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Guide for buying Real Estate in Mallorca, Spain — purchasing process, documents, steps, costs. Tips from brokers and free checklists.

Suppose you want to buy a property in Mallorca quickly and profitably. YES! Mallorca Property team has much experience in this field. We put together a guide that explains the most critical parts of buying a property in Mallorca, Spain. 

This article shares the secrets and helpful tips for buying a property in Mallorca. We tell you which mistakes you should not make when purchasing. How to buy a house as quickly and profitably as possible, what taxes and fees to pay and whether it is possible to complete a transaction remotely without travelling to Spain. 

Content

  1. The main requirements when buying a property in Spain (including Mallorca)

  2. Checklist for buying a house in Mallorca

  3. Property Financing Strategy

  4. Extra-fees to consider when buying a home

  5. Mortgage-related costs

  6. Choosing a property in Mallorca for your needs

  7. Property selection process

  8. Checklist: How do I choose a location to buy a property in Mallorca?

  9. Checklist: What to consider while viewing a property in Mallorca?

  10. The most critical factors of the buying process

  11. The best time of the year to buy a house in Mallorca

  12. Important things to remember and valuable links for buyers

Buying and selling property in Mallorca requires advanced knowledge of Spanish legislation. It is necessary to have enough time - it is impossible to buy a property in Mallorca in just one day. If you want a fair deal, you have to run thoroughly in choosing a property in Mallorca — select a real estate agent in Mallorca, pinpoint your priorities and make a list of the houses you want to buy in Mallorca.

 Man fill out checklist on a tablet

The main requirements when buying a property in Spain (including Mallorca)

Most people will say that buying a property starts with choosing the property itself. But that is not quite the case. You first need to determine on what terms you can buy a property in Mallorca.

 

If you want to buy the property of your dreams in Mallorca, you need the following documents:  

  • NIE - Foreigner Identification Number (Número de Identificación de Extranjero)

 The essence of the document is elementary. Spain's NIE is the taxpayer's tax identification number.

This document is the basis for all further actions in Spain. Without it, it is impossible to open a bank account, buy or sell chattels and real estate, obtain a residence and even issue a discount card in the supermarket. 

The process is simple, and there are three options. 

1. You can apply here, fill in the documents, pay the fee of 15 to 20 Euros and come to the Extranjería on the day of application to lodge your application in person.

 2. If you want to save time, you can go to a notary who will do everything for you.  

To obtain an NIE in Spain, you have to:

- make an appointment with a notary;

- present the passport that entitles you to stay in Spain;

- pay the fee and notary services (about 150 - 200 euro per person). 

3. You can also apply for a Spanish NIE through the Spanish Consulate in your country of residence. To do this, you need to make an appointment at the Spanish Consulate's website. 

The NIE process takes from 3 to 60 days.


  • Opening a Bank Account in Spain

The issuing bank also takes time to open an account, which can take a week to a month.

At this time, you do not necessarily have to be physically on the island waiting for the bank's approval.

Once the account opening is complete, you must revisit the Spanish bank branch and sign the relevant agreements.

Suppose you have an account with a Spanish bank. In that case, you must immediately inform the tax office of the country of residence and taxpayer.

When you transfer money from your account to the Spanish bank, you must provide all the necessary documents for the real estate you buy (purchasing contract with all the deal details). It helps to avoid blocking your transaction in Spain.

 

  • Insurance

You need life and property insurance if you decide to buy a property in Mallorca with a mortgage. It's the requirement for the bank that provides you with a mortgage. You can apply for insurance with the same bank. Or you can choose an insurance company at your discretion.

Suppose you decide to buy a property in Mallorca. Get more information about property insurance in this article.

IMPORTANT: When buying propert in Mallorca, you must do some paperwork and step-by-step actions simultaneously. You don't have to wait for the documents to be ready. The main thing is to start the process, and then you can start looking for the home of your dreams in Mallorca.


