Ley de Vivienda Balearics: Mallorca rent caps and zona tensionada

The Ley Vivienda Balearen — referring to Spain’s Ley 12/2023 (Ley por el Derecho a la Vivienda) and its implementation in the Balearic Islands — has been the most widely discussed property law on the islands since it came into force in May 2023. It promises rent caps, new rules on rent increases and a mechanism called zona de mercado residencial tensionado, intended to impose rent ceilings in housing markets under pressure. What the law actually means in practice, however, depends heavily on whether and how the Balearic Islands use these measures — and in 2026, the situation is more complicated than many expect. This guide explains how the rent index works, what qualifies as a zona tensionada, why the Balearic Islands have so far refused to designate any, which IRPF tax breaks are available to landlords, and which rules matter to large landlords and buyers.

• Guide: Long-term renting in Mallorca — all rights and obligations for tenants and landlords

What Ley 12/2023 actually covers

Spain’s housing law (Ley por el Derecho a la Vivienda, Ley 12/2023) has been in force since 26 May 2023. It changes tenancy law at national level but gives the autonomous communities extensive powers to activate or adapt certain measures. The key points at a glance:

Note: Ley 12/2023 is a framework law. Many measures — particularly rent caps in zonas tensionadas — will only come into force in the Balearic Islands if the Balearic regional government (Govern de les Illes Balears) expressly activates them. It has not done so to date.

The new IRAV rent index: What applies from 2025

Until the end of 2024, temporary statutory caps applied: 2% in 2023 and 3% in 2024. From 2025, a new national reference index was introduced, the Índice de Referencia de Actualización de los Arrendamientos de Vivienda (IRAV), calculated by Spain’s national statistics institute, INE. The IRAV is intended to be more stable than the IPC over the long term and to curb excessive rent increases when contracts are renewed.

What this means for landlords in Mallorca: If you signed a tenancy agreement on or after 26 May 2023 and it includes an annual rent review clause, any increase from 2025 must not exceed the IRAV figure for the relevant month. For older agreements, the clause agreed at the time continues to apply; the temporary caps of 2% (2023) and 3% (2024) have expired. Parliament did not ratify the 2% cap introduced by Real Decreto-ley 8/2026 in March 2026 when it voted in April 2026, so it no longer applies.

Important: For new tenancies in areas without a zona tensionada — which currently means all of Mallorca — the IRAV applies only to rent review clauses in existing agreements. As a landlord, you can set the initial rent for a new tenancy freely. That is the crucial difference from a zona tensionada.

Zona tensionada: What the designation means — and why the Balearic Islands do not use it

Conditions for designation

An autonomous community or municipality can designate an area a mercado residencial tensionado if at least one of the following conditions is met:

1. The average housing cost burden (rent or mortgage payments plus basic costs) exceeds 30% of average household income in this area.
2. Purchase or rental prices have risen over the past five years by more than 3 percentage points above the regional cumulative inflation rate.

As far as is currently known, the Balearic Islands meet both criteria — a view shared by housing experts and some academics. Forecasts for 2026 predict further rent increases of between 8% and 12%, mainly because thousands of five-year contracts signed in the post-pandemic period are due for renewal.

The political impasse

The Balearic Parliament has rejected a motion to designate the whole of the Balearic Islands a zona tensionada. The governing PP parliamentary group argues that the measure has “no real effect”. Academics and housing experts counter that it could at least curb rent increases on renewal in the short term, while structural solutions (more social housing, more supply) take effect.

What this means for you: As long as the Balearic Islands do not declare a zona tensionada, no statutory rent caps under Ley 12/2023 apply to new tenancies on Mallorca — including in Palma. Landlords can continue to let properties at market rates.

What would apply if a zona tensionada were activated

For completeness: if the Balearic Islands or a municipality in the Balearic Islands declared a zona tensionada, the following rules would come into force:

• Existing tenancies (property rented within the last 5 years): The new rent must not exceed the last agreed rent plus the maximum permitted annual increase (IRAV).
• Properties coming onto the market (not rented for 5 years): The initial rent must not exceed the maximum set by the state reference index for the area.
• Large landlords (10 or more residential units): In zonas tensionadas they generally cannot set a rent above the reference index — even for a new tenancy.

Large landlords (gran tenedor): Who is affected?

Ley 12/2023 defines a gran tenedor as an individual or legal entity that owns 10 or more residential properties in Spain or holds more than 1,500 m² of occupied residential floor space in total. In some zonas tensionadas, the autonomous communities may lower this threshold to 5 residential properties.

