Mallorca Property Report 2009

Here are some important comments about the property market in Mallorca

Interest rates

The Mallorca Property Buyer's Guide

A step-by-step guide for Mallorca property buyers

The buyer's problem in finding the right property, negotiating its purchase and closing the sale is much more difficult than in one's own country. As in most resort areas, everybody seems to be in the business, from the taxi driver to the hall porter in the Hotel. Property is everyone's favorite subject of conversation. And almost everyone has an opinion, many of which can easily confuse a potential buyer. Where to start?

Finding a property in Mallorca

Some people spend years looking for a property. Others are lucky enough to find a property and have the confidence to purchase on their first visit to Marbella. Yet others need to take their time and view properties during three or four trips, until they feel really comfortable with their eventual decision.

What type of property are you looking for, and in which area of the island?

Many potential buyers think they are looking for one type of property and end up choosing something totally different. Unless you are very clear about what you want and are equally sure that it exists, look at various types of properties in different residential areas with an open mind. This exercise will also help you build up your knowledge of market values in the area, a major advantage in negotiating and ensuring that you are getting fair market value for your money when you buy.

Puerto Pollensa is an ideal place to buy property in Mallorca due to the high income from renting private properties to holiday makers. The north of Mallorca is known as the top holiday destination with over 1000 private villas for rent and over 500 private apartments.

A few points of advice when buying property in Mallorca

Compromise always pays dividends
It will be almost impossible to find exactly what you want, even if you build it yourself and if you do find it, don't be sure your partner will agree with your choice. Find a property that you are both happy with (even if this means compromise!)

Do you mind being a pioneer?
If you want to buy in a new or not fully built-up area, remember that empty land plots will be built on one day and that you may find yourself in the middle of an ongoing construction site for many years to come.

Protect your investment
Make sure you have enough land around you to protect your privacy and views from a prospective building project.

Ensure the protection afforded by the law is given to you
If you are buying property under construction, the developer is legally required to provide an insurance policy or bank guarantee to protect your payments in the event of incompletion. The developers must also provide proof of ownership, as well as planning permission and licenses, and since 2002, an insurance policy against building defects. A lawyer experienced in property transactions will anticipate these items.

Buy for your own use first and foremost
Unless you are absolutely sure that your children or grandchildren will visit you, it is generally a mistake to buy with their use as the main consideration. Time and again, people end up selling their enormous homes when their family doesn't visit as often as envisaged. Purchase primarily for your own use, taste and objectives.

Realistically analyze the potential costs of modernising an older villa or apartment that has romatically taken your fancy
Reforms and unexpected repairs can be expensive surprises. That said, second hand properties will often have a better location and may be less expensive than newer properties.

Look at comparables
The best rule for determining the value of a property is to take real sales prices of comparable properties recently sold. To enable you to do this your agent must have very good market knowledge. It will also help to have seen enough properties yourself to get a basic knowledge of the market.

Think ahead to the day you sell
A property bought today is an important part of one's assets. It is therefore advisable to take into account not just personal preferences but also general investment criteria, such as location, design factors, quality of finishes and facilities.

Take into account not just personal preferences but also general investment criteria, such as location, design factors, quality of finishes and facilities.

Negotiating the purchase

In making an offer it is important to feel out the bottom price of a seller but at the same time qualify yourself as a serious bidder. Too low an offer will not engage the interest of the seller, and might prove counter productive.

Try to get all your negotiating points together at one time rather than negotiate piecemeal: this saves time and often, unpleasant surprises.

If your offer is too low, your strategy can boomerang and it may simply insult the seller, and you may not even get a response. It's important to know how much property is really worth in the market, and to you. Find out if the seller has rejected other offers and what they were. What is the minimum offer that will engage his interest?

Make your offer in writing if possible (of course, subject to contract), and include not only the price, but also the deposit amount, when you are prepared to pay it, when you are prepared to complete, what you understand to be included in the price (for example furniture and fittings if applicable), and an often neglected point, that all machinery equipment and installations should be in good working order.

Show the colour of your money to the seller. He will certainly take your offer more seriously if you have a healthy deposit ready for immediate action in a bank account in Spain. This is normally in the area of 10% of the purchase price. Many agents today also offer credit card facilities, wherein a small deposit from €5,000 to €50,000 can be taken to “seal a deal” with a seller, and the deposit remains in the agent's client account during the week to ten days it can take the lawyers to prepare the private contract and a transfer of the 10% to arrive.