Checklist for buying a house in Mallorca

In addition to taking care of the documents, it is worth investigating the procedure for buying a property in Mallorca. To avoid getting confused and forgetting anything, we recommend that you keep the "How to buy a property in Mallorca" checklist. This step-by-step guide will help you save time and money and make buying a property in Mallorca more enjoyable and more manageable.

Prepare documents  

- Spanish NIE

- Bank account in a Spanish bank

- Insurance (if applicable)

Budget your purchase

Mallorca, like mainland Spain, requires investment. However, the Mallorca property market is slightly different to mainland Spain. Our article, Mallorca Property Prices & Market Report 2022, will help you set up the maximum budget for the home you want.
Define Property Finacing  Strategy You can buy property in Mallorca using your funds or with a mortgage.
Set up Priorities Once you set up your budget, we recommend focusing on the property type. The questions that help to do this:
- What is the purpose of buying a property in Mallorca (renting out, vacation, seasonal living)?
- How do you maintain your Mallorca property?
- Who in your family will have access to the property?
- What is the time frame for the purchase?
- What role does the issue of obtaining Spanish residency play for you?
- How many years do you plan to own property in Mallorca?
- Will you be renting out your Mallorca property?
Find the right real estate agent Study the reviews on the internet. Look at the company's rating and the agency's website. Find out what other channels the real estate agency has in Mallorca: social media, YouTube channel, etc. Agencies with the resources to maintain additional resources are more likely to sell a lot and therefore have a lot of experience.
Make an appointment with a real estate agent The quickest way to let an agent know what you are looking for is to make an appointment — at the sales office or online.
View Property A professional real estate broker in Mallorca will tell you the property's pros and cons during your visit. But remember you must not only rely on the estate agent but also remain vigilant. Scrutinize the property. And if a question comes up, be sure to ask your real estate agent.
Negotiate and make Offer Only make an offer if you have decided to buy the property.  Inform your agent about the terms of the deal that are acceptable to you.
Sign Optional Agreement Once you agree upon the purchase terms, the real estate agent will make the optional agreement. It contains all the conditions for purchasing the property in Mallorca, the buyer and seller details, the price and the payment plan.
When signing the preliminary contract, you must transfer 10% of the property's value to the notary's account as a deposit.
Deal After paying a 10% deposit, you will have up to 3 months to close the deal. Three months is enough to obtain all the documents, arrange a mortgage if necessary and prepare the total amount of money for the purchase.
The time can be less if both parties are prepared to close the deal sooner.
Pay Taxes All properties for sale in Spain are usually listed without taxes. So, to the price of a house, you need to add 10% as tax payment and 2-3% as the cost of purchase (depending on the type of the property. Get more information about it article. 
Make arrangements for moving in As a final step, you need to change your energy, water suppliers’ contracts, and phone and internet providers. Nothing can stop you from enjoying your home in Mallorca when you notarised your deal and got your keys.

Download the Buying a House in Mallorca Checklist


Property Financing Strategy

If you wish to buy real estate, you have to accumulate funds.
  • Questions to ask before buying a property
First, you must soberly evaluate your wishes and compare them with your actual financial possibilities. Mallorca is a luxury resort. The elite status of the island also affects the average cost of 1 m2. For September 2022, this figure is €3,542/m2. And it is constantly increasing. Since 2022, the average price of 1 m2 of Mallorca real estate has increased by 3%.
But that is not the limit. In the luxury areas of the island, such as Son Vida, Puerto d'Andratx, Sol de Mallorca, Costa den Blanes and Nova Santa Ponsa, the cost of 1 m2 can be as high as €15,000.
Therefore, you must first determine the financial strategy.

  • Buying a property with your own funds
If you decide to buy a property in Mallorca with your funds, you need to understand that you must have a pretty impressive amount of money. The minimum amount you can buy a property in Mallorca is 100.000 euros. For this price, you can get the small studio in the North of Mallorca (Get more information at Review of Bargain Real Estate in Mallorca).

  • Applying for Mortgage
50% of property buyers in Mallorca in the last five years applied for a mortgage.

