Property Buying Guide

Ibiza & Mallorca (Majorca) Property Buying Guide


Property investment on the Balearic islands has recently entered a lucrative phase of regeneration with the potential revenue for those gaining a foothold on the market seeing a considerable rise. Since the end of 2012 property prices in the premium sector have seen an escalation of up to five percent, a trend which is set to continue.

However buyers of properties on Ibiza and Mallorca (Majorca) are more likely to be seduced by the beauty of the islands, the sun kissed climate, picturesque countryside, sandy beaches and relaxed lifestyle than by any economic or tax-related benefits of owning a home on a cosmopolitan Mediterranean island.


Buying Guide for Properties in Ibiza and Mayorca

“Although real estate is a solid investment it is important to get the best financial advice”


Some of the most highly respected business brains have allowed romantic notions to plunge them toward potential pitfalls when buying a dream villa or considering the life-affirming notion of owning a country finca surrounded by acres of land. For this reason everything deluxe offers a specialist guide to investment in luxury property on the islands of Ibiza and Mallorca (Majorca). For many interested buyers, the purchase price is of secondary importance, however, to reduce transaction time and costs, the process needs to be as simple and financially secure as possible. For this reason the following guide aims to highlight some relevant considerations when buying Balearic property.

On a personal level it is advisable for the buyer to seek professional relevant and current advice on Balearic law, taxation and planning regulations during each stage of the purchase process. However the following general guide pinpoints some important considerations for would-be investors in real estate on the islands of Ibiza and Mallorca (Majorca).


Decisions to be made

Complete clarity is the key to choosing the ideal holiday villa or second home on Ibiza or Mallorca (Majorca). Even the most luxurious properties can be subject to the less than sophisticated infrastructure of the islands and embracing the relaxed lifestyle is essential for those wishing to spend time in the Balearics. Whether the plan is to invest in property as a business strategy, to acquire a home for holidays or to relocate permanently, thorough research is vital to ensure a smooth transaction.

In order to choose the right property in the best location you may wish to consider the following points:




Your reasons for choosing the Balearics and the specific area
Purpose of buying a property e.g. home, holidays or investment
Renovations, maintenance, upkeep and potential returns
Taxation, planning regulations and local laws
Plot of land and scope for future development
Local facilities and important services such as schools etc
Location, size requirements, environs and lifestyle requirements
Type of property e.g. modern, chic or rural and rustic


Choosing the region

Most people who buy property on the islands of Ibiza or Mallorca (Majorca) already have a favoured region but it is useful to make several preliminary visits to establish the ideal location. If you are buying a home or holiday home the criteria for decision making are much the same as when buying your principal dwelling. Would you prefer to be close to beach and local amenities with good transport links, or is a rural lifestyle important to you? It must be remembered that the islands are relatively small, certainly in the case of Ibiza, and therefore with the right vehicle any property could be a suitable base to make your home. However, please bear in mind that many of the minor, country roads on the islands are little more than dirt tracks.
If you are purchasing a property with rental in mind, it may be useful to research trends in holiday construction and popular destinations on the islands. As is the case worldwide, property prices fluctuate depending on the area. Some of the most sought-after, and therefore expensive, locations in Ibiza are: Ibiza Town, and the neighbouring beach resorts of Talamanca and Playa D’en Bossa. The coastal areas of Es Cubells and Cala Jondal boast some of the most luxurious dwellings and the inland rural villages of San Carlos and Santa Gertrudis also command some of the highest house prices on the island. Prime areas in Mallorca (Majorca) include the capital of Palma, Andratx, Puerto Portals and the northern resort of Puerto Soller which was a quiet fishing harbour just a decade ago. Small villages, such as Llubi, Alaró and Santa Maria, are now in higher demand, with an estimated 30 per cent of buyers looking for inland plots to build their own homes.
On both Ibiza and Mallorca (Majorca) demand from overseas buyers has driven prices up in some cases to double-digit millions but an in-depth knowledge of the local property market will still secure a sound investment and whilst prices in some areas of the Balearics have risen, others have not, leaving the average cost of property largely unchanged since 2005 whilst values over the past decade have soared by approximately 170%. Balearic_Island_Region








