What has the Government done to curb the housing crisis?
Prohens promised 7,000 affordable homes, a figure she is trying to reach with various reforms, but it will take some time.
PalmHousing prices in the Balearic Islands have reached an all-time high once again. The average price per square meter is €4,096, 11.5% higher than a year ago, according to the latest report from the Balearic Islands Association of Real Estate Agents (Apibaleares). Faced with these figures, the Balearic Government has adopted a strategy of "build, build, and build"—in the words of President Marga Prohens—and has implemented significant regulations to this effect. This has accelerated planning but not construction, which in most cases has not yet begun. The Government's promise to build 7,000 affordable homes cannot be fulfilled during this legislative term; the Executive now acknowledges that the results of the legislative changes will take time, despite efforts to streamline permits and reduce bureaucracy. "It's important to remember that the first phase of the previous government's housing plan—five homes in Palma—was delivered in 2020, during its second term," argue sources at the Ministry, who are urging patience. These are the main housing initiatives undertaken this term and the results achieved so far, according to data from the Ministry itself. All are part of the Housing Action Plan launched by the Executive. Meanwhile, the Government continues to refuse to implement the rent cap allowed by state law. First Vice President Antoni Costa insisted on Friday that he considers it a "failed policy."
Law of Urgent Measures
There have been 330 changes of use from premises to housing and 140 increases in height.
The Law on Urgent Measures Regarding Housing was the government's first move to address the housing emergency. It was introduced by the former Housing Minister, Marta Vidal, in October 2023 as a decree-law, and expanded by Parliament six months later. It is based on public-private partnerships for construction. It establishes the category of Limited Price Housing (HLP), with a maximum surface area of 90 square meters, purchase prices up to €285,000, and rents up to €1,070, reserving 30% for those under 35. According to government data, the law has facilitated the conversion of 330 vacant premises into buildings, the creation of 140 homes by increasing the height of existing apartments—it also allows for the division of existing apartments—and the transformation of land designated for public facilities into building plots. In addition, 34 homes have been created by converting outdated hotels, and another 151 through subsidies to complete unfinished buildings. According to sources at the Regional Ministry, the implementation of this law has allowed for the creation of 1,900 homes on paper.
Tax cuts
The PP has introduced tax breaks on the ITP (Property Transfer Tax) and inheritance tax.
As soon as it came to power, the PP introduced tax breaks on the Property Transfer Tax (ITP) for young people buying their first home, large families, single-parent families, and people with disabilities. According to data from the Ministry of Economy and Finance provided after the last tax season, 3,854 people benefited from these tax breaks in 2025.
The Government also introduced 100% inheritance tax breaks for inheritances between parents, children, and spouses, and eliminated taxation on donations of real estate intended as a primary residence. These inheritance tax breaks resulted in the Executive foregoing €808 million in revenue during the first two years of the legislature, with wealthier citizens benefiting the most, as ARABalears explained. However, the Balearic Government believes this has encouraged families in the Islands to retain their assets and not have to sell them. Simplification Law
It removes obstacles to construction, but also in protected areas.
The Administrative Simplification Law, approved in October 2024, includes several, albeit controversial, provisions regarding housing. It opened the door to legalizing irregularly constructed buildings on protected or rural land. It also simplified administrative procedures related to construction, both for new developments and for obtaining permits. The government argued that this would boost the construction of subsidized or affordable housing, as the procedures would be less costly. However, left-wing parties and organizations like GOB denounced the law as a "development amnesty" that allows for the consumption of land in the name of access to housing. It's worth remembering that the PP, when it came to power, also eliminated the Balearic Environmental Commission. Furthermore, the law also activated new deductions in the regional portion of the Personal Income Tax (IRPF) for the purchase, construction, or rental of housing in underserved areas, with income limits. It also expanded deductions for landlords.
Rentals, pending
The Safe Rental program flops with only 60 apartments awarded
The Secure Rental program has been a failure, according to sources within the government itself. It was launched in October 2024 with the goal of "achieving between 2,000 and 3,000 homes in its first phase." But a year later, only 60 have been allocated. Most are larger than 100 square meters and have two or three bedrooms, for 950 euros. The program incentivizes bringing vacant or unused homes onto the market. The government is looking for ways to modify the program to make it more effective. On the other hand, government sources highlight the Build to Rent program, through which the government transfers public land to private developers to build rental housing. This has led to the planning of 2,400 homes through calls for proposals from the regional government or municipalities, although it could take years for construction to be completed. Uneven performance from the Balearic Housing Institute (Ibavi)
The government advocates for the construction of 900 homes, but few are actually being allocated.
The results of the Balearic Housing Institute's (Ibavi) work are mixed. While the Housing Department maintains that there are 900 subsidized housing units in various stages of development, only 70 procedures appear on the agency's contracting portal. Sources within the Department point out that projects developed by Ibavi's own architects "are not put out to tender" and, therefore, do not appear on the portal. However, these same sources admit that most construction will not begin until 2026. They also note that the institute has purchased 38 homes and two plots of land through the right of first refusal during this legislative term.
During this term, the conditions for receiving mortgage assistance under the Nova Hipoteca Jove program have also been modified. Since then, 138 guarantees have been approved, an increase of approximately 27% in seven months. In total, 638 guarantees have been granted during this legislative period.
The Land Acquisition Law
Strong criticism for promoting land speculation
The Land Acquisition Law approved by the Government last July was controversial because it allows construction in areas where it was previously prohibited, known as transition zones. This has drawn criticism from the PSIB, Más per Mallorca, and Més per Menorca parties, who believe it opens the door to speculation. In fact, advertisements have already appeared for the sale of plots of land where construction was previously prohibited, priced like those of young Canarians: for example, in September, a rural plot was put up for sale for €24.5 million in Establiments (Palma). However, the Housing Department insists that, for now, "no projects have been submitted in transition zones, neither in Palma nor in any other municipality." The law introduces the concept of Strategic Residential Projects (PRE) to "unlock urban and developable land and reduce construction timelines." It leaves the promotion of projects in the hands of the municipalities. In the city, the Son Güells and Son Puigdorfila projects have been promoted, for which 1,868 homes are planned.
