far more apartments back on the market for long-term rental; or potentially on the market. The government's plan, therefore, is to make provision in the 2018 budget for an income tax incentive worth some 300 euros per annum to cover the cost of insuring against losses because of non-payment of rent.

In addition, the government is proposing that there are tax deductions of up to 400 euros per annum for certain types of tenant - the young, large families, people with disabilities and also people who come to the Balearics for work.

It is believed that the housing plan and bill will include other tax measures as yet to be announced.

* According to the Rastreator insurance price comparison website, 18% of owners have insurance for non-payment.

Whether an incentive of 300 euros is that much of an incentive is open to question. And is it to be dependent on there being an insurance policy? A rough guide is that the insurance can work out at between four to five per cent of the annual rent. In some instances where this insurance has been taken out, the tenant pays it rather than a deposit.