Large landlords in the Balearic Islands face greater disclosure obligations and stricter requirements for rent increases under existing contracts — even without a zona tensionada. If an area is subsequently designated a zona tensionada, the reference-index limit would apply to all new contracts immediately.

Note: Anyone who holds several holiday rental licences (ETV) as well as long-term rental properties should keep track of their total number of residential units. Legal advice is recommended if you are approaching the 10-unit threshold.

IRPF tax relief for landlords: The rates in detail

One of the measures in Ley 12/2023 with immediate effect is the new tiered IRPF tax relief for landlords of long-term rental properties. The deduction applies to net income from vivienda habitual-term rentals and replaces the previous flat-rate 60% reduction.

As no zona tensionada has currently been declared in the Balearic Islands, Balearic landlords can currently claim only the 50% reduction — the higher reductions of 60%, 70% or 90% require the rental property to be in a declared zona tensionada. For more details on this deduction, see our guide to IRPF deductions for landlords in the Balearic Islands.Restrictions for buyers: What the Ley Vivienda means for buyers

Ley 12/2023 does not impose direct purchase price caps on the open housing market. However, it establishes rules that indirectly affect buyers — particularly investors and non-residents:

1. Social housing requirements for new developments:

New-build projects must reserve a larger share of homes for subsidised or price-controlled housing. In the Balearic Islands, this is also governed by Balearic Ley 5/2018 (Ley de la Vivienda de les Illes Balears) and Ley 3/2024.2. VPO/VPL purchase price restrictions:

For protected housing (For sheltered housing (Vivienda Protegida de Precio Limitado, VPL, and Vivienda de Protección Oficial, VPO), the Balearic government sets maximum permitted purchase prices and rents. The Consell de Govern approved an update to these price caps on 20 February 2026. For details on buying VPO/VPL property, see the guide VPO/VPL Mallorca.

3. Public-sector rights of first refusal: In zonas tensionadas and for social housing, public authorities may exercise rights of first refusal. Here too, as long as no zona tensionada has been designated, this does not affect the ordinary resale market in Mallorca.

Balearic housing plan 2026–2030: 168 million euros

Alongside Ley 12/2023, the Balearic regional government has secured funding through the Plan Estatal de Vivienda 2026–2030. According to the Govern de les Illes Balears, the Balearic Islands will manage 168 million euros under this programme. The government says its own contribution is the largest of any previous plan period. The funding will support social housing, renovations and rent subsidies.

Tip: You can apply for the Bono Alquiler Joven — a government rent subsidy for young people — regardless of zona tensionada status. Find all the details in our guide to the Bono Alquiler Joven Balearic Islands.

How Mallorca’s rental market is developing in 2026

Even without an active zona tensionada designation, tenants are feeling the effects of a structural shortage of available homes. Here are some figures and trends from the available sources:

• Market observers expect further rent increases of between 8% and 12% in 2026, driven by the renewal of post-pandemic contracts.
• According to market reports, the price of resale properties in the Balearic Islands has now reached over €5,000/m² — and continues to rise.
• Reports suggest that some rental listings in the Balearic Islands remain online for less than a day before the properties are let — an indication that demand far exceeds supply.
• Experts estimate that the share of household income spent on housing exceeds the 30% threshold cited in Ley 12/2023.

These figures help explain why the debate over the zona tensionada is politically contentious — and why the Govern’s decision not to activate it has significant social consequences.

Common mistakes concerning the Ley Vivienda in the Balearic Islands

1. Increasing rent in line with the IPC rather than the IRAV. For contracts from 26 May 2023 onwards, the IRAV has been the cap on rent increases since 2025. If such a contract still refers to the IPC, it is not automatically invalid, but any increase must not exceed the IRAV. Landlords who use the IPC when it is higher risk a dispute with the tenant.

2. Continuing to apply the 60% IRPF deduction. The old flat-rate 60% reduction has been replaced by a new tiered system. Anyone who continues to deduct 60% without checking the conditions of the new system risks a tax demand. Since 26 May 2023, the new rules have applied to new contracts (and renewed contracts).

3. Assuming the zona tensionada designation already applies. Numerous media reports give the impression that rent controls are already in force in the Balearic Islands. They are not: without a formal decision by the Govern, the special restrictions do not apply.

4. Passing the estate agent’s fee on to the tenant. Since May 2023, the landlord generally pays the agency fee for residential tenancy agreements. Clauses that charge the tenant can be challenged.

5. Ignoring VPO purchase price caps. Anyone buying or selling a protected home needs to know the current maximum-price tables — most recently updated by a Consell decision in February 2026. A purchase above the maximum price can be reversed.