Municipal Added Value (Plus Valía) tax (the increase of the index value of the land since it was last purchased to its present sale). This tax corresponds, by its nature, to the vendor who is responsible for its payment, unless otherwise negotiated. Measure the land you purchase. If you are looking to buy a plot of land and no topographical survey exists, it may be advisable to negotiate a “Euro per square metre” price subject to survey, to avoid any unpleasant surprises.

Good psychology dictates that you should leave room to improve an initial offer. However, if you believe your offer is realistic and perhaps have a second choice in mind, it can be a wise strategy to let the seller know that if he doesn't accept your offer, you will be offering on another property befote considering any counter offer from him.

Property Purchase Costs
Transfer Tax
7% Payable by the buyer for the purchase of any Real Estate (villas, flats, land, commercial premises, garages), provided the vendor is not a developer or normally trading in the business of resale properties.
VAT and Stamp Duty 7% + 1% For any VILLA or APARTMENT, or GARAGE that is annexed to an apartment, where the vendor is a developer, promoter or habitual trader in these generally new properties.
VAT and Stamp Duty 16% + 1% For PARCELS OF LAND, COMMERCIAL PREMISES or COMMERCIAL GARAGE SPACES, where the vendor is a developer, promoter or habitual trader or a company. This covers virtually all NEWLY URBANIZED LAND PARCELS and NEWLY BUILT COMMERCIAL PREMISES. This only covers resale properties when the vendor falls into one of the above categories.
Notary and Property Registry Fees Approx 2.000€
for both
The cost increases according to the number of pages or complexity of the title deed, and value of the property.
Lawyers Fees 1% Appox. Lawyer's fees are in the order of 1% of the selling price, more or less, depending on the lawyer and the price of the property.
Municipal Added Value Tax
(Plus Valía)
The Plus Valía tax (described earlier) can be as little as a few hundred Euros or as much as many thousands of Euros on a property with a lot of land that hasn't changed hands in many years. This tax corresponds, by its nature, to the vendor who is responsible for its payment, unless otherwise negotiated.
The total official costs involved in purchasing a constructed residential property should be less than 8% for resale properties or less than 9% if VAT is paid on the purchase price, plus lawyer 's fees.

When an offer is accepted, always get a lawyer to check the land registry (the last word on property ownership, where any liens and encumbrances will show up). He will prepare a private contract that will bind both parties to the deal, and eventually prepare the public deeds for signature in front of a Spanish Notary, when the balance of the purchase price is paid and vacant possession of the unencumbered property is granted, thereby completing the sale. There are excellent lawyers in Mallorca, most speaking fluent English and other languages. The best way to find one is by personal recommendation, or by asking your agent Balearic Properties in Mallorca will suggest you the best advice from independent lawyers.

Of course, many of the above comments are more intended for the purchase of resale properties, as new developments have a fixed price list and payment schedule, often with very little room for negotiation, at least with respect to price. Sometimes some extras or modifications can be negotiated within the purchase price, depending on the policy of the developer.

In summary, finding and buying a property in Spain can be as simple, or as complicated a procedure as one wants to make of it. The old rule of Caveat Emptor, (Let the Buyer Beware!) always holds true. And a final tip: listen to your intuition! It is often one's best guide!

Balearic Properties Mallorca
Via Pollentia 3
Telephone: +34 971 53 22 21


Our Mallorca Property of the Week:

Pollensa Property of the week

Reduced Villa in Puerto Pollensa

DOWN IN PRICE FROM 1.150.000€ TO 995.000€ OFFERS INVITED! This large and extremely flexible villa is the ideal property for a family holidaying with different generations. In total there are 5 bedrooms and 5 bathrooms, but the possibility exists to separate either a 1 or a 2 bedroomed apartment, with private terrace and access! Being so large, the house of course is a rental hit, and it could well be a source of income for you too. Located in the residential area of Llenaire, recently finished and built to high standards, this property is all you could want for. Central heating ensures year round comfort, and the garden is lovingly designed and maintained. Air conditioning in the studio. Definitely worth a visit.


Mallorca Property Articles and Reports

dot Mallorca Property Market in 2009

NEW! - A brilliant in-depth analysis of the Mallorca property market

  dot The Property Seller's Guide

How to sell your home in Mallorca, procedures, costs and advice.

dot Buying your home in Mallorca

All you need to know about buying a home in Mallorca, applicable to the whole of Spain.

  dot Buy a Spanish Property

Questions and answers about the procedures and costs for buying and owning a property in Spain.

pixel dot Mallorca Property & Lifestyle

Mallorca property news, lifestyle in Mallorca, news, ... everything about Mallorca.

  pixel dot Mallorca Property Magazine

Apply to receive a copy of our Mallorca property magazine, interesting, helpful, stylish and FREE.