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A Comprehensive Guide for Foreign Property Buyers in Mallorca

Mallorca, with its stunning beaches, charming villages, and vibrant city life, offers a perfect setting for owning a property, whether it's a holiday getaway or a fresh start in a new home. If you're considering buying property in Mallorca as a foreign investor, there are some important factors to keep in mind. In this comprehensive guide, we will take you through everything you need to know about purchasing property in Mallorca as a non-resident.

Living in Mallorca: What You Need to Know

Before we dive into the property buying process, let's explore some key information about Mallorca:

  • Location: Mallorca is one of the Balearic Islands, situated in the Mediterranean Sea off the coast of Spain.
  • Climate: Mallorca enjoys a pleasant Mediterranean climate with hot summers and mild winters.
  • Currency: The official currency of Mallorca is the Euro.
  • Main Languages: The primary languages spoken in Mallorca are Spanish and Catalan, but English, German, and French are widely spoken.
  • Population: Mallorca has a population of approximately 947,315 people.

Local government initiatives to attract quality tourists to the island are bearing fruit and as a result Mallorca is able to offer a very cosmopolitan lifestyle to the expat community. Each year, more than 2.3 million British tourists holiday on the island and account for 26% of total tourism. Germans remain the largest group,with over 3.4 million - equivalent to 40% of the total. There are some 340,000 Scandinavians, 238,000 French, 160,000 Swiss and 136,000 Irish and although now small, the number of Russian visitors continues to grow. A significant part of the tourist market is still attracted by the wide range of options available in major areas such as Palma, Magaluf and the popular family destinations of Alcúdia or Pollensa and Calvia. However, the most important growth for the property market comes from visitors looking for a different type of holiday in small rural hotels, country houses or in rented apartments and villas on the beach.

Living Costs in Mallorca Compared to the UK

When considering a property purchase in Mallorca, it's essential to understand the cost of living compared to the UK. Mallorca generally offers a lower cost of living across a range of expenditure categories. Here are a few examples of the price differences:

  • A three-course meal for two people costs around £38 in Mallorca, compared to £80 in the UK.
  • The price of a domestic beer is approximately £3 in Mallorca, compared to £6 in the UK.
  • The price per square metre for an apartment in Mallorca can be up to 50% cheaper than in the UK, depending on its location.

Living Costs in Mallorca Compared to Germany

You would need around € 2,775 in Palma de Mallorca to maintain the same standard of living that you can have with 5,000.0€ in Munich (assuming you rent in both cities). This calculation is based on net income (after tax) and uses our Cost of Living Plus Rent Index to compare living costs.

How is the real estate market in Mallorca?

Mallorca's popularity as a holiday destination and its appealing lifestyle contribute to a thriving property market. In November 2023, the average property price per square metre in Mallorca was €4,363. This represents an average increase of 26.98% compared to November 2022 when it was €3,436 per square metre.

Despite inflation and the European energy crisis, Mallorca's property prices continue to rise steadily, outperforming other European property markets. Foreign buyers are particularly attracted to Spain, especially Mallorca, for real estate investments due to its strong market and rising property values. It is also considered a safe haven for property investments, offering a diverse portfolio.

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Can Foreign Nationals Buy Property in Mallorca?

Yes, foreigners can buy property in Mallorca. Spain's real estate market is open to international buyers, including both EU and non-EU citizens. If you're a non-resident looking to purchase property in Mallorca, obtaining a mortgage can significantly enhance your budget. Homevest, a leading mortgage provider in Spain, offers mortgage options for non-residents. It is relatively straightforward for foreigners to obtain a mortgage in Mallorca, similar to the process in the rest of Spain.

Eligibility and Criteria for Obtaining a Mortgage in Mallorca

The eligibility and criteria for obtaining a mortgage in Mallorca may vary depending on the bank and individual circumstances. Here are some common factors to consider:

  • Permanent employment or a solid self-employed background with 2-3 years of experience.
  • Minimum 6 months of employment.
  • Monthly net income of €2000-€2500.
  • Debt ratio not exceeding 40% of monthly net income.
  • Minimum 30% deposit.
  • Clean credit history.

Applying for a mortgage with a co-applicant can increase your chances of approval and allow you to borrow more. It is advisable to explore the mortgage options offered by Spanish banks such as Sabadell, Cajasur, Unicaja, Bankinter, BBVA, Santander, Caixa, and UCI.

