Viewing, purchasing and legalities
A Guide to Purchasing Property in Mallorca
If you are thinking of purchasing Property in Mallorca, here are some useful tips for you.
These include Mallorca locations to pick up a property bargain and useful links to estate agents and lawyers.
Mallorca Property Prices
The prices on the Spanish Balearic Island of Mallorca are some of the highest in Spain. German’s, Scandinavians, Russians and Brits have helped to push prices up with their increasing demand for homes on the island during the past decade.
Legalities and Fees for Purchasing Property in Mallorca
The legal process and buying costs for purchasing property on Mallorca are similar to those in mainland Spain. Expect to pay 13% of the property cost in fees by the end of the buying process. This is after stamp duty, taxes and legal fees are included.
NIE Number and Spanish Bank Account
You need to open a Bank Account in Spain before purchasing property in Mallorca or Spain. To be able to do this you need to obtain your Numero de Identidad Extranjero, an identity number for non-Spanish residents (NIE). Transferring funds for the property on completion day can only be done via a Spanish account. A reputable Spanish solicitor will help you with the process of obtaining your NIE number and with opening a bank account.
Sometimes the estate agent that you are purchasing your property with will recommend a lawyer. Do your own research though to be sure it is not just a case of both professionals just scratching each others backs. Often it is best to find an independent lawyer either online or by word of mouth.
The Reality of Buying in Spain
UK property television series’ such as A place in the Sun and Sun Sea and Selling houses have fulfilled peoples Spanish property dreams. And many more of us still have this dream in the pipeline.
Remember though, there are a few reality checks you need to take if buying a holiday home. Monthly community fees if buying in an apartment block can be high depending on amenities available onsite. Also there are standing charges for water and electric each month even when you are not there. And take Spanish tax into consideration too. Even if you are not working or renting out your Spanish property you still have to pay a calculated annual charge before 31st December.
Mallorca Property Prices and Trends
Porto Mallorquina is a real estate company specialising in upmarket properties with offices all over Mallorca. Results of a survey they commissioned show prices on the island are up by 35% since 2015. Although during 2018 and 2019, the number of Mallorca property sales dropped slightly. And property prices in parts of the the island dropped by 6-10% between Autumn 2018 and a year later in 2019. Although Commercial Real Estate Solutions (CRES) predict Mallorca prioperty prices will rise by 6% a year up to 2022.
Reasons for Downturn
Brits who make up a high percentage of Mallorca property purchasers are unsure about the implications of Brexit. Also buyers in general are choosing to buy in cheaper Spanish areas such as Almeria, Murcia and Alicante.
Where to buy property in Mallorca
No longer are you able to grab a bargain on 2 bedroom apartment for under 80,000 as was the case in 2016. Prices of a good standard 2 bedroom apartment now start at €100,000 euros. Best areas to find a bargain are Manacor (home of Rafael Nadal) and the nearby coastal holiday resort of Cales de Mallorca. Sa Pobla, Arta and Inca are all Northern towns and cheaper places for purchasing property in Mallorca. Palma, the island’s capital makes a wonderful choice due to the buzz and superb transport links. If you shop around there are still bargains to be found especially on the outskirts of the city.
The Reservation Process
So you find a property you would like to buy in Mallorca. Generally you put down a reservation fee which is equal to roughly 10 percent of the overall property price. It shows commitment but if you change your mind about the property, you stand to lose this deposit. If the vendor changes their mind you get your deposit back plus a further 10 percent. The estate agent or vendors lawyer hold on to the deposit.
The Reservation Agreement
Before putting down any deposit on Mallorca property, consider whether you want any special clauses drawn into the Reservation Agreement. Consult with Your Mallorca property lawyer whether special clauses such as refund rights in the case of structural problems should be included.
You can transfer the reservation fee from your bank account in your own country. When it comes to completing the sale, the remainder of the funds needs to be transferred from your Spanish bank account.
The Reservation agreement freezes the price of the property, removes it from the market, making it exclusive to you.
Read more about Legalities of buying Spanish Property
Find more information also at Buying Balearic Property
Need To Knows
When purchasing property in Mallorca beware when buying estates that you want to develop. It can take years to get planning permission. Also there are laws in place if you plan to rent out your property either as a holiday let. You need a tourism licence and you have to declare the tax you earn on it on a quarterly basis rather than a yearly basis. On the plus side, it is a hugely popular island so renters will never be far away if you price it fairly.
Estate Agents Mallorca
At the start of 2020, there is much speculation amongst Brits about the effects Brexit will have on buying any property in Europe. No-one knows the answer to this. But don’t give up on your dream and the opportunity to do what’s make you happy!