Year

Number of issued mortgages

Total number transactions %

Total number of deals

Debt capital (mil. Euro)

2021

6.961

49%

14.146

1.450.069

2020

7.101

66,5%

10.684

1.209.105

2019

8.046

57,8%

13.925

1.352.383

2018

8.190

52,3%

15.665

1.417.304

2017

7.520

47%

15.893

1.207.551


By Ibestat (Institut d'Estadística de les Illes Balears) and   INE (Instituto Nacional de Estadística)

Caixabank, Santander, and Sabadell lend up to 80% of the value of such property type. The borrower must have at least 20% of the property's value before submitting the documents and 12 to 15% to repay related taxes and fees.

Mortgage Rates and Types

Caixabank, Santander, and Sabadell lend up to 80% of the value of such property type. The borrower must have at least 20% of the property's value before submitting the documents and 12 to 15% to repay related taxes and fees.

Average loan interest rate 

Overpayment for 15 years

Overpayment for 130 years

Fixed

2,3%

16,5%

38%

Variable

1,8%

from 10%

from28%

Mixed

2%

from 13%

from32%


  • Cash loan

Buyers of property in Mallorca often use a consumer loan as a source of additional finance. This form is convenient if you have almost the entire amount. Or such a loan can be used as a mortgage down payment.

Extra-fees to consider when buying a home in Mallorca, Spain 

Within 30 days after signing the final purchase contract, the seller is obliged to pay taxes and fees according to Spanish tax law. This amount will be 10% of the property price. When tax is paid, the deal will be registered.

Payments and tax charges when buying a property in Mallorca:

El impuesto de transmisiones patrimoniales (ITP)

8%

Property transfer tax for the resale property

IAJD — Impuesto sobre actos jurídicos documentados

Up to 1,2%

Stamp duty varies depending on the municipality. The maximum rate for the Balearic Islands is 1.2% of the property price.

IVA – value added tax

10%

The buyer pays it only when purchasing a new home from a development company. The buyer pays it only after the property acceptance deed. 

Registration fees

0,2%

A buyer pays the fees to apply for the property for the Registry.

Notary Fees

-

The buyer pays the notary's fees. Each notary sets the price. In practice, the cost ranges from EUR 400 to EUR 1000.

Banking fees

-

Check in advance with your bank for the costs of transferring money, opening an account and converting currencies. These are usually between 0.1% and 0.4% of the payment amount.

Municipal tax

3%

According to the Spanish Income tax provision, the seller does not pay this tax. The buyer must pay the tax authorities 3% of the purchase price.

Legal Expences

1%

Buying property in another country is always a significant risk and responsibility. You can use the services of a lawyer to ensure that the deal is legally clear. The fee for legal support is 1% of the transaction amount.

You can have a notarised power of attorney for your lawyer to manage the entire transaction. Such a power of attorney would cost between EUR 200 and EUR 300.


IMPORTANT: The real estate agent's commission is 2.5 to 7% of the property's purchase price and is included in the property's price. The seller pays it when signing the purchase contract with the notary.

Advise: Many taxes and payments are refundable for EU citizens. Contact your tax advisor to reclaim them. 

The example of taxes and extra-fees for luxury apartment in Mallorca:

  • The value of the purchased property was 850,000 euros.

  • The property was purchased from the agency Yes! Mallorca Property in 2022.

  • The real estate agent's commission is already included in the property's value.

  • The commission was 5% and was paid by the seller according to the purchase contract for the property in Mallorca.

Ein Beispiel für die Zahlung von Steuern und Gebühren auf Mallorca.jpg

Mortage-related fees 

Suppose you decide to buy a property in Mallorca with a mortgage. In that case, you will need to calculate the additional costs of completing it.

According to the decision of the Civil Court, after 2019, the bank providing the financing will have to pay most of the additional costs related to obtaining a mortgage.

