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Common Mistakes when buying a Property in Mallorca and how to avoid them

Mallorca, with its idyllic beaches, Mediterranean climate, and relaxed lifestyle, is a dream destination for purchasing a property. However, the process of buying real estate on the island can be complex, especially for those unfamiliar with local regulations and the real estate market. In this article, we explore the most common mistakes buyers make and provide strategies to avoid them, ensuring a successful and seamless experience.

1. Failing to research the Property thoroughly

One of the most frequent mistakes when buying a property in Mallorca is not conducting sufficient research on its legal status. Every property must be free of encumbrance, mortgages, or legal disputes that could jeopardise the transaction. To ensure this, it is essential to request a "nota simple" from the Land Registry, a document that provides detailed information about the property's legal situation. Additionally, hiring a lawyer specialising in real estate law is a key investment that will protect you from legal surprises and give you peace of mind.

2. Ignoring Local Urban Planning Regulations

Urban planning regulations in Mallorca vary significantly depending on the location of the property. Some properties, particularly those in rural or protected areas, may be subject to restrictions that limit renovations, expansions, or even their use. For instance, certain areas are classified as "Protected Rustic Land," which involves strict limitations. Before making a commitment, it is essential to request an updated urban planning report and consult with experts in the field. This step ensures that the property complies with current regulations and avoids future problems.

3. Not Engaging a trusted local Real Estate Agent

The real estate market in Mallorca has specific characteristics that can be challenging for international buyers and first-time purchasers. Working with a local real estate agent not only provides access to exclusive properties but also ensures a deep understanding of the market and its nuances. Professionals at Balearic Properties, for instance, can offer personalised guidance, negotiation advice, and continuous support throughout the purchasing process. This not only optimises your experience but also minimises risks.

4. Underestimating Additional Costs

A common mistake is focusing exclusively on the purchase price while overlooking associated expenses. Buying a property in Mallorca involves additional costs such as the Property Transfer Tax (ITP), notary and registry fees, and legal fees, which can amount to 10% to 15% of the property's price. Furthermore, consider maintenance costs, potential renovations, and fees related to the homeowner's association. Having a realistic and well-planned budget from the outset is crucial to avoiding financial surprises.

Additional Taxes and Fees to consider

  • Value Added Tax (VAT): VAT is levied on the acquisition of new homes in Spain, applying a general rate of 10%. However, this percentage is reduced to 4% for officially protected housing (VPO) and publicly promoted housing. It is important to note that in the Canary Islands, VAT is replaced by the General Indirect Canary Tax (IGIC), with a general rate of 6.5%.
  • Property Transfer Tax (ITP): This tax applies to the acquisition of second-hand homes, with rates varying between 6% and 10% depending on the Autonomous Community.
  • Tax on Documented Legal Acts (IAJD): This tax applies to the formalisation of notarial and registry documents, typically at a rate of 0.5%, though it varies by region.
  • Registration Fees: Costs for registering the property in the Land Registry.
  • Notarial Fees: Expenses related to drafting the public deed of sale and other notarial procedures.
  • Agency Fees: Fees for administrative and legal procedures associated with the sale.

Each Autonomous Community may impose additional surcharges or benefits on these taxes and fees. Consulting local authorities or a real estate professional ensures accurate, up-to-date information for your specific situation. Including these expenses in your budget will help secure the necessary funds for a successful transaction.

5. Not securing Financing before starting the Search

Looking for properties without clarity on financing is a mistake that can delay the process and cause frustration. Banks in Spain often require extensive documentation to approve mortgages, especially for foreign buyers. Obtaining mortgage pre-approval will provide a clear view of your purchasing capacity and position you as a serious buyer to sellers. It is also advisable to compare different financing options to choose the one that best suits your needs.

6. Skipping a Professional Property Inspection

Another common mistake is neglecting a technical inspection of the property before closing the deal. A professional inspection can reveal structural issues, deficiencies in electrical or plumbing systems, and other aspects that may require costly repairs. This step is especially important for older properties or those in rural locations, where systems may not meet modern standards.

7. Making Hasty Decisions

The demand for properties in Mallorca is high, particularly in popular areas such as Palma, Pollensa, or Andratx. However, making hasty decisions out of fear of missing an opportunity can lead to costly errors. It is crucial to take the necessary time to analise available options, consult with professionals, and evaluate all aspects of the property. An informed decision will always be better than a rushed one.

Purchasing a property in Mallorca is an exciting experience and a significant investment. Avoiding these common mistakes will help ensure a smooth and satisfying transaction. At Balearic Properties, our team of experts is ready to guide you through every step of the process, from finding the ideal property to signing the contract. Our priority is for you to fully enjoy the dream of owning a home on this beautiful Mediterranean island.

By Iris Gruenewald
Founder

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