6. Underestimating large-landlord status. Anyone who owns 10 or more homes in Spain in total — including long-term lets, holiday lets and homes for personal use — should check whether they are classified as a gran tenedor. The requirements go beyond those that small landlords must meet.

What comes next? Possible developments in 2026 and beyond

Ley 12/2023 is not a static law. Several developments are worth watching:

• Pressure to designate a zona tensionada: Political and public pressure on the Balearic government could increase once the new wave of contract renewals demonstrably pushes up rents. The Govern may reconsider its position.
• Plan Estatal de Vivienda 2026–2030: The 168 million euros will fund specific support programmes over the coming years that could affect both tenants and developers.
• Balearic Ley 3/2024: The Balearic emergency law of 2024 contains its own measures for affordable housing, which operate independently of the national Ley 12/2023.
• ETV licence moratorium: The existing moratorium on new holiday-let licences keeps supply tight. Fewer holiday lets do not automatically mean more homes available for long-term rent — that is a central point of contention.

Checklist: what landlords in Mallorca should check now

1. Review your rent increase clause: If you signed the agreement on or after 26 May 2023 and it still refers to the IPC, the annual increase must not exceed the IRAV.
2. Recalculate your IRPF relief: Apply the 50% tier correctly; check whether you could qualify for a higher tier in future.
3. Clarify your large-landlord status: Count all residential units you own in Spain, including VPO properties, holiday properties and unfinished buildings with planning permission.
4. Remove estate agent fee clauses: Existing agreements requiring tenants to pay estate agent fees can be challenged — correct them when renewing.
5. Check the property's VPO/VPL status: Is it subject to a protection period or a maximum-price regime?
6. Keep an eye on zona tensionada designations: Subscribe to BOIB (Butlletí Oficial de les Illes Balears) alerts on housing law — a designation could come at short notice.
7. Keep your energy performance certificate up to date: It is required for letting and is also relevant to renovation-related IRPF relief. Read more in our guide to energy performance certificates in Spain.
8. Consult a tax adviser: The interaction between the IRAV, IRPF relief tiers and a possible zona tensionada designation is complex. A one-off consultation is worth the cost.

Conclusion

In 2026, the Ley Vivienda Balearen has considerable potential but has so far had limited local impact. The national framework law (Ley 12/2023) applies throughout Spain: the IRAV replaces the IPC, landlords pay estate agent fees, and the new tiered IRPF relief is in force. The key instrument for capping rents — the zona tensionada — has not yet been activated in the Balearic Islands. The governing PP group opposes it, while experts believe the rental market has long met the legal thresholds for activation. For landlords, that means acting now on rent indexation and IRPF deductions, keeping an eye on zona tensionada developments and taking VPO/VPL price caps seriously. Buyers on the open market face few direct restrictions under Ley 12/2023 — but its indirect market effects (scarce supply, rising prices and affordable-housing obligations for new developments) are all the more significant.

Official sources

• Ley 12/2023, de 24 de mayo, por el derecho a la vivienda (BOE): https://www.boe.es/buscar/act.php?id=BOE-A-2023-12203
• Law 5/2018 of 19 June on housing in the Illes Balears (CAIB): https://www.caib.es/sites/institutestudisautonomics/f/301150
• Law 3/2024 of 3 May on urgent housing measures (CAIB regulations): https://www.caib.es/sites/normativa_dgha/es/normativa_vivienda/contenido.do?idsite=13687&cont=159809
• Agreement of the Consell de Govern of 20 February 2026 (updated VPO/VPL prices): published in the BOIB (Butlletí Oficial de les Illes Balears): https://www.caib.es/eboibfront/?lang=es
• IRAV (Housing Rent Adjustment Reference Index) — INE: https://www.ine.es
• ATIB — Agència Tributària de les Illes Balears: https://www.atib.es
• State Housing Plan 2026–2030 — Govern de les Illes Balears: https://www.caib.es/webgoib/es/
• Protected housing regulations (CAIB): https://www.caib.es/sites/normativa_dgha/es/normativa_vivienda/contenido.do?idsite=13687&cont=159809

Why Idealista figures are not a cap on rent increases

For the Balearic Islands, rents advertised on Idealista were reported to have risen by 8.5% in 2025. That describes changes in asking rents – not how much an existing rent may be increased.

For an annual adjustment to a residential tenancy, the contract clause and the date the contract was signed matter. For contracts signed on or after 26 May 2023, the monthly published IRAV limits the agreed adjustment. Its value for December 2025 was 2.32%; this does not establish a single rate of increase for the whole of 2025. You can find the published index at the Spanish National Statistics Institute (INE). Without an agreed adjustment clause, rent cannot be increased annually solely because advertised rents have risen.

Note: This is not legal or tax advice.