What Does Moratorium Mean?
A moratorium is currently in place in some areas – mainly housing estates – on Mallorca. In simpler terms, this is a stop of construction.
This means that no building permits will be issued for new buildings or extensions. In the northeast, the residential areas affected include Costa Canyamel, Els Pelats in Cala Ratjada or parts of Betlem in the municipality of Artà. In our real estate offers, we have marked these residential areas as “partially developed” and/or “land awaiting construction”.
What Exactly Is Meant By Residential Area?
European standards qualify a residential area (urban area) as a residential area if there is public or communal electricity and water supply. There must also be a sewer with treatment plant (sewage treatment plant). Since the latter is not available in many settlement areas, the residential occupancy of residential areas may – according to European law – no longer be increased. To comply with this, many municipalities have imposed the moratorium, the construction stop. Other indication of quality of a residential area are pavements and street lighting.
In the settlement areas “Gala Cat” and “Son Moll de Dalt”, parts of the municipality of Capdepera, the end of the moratorium could already be obtained. The residents have founded an owners’ council (“junta de compensación”). They agreed with the municipality on the development of the residential area. Financing is usually provided through a development cost allocation at the expense of the owners.
With sewers, new underground electricity cables, nice pavements and modern street lighting, a previously unattractive settlement suddenly becomes a “hot spot”.
Why can a moratorium also offer opportunities?
If you are currently considering buying a plot of land in the area of a moratorium, you can find a bargain here and there. In the long run, undreamt-of potential for value appreciation could develop here. Especially if the conditions for ending the construction stop are created.
At present, it is to be expected that property prices in these affected areas will rise significantly if the moratorium is lifted. A plot of land as a capital investment is associated with low running costs. Only the annual property tax must be paid.
For courageous investors, this is an interesting way to protect capital from inflation and negative interest rates.