In 2022, the borrower assumes the following costs when receiving the loan:

  • Commission for issuing the mortgage - from 0.5 to 1% of the requested loan amount

  • Bank appraisal of the value of the property — up to 0.1% of the value of the accommodation

  • The cost of property insurance. — varies depending on the time of conclusion of the contract, property, insured capital and the contractual guarantees. On average, this amounts would be up to 0.25% per year of property value 

  • Life insurance of the borrower who pays it once a quarter. The estimated cost is 90 euros.

Under current Spanish legislation, the bank cannot compulsorily include property insurance in the loan value. The client can choose the insurance company with the most favourable conditions. But in practice, buying the insurance in the same bank where you take a mortgage improves the loan agreement conditions. The bank can reduce the interest rate from up to 1%.

It is still necessary to determine the loan term correctly. The monthly payment must be comfortable and not burdensome for you.

Advice: Choose a term, so the mortgage payment does not exceed 20% of your income.

You can preliminary calculate the mortgage payments with the "Mortgage calculator".

Choosing a property in Mallorca for your needs

Accordint to statistics, 96% of buyers do not buy what they had initially planned. And the point here is not the value of the property. The fact is that most people initially want to buy the property they liked in the photo. But in the selection process, people often realise that their original choice does not meet their needs.

To understand what type of house in Mallorca is right for you, ask yourself some essential questions:

 

What is the purpose of buying property in Mallorca?

  1. Do you plan to live in Mallorca permanently?

  2. Do you plan to rent out your property?

  3. Do you use it for vacation or seasonal living?

  4. Do you plan to buy and re-sale it in the future?

  5. Is it multipurpose?

How you play to use your dwelling

  • Holiday home

  • Seaside property

  • Country home

  • Luxury villa

  • Second home

  • Permanent living home

Who of your family member use the house

Do you plan to use your dwelling on your own? Or do you need more space and sleeping quarters, a lift, a swimming pool, and a garden area?

Do you need Spanish residency?

It is possible to obtain a Spanish residence through the Golden Visa program. To do this, you must buy a residential property that costs 500,000 euros or more. In doing so, you must only use your savings and not a mortgage. You are then entitled to a Gold Investor Residence.  

How many years do you plan to have a house in Mallorca?

The time you have owned the property affects the amount of tax you pay when you sell it later. If you plan to use the property bought in Mallorca for a long time (10 or more), it is better to buy a better home. This approach helps you avoid unnecessary future repairs and maintenance expenditures.

Do you plan to rent your dwelling?

If you plan to rent out your house or apartment, read a few rules to keep in mind:

  • Apartments in Mallorca cannot be rented out for the short term.

  • Properties directly by the sea are valued more highly

  • Owner will bear the depreciation of the property

  • Majorca Real Estate renting tax is 24%

  • Tourists prefer holiday homes and villas with private pool

When do you plan to make a deal

The Mallorca property market is very dynamic. It constantly grows, with high demand and a consequent supply shortage.

So if you plan on buying any property in the next 6 to 12 months, you should first look at all the helpful information and buying articles on our website.

Going for a property inspection, in this case, makes little sense. The average property sale in Mallorca does not exceed 4.5 months. If you like something, the property will be out of stock after six months or will cost 10-15% more.


If you answer these questions, it will be easier to decide what to buy. Please write down the answers on paper and send them to your real estate agent in Mallorca. A professional real estate agent recommends the best options for buying property based on your needs.

IMPORTANT: It can get cold on Mallorca too. As a dream island, Mallorca is a sunny place, but in winter, it can be a bit chilly in the Balearic. Check the heating of the house you want to buy in Mallorca. The new homes in Mallorca have modern heating systems. Older houses often have alternative heating options, for example, air conditioning. This can lead to high electricity bills if much heat is needed in winter. Ask to be provided with heating bills in winter. Also, ask the owner or builder for information about the energy efficiency of the housing (certificate A ++ being the highest).

Congratulations! You have all the money you need and have calculated and accounted for all the extras. You can now start looking at properties in Mallorca.

How to start your property search in Mallorca

There are many types of homes that serve different needs.  Foreign buyers in Mallorca prefer.