Taxes and Costs

Taxes Payable On Purchasing Property

Plusvalia –  is the tax payable on the increase in value of urban land following a property purchase in Spain. The rate is fixed by the town hall and varies dependent on local population size and length of ownership. The minimum tax rate for a property situated in a town of more than 100,000 inhabitants is 20% and the maximum 30%. A declaration must be submitted within 30 days of purchase but, in fact, the town hall usually calculates the tax based on the property values entered in the local property register from the Deeds of Sale.

Spanish VAT or IVA – (Impuesto sobre el Valor Añadido) at the rate of 10% is payable by a purchaser when acquiring a new build property from a developer, or an unregistered property (that is, an off-plan property acquired from another individual prior to being registered). In addition to IVA, a document fee AJD (Impuesto sobre Actos Jurídicos Documentados) is levied, which is similar to UK Stamp Duty of 0.5%.

ITP – (Impuesto Transmisiones Patrimoniales) is Spanish property transfer tax and is levied depending on the agreed purchase price at the rate of 8% rising to a maximum of 10% in the Balearics, on all other registered, residential properties. There may also be extra payments for refuse collection, which in some areas is charged separately, as well as possible additional taxes to cover shortfalls on local projects.



As well as tax and insurance your property may be subject to annual maintenance and management fees if it is located within a development. These costs are know as Community Fees. The development community will have an elected president and an appointed Administrator who manages the collection and distribution of the fees. Also, your local council, known as the ‘Ayuntamiento’, will collect fees towards your local council running costs such as street lighting and refuse collections.


If it’s your first experience of buying property in the Balearic Islands it’s normal to browse the selection of specialist Estate Agents available on the internet as you look for a reputable company with experience in your area of interest and a broad portfolio of suitable properties. That’s where we excel. Now you have found us, we have no shortage of expertise in the property market and being a reputable company, we will be able to furnish you with advice you need as a foreign investor.




If you wish to maximise revenue by letting out your newly acquired property when not in use there are plenty of opportunities. However there remains some factors for consideration: seafront villas and apartments tend to have a higher rental yield during the summer season whilst rural properties may provide a lower level of income but can be rented all year round or in low season. During the winter months, direct flights are widely available to Mallorca (Majorca). Flights to Ibiza during winter months are operated by BA from London City but not every day. When letting out a property it is essential that you are familiar with and comply with all relevant, local tax obligations and regulations.


It is vital that you seek legal advice at each stage of the buying process and familiarise yourself with Spanish property law. In particular, when considering the purchase of a property, ensure that no debts (e.g. mortgages) will be passed on to you from the previous owner by way of a Nota Simple. Study local building regulations and establish that the plot on which your property stands is designated “urban” and that construction has not taken place on “green” land. Always appoint an independent lawyer to represent your interests when purchasing property or land.




Exchange Rate fluctuation in the Euro exchange rate between acceptance of your offer and finalisation of purchase can lead to a substantial overpayment on the agreed price. Currency brokers can be used to fix the rate in order to prevent this. Specialists such as Currencies Direct also offer better exchange rates than financial institutions representing a typical overall saving of 2% on sterling to Euros. As the time between commitment to buy and final payment can span months an adverse change in the currency market could cost tens of thousands of Euros. Brokers can advise you on the most suitable currency transaction for your needs in order to secure a definite closing price.


Ensure that your property is adequately covered and that the terms of the insurance are met at all times, this is particularly important if the property is to stand uninhabited for long periods of time.

In addition to cover against damage to the property and contents, adequate Public Liability Insurance (PLI) is vital. should you plan on letting out the property. This will provide cover for alternative guest accommodation should your property be rendered uninhabitable. PLI is also needed to compensate guests in case of injury resultant from the proper use of equipment or facilities within the property, extending to outdoor facilities such as the pool or BBQ.