Simplifying the Mortgage Process with Homevest

Navigating the mortgage process abroad can be challenging, especially with the extensive paperwork required for each bank application. Homevest, a digital mortgage service, streamlines this process, ensuring your mortgage application is fully prepared and ready to be presented. Their services include:

  • Access to a dedicated mortgage broker available via phone, video, and WhatsApp to assist you from start to finish.
  • Priority banking service.
  • A one-hour legal consultation to ensure your purchase contract is in order.

The Cost of Buying Property in Mallorca?

The expenses associated with buying property in Mallorca vary depending on factors such as location and property type. In addition to the sale price, you need to account for taxes such as Value Added Tax (VAT), Transfer Tax, and additional fees for notary and registry services.

Let's take an example: Suppose you buy a resale property worth €350,000 in Palma de Mallorca. In addition to the sale price, you will have to pay approximately €34,450 for the following taxes and fees:

Tax/ Fee 
Property Transfer Tax  €32,200 
Notary Fee  €450 
Property Registration  €1,050 
Agency Fee  €350 
Property Appraisal Fee  €400 
Total  €34,450 

These prices are based on current rates and may vary depending on the value of the property. In addition, there may be other charges such as mortgage, gestoría, bank, land registry and estate agent fees. It is advisable to seek professional advice before taking any action based on the information contained in this article.

Frequently Asked Questions

Can I obtain residency in Spain if I buy a house?

Yes, buying a house in Spain can contribute to obtaining residency, but it is not the sole requirement. The Spanish government offers various residency options, including the Golden Visa program for non-EU citizens. Owning property in Spain can be one of the qualifying factors for obtaining residency, but additional criteria must be met, such as minimum investment thresholds and fulfilling specific residency periods.

How does property in Mallorca retain its value?

The island's desirability as a holiday destination and high demand among international buyers contribute to the unwavering property prices. The limited availability of land for development and strict building regulations also play a role in strengthening values. Additionally, the attractiveness of Mallorca's lifestyle, amenities, and natural beauty further increases the demand for properties, leading to reliable investment opportunities.

Can I buy a house in Spain without a Spanish bank account?

While having a Spanish bank account can be beneficial for managing financial transactions, it is not a strict requirement for buying a property in Spain. However, if you plan to obtain a mortgage from a Spanish bank, having a local bank account may be necessary for smoother transaction processes. It is advisable to consult with a financial expert to explore the specific requirements of your chosen bank.

How much does it cost to buy a house in Mallorca?

The cost of buying a house in Mallorca depends on various factors, such as location, property size, amenities, and condition. Prices can range from affordable options to high-end luxury properties. It is essential to set a budget and work with a trusted real estate agency to find properties that meet your criteria. Additionally, you need to consider the associated taxes, fees, and potential renovation costs when calculating the total cost of buying a house in Mallorca.

Can I buy a property in Spain as a UK citizen?

Yes, UK citizens can still buy property in Spain even after Brexit. The Spanish real estate market welcomes international buyers, including UK citizens. The Spanish government has maintained regulations allowing UK citizens to purchase property and access mortgages in Spain. However, it is crucial to stay updated with any potential changes in regulations and seek professional advice to ensure a smooth purchase process.

Is buying in Spain worthwhile?

Buying a property in Spain can be a beneficial investment for various reasons. The country offers a desirable lifestyle, beautiful landscapes, and a pleasant climate. Property prices have shown a consistent rise over the years, making Spain, including Mallorca, an attractive option for real estate investments. However, it is important to conduct thorough research, assess personal financial circumstances, and consider long-term goals before making a purchase.

Can you buy a house in Spain without living there?

Yes, you can buy a house in Spain without living there. As a non-resident, you have the right to purchase property in Spain. Whether you plan to use the property as a holiday home, rental investment, or future residence, the process is open to non-residents. However, it is advisable to seek professional guidance, understand legal requirements, and consider factors such as taxation and property management if you don't plan to live in the property permanently.

Buying property in Mallorca as a foreign investor offers an excellent opportunity to own a piece of paradise in one of the most desirable destinations in the Mediterranean. Despite the potential challenges, such as navigating the mortgage process and understanding the associated costs, the rewards can be significant. With the right guidance from professionals and thorough research, you can find the perfect property to suit your lifestyle and investment goals.

If you're ready to start looking for your dream property in Mallorca, Balearic Properties, an esteemed real estate agency, offers a diverse portfolio of properties to choose from. Explore their website here to begin your search for a new and exciting lifestyle in Mallorca.

Disclaimer: The information provided in this article is for general informational purposes only and should not be considered legal, tax, or financial advice. It is always recommended to consult with professionals and conduct thorough research before making any property purchase decisions.

By Iris Gruenewald

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