Real estate types and prices in Mallorca

Most often, foreign property buyers in Mallorca prefer:

Which properties are most often bought in Mallorca:

Ground floor apartments

Penthouses

Resale apartmens

Newly built apartments

Villas

Fincas

Building plots

% of total number of deals

9%

4%

28%

8%

24%

21%

6%

Average price

€560.000

€1.00.000

€340.000

€550.000

€1.670.000

€880.000

€640.000


Data are based on studies by the National Institute of Statistics of Spain (INE), citing www.ultimahora.es and expenditure www.europapress.es.

According to an estimate by Spain's leading real estate portal Idealista, the average price per square metre in Mallorca in September 2022 is €3,542. The average property price in Mallorca in 2021 was €3,141/m2. 

The increase from September 2021 to September 2022 is 10,8%, the highest annual growth in Spain, with a 3,9% average.

From January to September 2022, the average price per square meter in Mallorca rose from €3,353 to €3,542 — a 5,6 % increase.

Most Popular Locations and Prices 

Location

Annual difference 

Price in September 2022

Palma de Mallorca

+ 11,8%

3.431 €

Santa Ponsa

+ 17,7%

5.396 €

Andratx

-2.4%

5.135 €

Alcúdia

+ 13,3%

3.368 €

Felanitx

+ 13,3%

1.608 €

Llucmajor

+ 12,6%

2.971 €

Marratxi

+13,4%

2.667 €

El Toro

+ 36,6%

5.080 €

Palmanova

+ 30,8%

5.105 €

Cala Vinyes

+ 16,7%

5.499 €

Sol de Mallorca 

+23,8%

6.263 €

Portals Nous - Bendinat

+ 31,4%

7.724 €

Calvià

+ 13,2%

4.316 €

S'Arenal-Son Verí

+ 6,2%

2.519 €

Son Vida

+ 39,9%

6.802 €

Valldemossa

-10.5%

3.613 €

Manacor

+7.1%

1.658 €

Sa Ràpita

+44.9.%

4.012 €

Binissalem

-10.3% 

1.882 €


Get more information at Mallorca Property Prices 2022 Report.

So, here are all the critical steps involved in preparing to buy a house in Mallorca:

  1. Prepare necessary documents.

  2. Set up the financial strategy and budget.

  3. Set up personal priorities.

  4. Define the type of property to buy in Mallorca.

  5. Overview of property prices and the most popular locations.

Now you can start visiting the houses you like. Split this process into two steps for your convenience:

  • Make a location tour

  • Request property viewing


Checklist: How do I choose the location for buying a property in Mallorca?

Score each parameter from 1 to 5, 5 being the highest.


  1. Make sure you are happy with the location of all the necessary infrastructure: grocery shops, pharmacies, playgrounds, cafés, bars, restaurants, bus stops, bakeries, etc.
  2. Overview of the area accessibility. Is it convenient to get in and out? How far are the capital Palma and the airport? Is public transport available?
  3. No unpleasant odours exist in the living area, such as agricultural production or sewage.
  4. Trash bins are plentiful and clean.
  5. Will there be noise in the living area? How does it manifest itself at different times of the day? From which side does the noise come.
  6. Does the neighbourhood give a pleasant impression? Is there a park, green space, or walking paths?
  7. Is there any construction work planned in the neighbourhood? How this affects your privacy? Degree of noise? Dust generation?
  8. How close is the sea? What is the walking distance to the nearby beach?
  9. Are there any hotels, nightclubs or clubs in the neighbourhood? The presence of tourists can lead to increased pollution in the area and nighttime noise.
  10. Does this suit your idea of the area around your home?

Checklist: What to consider while viewing a property in Mallorca?

1. Property Viewing
  • Property Reference Number
  • Property Price

  • Agency 
2. Property total size

Make sure that there is enough space for your needs and that the area is the same as declared in the documents.

3. Property Condition 

Check the facade, roofing, stairwell, and letterbox; no mould in the corners, no unpleasant odours, and no cracks in the ceiling or walls.

4. Electricity 

Check that the lights are on everywhere. If it is not working somewhere, you may have to change the electrics.

