Palma pulls the emergency brake: Short-term rentals, party boats and hostels to disappear

Palma wants to reclaim housing – but at what cost?

On Tuesday morning Mayor Jaime Martínez presented a package that the city administration sees as a turning point: as many forms of short-term holiday rentals as possible are to be stopped in Palma. The words were harsh, the message clear: the city no longer wants to issue new licences for vacation rentals, and existing rules are to be tightened retroactively – with a three-month transition period.

The central question, which quickly became a constant topic in neighbourhood WhatsApp groups during the noisy summer heat on the Paseo Marítimo, is: will this policy actually free up apartments for locals, or will Palma drag itself into a legal and social battlefield that ultimately proves less effective than hoped?

What exactly is planned

In short: the 639 currently legally registered vacation rentals will remain for now, but new permits will no longer be issued. Individual rooms, single-family homes, small flats – everything that has so far been offered via platforms will in future be subject to particularly strict checks. Party boats in front of the Paseo Marítimo are to be banned in cooperation with the Autoritat Portuària de Balears (APB). Hostels and youth hostels are not to be newly established; existing facilities will be gradually converted into hotels or regular apartments.

The idea is appealing and understandable: fewer bass waves at night, less crowded neighbourhoods in La Lonja, Santa Catalina or the narrow maze of streets in the old town, more space for families who want to stay in Palma. But the practical implementation has many downsides that have so far been talked about comparatively little.

The legal and practical construction site

Retroactive regulations are legally delicate. Owners could sue – and that can take years. Who bears responsibility if apartments suddenly may no longer be rented out, but mortgages continue and ongoing loans still have to be paid? Who pays the difference if hostels are to be converted into apartments, jobs are lost or operators need compensation?

Another blind spot: enforcement. Palma does not have unlimited inspectors to track down hidden offers or unregistered rentals. The ban could lead to a shift into the black market. Instead of bass until two in the morning, there might now be private rentals without registration and without tenant protection – harder to control, and tenant rights would suffer.

Economic side effects

The island economy relies heavily on tourism. Restaurants, boat operators, supermarkets and hostel cleaners depend on guests. A sudden disappearance of short-term visitors means less revenue and jobs, especially in the low season. The city does state the goal of making Palma an attractive destination "for the people who live here" – but without transition mechanisms there is a risk of a severe loss of income that particularly hits small businesses.

What the debate rarely mentions

1) Social mix: Some hostels allow young travellers to stay longer in Palma and enliven the local cultural scene. Their disappearance can homogenize the city.
2) Seasonal workers: Where will seasonal workers live in future? Without affordable short-term options, costs for gastronomy and event organisers rise.
3) Economic effects on the secondary market: Owners could sell – often to investors who operate differently in the long term. Paradoxically, this can spur new forms of speculation.

Concrete: opportunities and practical solutions

If Palma is serious, a general ban is not enough. A plan with instruments that work locally is needed:

Phased model instead of a blitz: Extend transition periods, promote conversions, provide structural support for operators.
Incentives instead of punishment: Tax breaks or grants for owners who convert apartments into regular long-term rentals.
Conversion fund: A municipal fund to purchase particularly critical properties to redirect them to the housing market or hand them over to cooperative projects.
Control and data offensive: A digital register coordinated with platforms, clear sanctions against illegal offers – and more inspectors.
Labour market strategy: Cooperation with hotels, restaurants and harbour operators so that employees can find alternative housing (e.g. staff accommodation).

Such instruments would also reduce legal risks and increase public acceptance. In the short term a ban may seem popular, but in the long term the details will determine success or failure.

Local mood

At the square by the Ayuntamiento there was cheering, snide laughter and sceptical looks at the same time. The market women in Santa Catalina noted that in the early morning fewer drunken party guests would disturb the tapas bars; the operators of small boat rentals warn of losses; neighbourhood WhatsApp groups exploded – caught between hopes for quieter nights and fear of job losses.

Martínez talks about Palma "for the people who live here." That is a good guiding principle. The challenge is to fill this principle with pragmatic, legally secure and socially balanced measures – not just bans. The next stage is the city council plenary. Until then the city remains taut like the line of a water taxi in the harbour: short, but under tension.