🏠 Property Investment: Mallorca's property market offers excellent opportunities for both buyers and renters. This guide covers everything from market analysis to legal requirements and practical tips.
Understanding Mallorca's Property Market
Market Overview
- Strong demand from international buyers
- Limited supply in prime locations
- Price appreciation in recent years
- Seasonal variations in rental market
- Foreign ownership restrictions in some areas
Popular Areas for Property Investment
- Palma - Capital city, best infrastructure
- Southwest Coast - Puerto Portals, Santa Ponsa, Calvià
- North Coast - Port de Pollença, Alcúdia
- Sóller Valley - Traditional charm, mountain views
- East Coast - Manacor, Artà, Cala Millor
Buying Property in Mallorca
Legal Requirements for Foreign Buyers
- NIE number - Essential for any property transaction
- Spanish bank account - Required for payments
- Legal representation - Spanish lawyer recommended
- No restrictions for EU citizens
- Limited restrictions for non-EU citizens
The Buying Process
Step-by-Step Process:
- Property search and viewings
- Make an offer and negotiate price
- Sign reservation contract (10% deposit)
- Legal checks by lawyer
- Mortgage arrangement (if applicable)
- Sign purchase contract (additional payment)
- Complete at notary (final payment)
- Register property at Land Registry
Additional Costs When Buying
- Transfer tax (ITP): 8-10% of purchase price
- Notary fees: €600-€1,500
- Legal fees: 1-1.5% of purchase price
- Land Registry: €400-€800
- Survey costs: €300-€600
- Total additional costs: 10-12% of purchase price
Renting Property in Mallorca
Rental Market Dynamics
- High demand especially in summer
- Long-term rentals more stable pricing
- Tourist licenses limit rental supply
- Winter discounts possible in tourist areas
Types of Rental Properties
- Long-term unfurnished - 1+ year contracts
- Long-term furnished - Higher rent, shorter commitment
- Short-term rentals - Tourist accommodations
- Room rentals - Shared accommodations
Rental Process and Requirements
- Proof of income - 3x monthly rent minimum
- Security deposit - 1-2 months rent
- References from previous landlords
- NIE number and identification
- Bank guarantee or guarantor may be required
Financing Options
Mortgage for Foreign Buyers
- Maximum loan: 70-80% for residents, 60-70% for non-residents
- Interest rates: Currently 3-5% variable
- Term: Up to 30 years (age dependent)
- Income requirements: Debt-to-income ratio limits
Required Documentation for Mortgage
- Proof of income - Last 3 months payslips
- Tax returns - Last 2 years
- Bank statements - Last 6 months
- Property valuation - Bank commissioned
- Life insurance - Usually required
Important Legal Considerations
Property Checks Before Buying
- Title deeds (escritura) verification
- Cadastral registration confirmation
- Planning permissions for any extensions
- Outstanding debts or charges
- Community fees status
Ongoing Property Costs
- IBI (Property tax): 0.4-1.1% annually
- Community fees: €50-€300+ monthly
- Utilities: €100-€300 monthly
- Insurance: €300-€800 annually
- Maintenance: Budget 1-2% of property value
⚠️ Expert Tips
- Always use an independent Spanish lawyer
- Get a professional survey for older properties
- Check tourist rental restrictions in your area
- Budget for additional costs beyond advertised price
- Consider seasonal rental potential for investment
- Understand community rules and restrictions