5. Bathrooms

Check the condition. Does everything work as it should? Does the bathroom have windows and an extractor fan? Mallorca has much humidity. If the bath is not ventilated, there could be mould.

6. Building orientation

Most used rooms should be on s the sunny side.

7. Windows

Make sure that the windows are well insulated. Check the seals and make sure there is no moisture on the windows.

8. Heating

Find out what kind of heating is used in the house. How much money does it cost per month? And whether it is possible to connect the city heating.

9. Kitchen.

Check the condition of the appliances. Make sure that everything is working and that the appliances are located comfortably enough for you.

Congratulations! You have chosen a property that best suits all your needs. You have also gained experience and understanding of buying property in Mallorca, which means you now better know and understand your options and requirements.

Advise: Never make more than five viewing a day. Take breaks between them. Add notes on a checklist.


The most critical factors of the buying process

Property Selection Process  

We approached the finish line: the next step was the purchase contract itself.

  1. Conclude a preliminary contract for purchasing a property in Mallorca with a real estate agency and a seller. The real estate agent draws up the contract. If necessary, you can review the agreement with your lawyer.

  2. Transfer 10% of the property's value to the notary's account, which handles the purchase and sale transaction. The buyer and seller selected the notary in advance, and its details were added to the preliminary contract of the reserve.

  3. Prepare the package of documents. After paying 10% for the property reserve, the buyer must prepare all the documents for the transaction.

  4. Check the property. Request a list of documents from the seller:

  • Escritura - Title Deed

  • Extract from the Land Registry

  • Nota Simple - Extract from the Spanish Land Registry the legal status of the property

  • IBI - Property Tax ID

  • Energy Certificate

  • Basura - Annual Tax

  • A certificate with the balance owed by the bank if you have a mortgage

5. The notarial certification of the purchase contract. Here the total value of the property is paid on previously agreed terms. 

The buyer can make the payment in various ways:

  • Transfer money to the account of a notary.

  • Ask the representative of the notary about this type of transaction in advance. Bank cheques are issued in advance for the amounts and recipients specified in the contract. 

  • Online transfer at the time of signing the contract. To do this, you must inform the sender bank of the planned transfer well in advance. Then your bank will withdraw the transfer limit for the time of purchase of a property

The best time of the year to buy a house in Mallorca

Decide whether to buy in the high season or winter.

If you want to buy property in Mallorca, one of the questions is: when is the best time?

The Mallorca property market varies from season to season.

For example, during the tourist season from April to October, most sellers see more prospects to sell their Mallorca property. Therefore there are more offers on the market now, but getting a discount is difficult.

Another benefit of buying during the holiday season is the opportunity to evaluate the property in a high season. You can be sure about:

  • No noise

  • Cleanliness of the place

  • Location of the sun

  • Neighbours

  • Easy access to the house 

Sellers are more likely to reduce the price at the end of the season before winter. This way, they can save on taxes for the next one. One of the advantages of buying property in Mallorca out of season is that the airfares are much cheaper. You can evaluate different locations at different times of the year and decide what to buy.

Also, in the winter, you can know exactly how warm or cold the house is and whether or not you need to install additional heating. This can be a point of discussion to reduce the cost of the property.

Tipp: Explore all your buying options at different times of the year. That way, you can buy a property in Mallorca at a reasonable price.


Important things to remember and valuable links for buyers

In this article, we have covered in great detail all the nuances involved in buying a home in Mallorca, Spain. We recommend keeping this article in your bookmarks so you can use it when you need it. You can download all the essential checklists for free.

An important point is the choice of a broker. In short, we recommend going with a reputable, well-established company. It must have experience in the local market, a good reputation, and an office. The list of properties from that company must contain exclusive properties and be constantly updated. Yes! Mallorca Property has extensive experience on the island, excellent references from clients and a constantly updated catalogue of properties. We will be glad to help with your choice and purchase. Contact us today!

 Helpful links for Mallorca propery buyers:

Property prices in Mallorca

Mortgage calculator

Mallorca's Property Catalogue 

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