Balearics at the forefront of real estate market

By MenorcaSol

Balearic Islands is currently at the forefront of real estate market price leadership with a 7.2% increase between January and June, compared to the same period last year, according to data from the appraiser Tinsa.

The islands have benefited from the incipient recovery of national tourism but, above all, from the strong increase in the number of foreign visitors who, if maintained at the current pace, could reach 84.3 million visitors in the year, an 11,6% more than in 2016. This fact has encouraged the purchase of the rent, but also as a property of own use by many tourists.

We must emphasize that the evolution of housing prices in the Balearic Islands over the last decade has been much more favorable than the whole Spanish geography, because of its small volume of stock, which also would support the safety of properties in these areas as an investment.
It is a fact that foreign citizens are buying more houses than ever in the Balearic Islands. Last year reached a record high, with more than 53,000 sales, despite the decline of British buyers, French and German. The arrival of Swedish citizens has changed the landscape of buying and selling properties in Mallorca, climbing to the fourth position of home purchases by foreigners.

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To date, Balearic Islands, operate fifteen Swedish real estate. The Nordics offer a personal shopper service: they explain how they want the home and the professionals are looking for it in the real estate market available. 72% of contacts established with Swedish results in a purchase.

For foreign investment, we offer legal assistance regarding funds from other countries for investment in real estate and business. Our team has extensive international experience and cooperation agreements with international firms. We are also members of the Association of International Property Professionals (AIPP).

If you intend to purchase a property in Mallorca from a foreign country you should consider that both the jurisdiction and the processes to be carried out and the roles of professionals involved in it are different.

Throughout the whole process, the presence of a lawyer is essential to be responsible for providing obligatory advice to clients on legal, tax and legal liabilities acquired during the action of sale.

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The price of housing in the Balearic Islands keeps going up

By MenorcaSol

Data from recent statistics cast the following conclusions: The average price of second-hand housing in the Balearic Islands has increased by 1.2% in May compared to the previous month, bringing the value to 2,108 Euros per square meter.

  • This figure is 25.5% above the average in Spain.
  • Balearics are the fourth most expensive autonomous region in Spain, only behind the Basque Country, Madrid and Catalonia.
  • The price of new housing in the Balearic Islands has risen 3.1 percent in the first quarter compared to the same period of the previous year.

Balearic Islands are in the spotlight of foreign investors looking to buy a property in the Islands. Last year, the volume of transactions by international buyers exceeded 1,600 million, which implies a 50% increase over the last two years. Luxury properties are the most sought after by European buyers, more interested in buying rather than renting, which has caused a significant increase of the average price so far this year in different areas of Mallorca.

Citizens of Scandinavian origin are playing a very active role in this situation. They have focused on Mallorca to acquire a holiday home, which reaffirms the trend detected by the registrars during the last months of 2016.

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Mallorca is popular among the Swedes, and the question is, why? Their fascination for the island is relatively recent and is based on various aspects: the weather, the strength of the Swedish currency (1 euro is equivalent to 9.6 crowns) and the shortage on the real estate industry in this Scandinavian country, which makes it almost impossible for its citizens to acquire a house. Factors that together have caused overwhelming buying and selling. Among the top areas in which the Scandinavians are acquiring properties, highlight goes to Palma center, the old town and various municipalities of Serra de Tramuntana.

Furthermore, there is a neighbourhood in the centre of Palma targeted by every Swedish who wants to invest in Mallorca: Santa Catalina, known as “little Sweden”.

If you are interested in buying a property in Mallorca please do not hesitate to contact Ripoll&Mateu Solicitors Mallorca.

We’re specialists in Real Estate Law in Mallorca and we offer comprehensive advice on the process of buying and selling property.

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First sanctions on holiday rentals

By MenorcaSol

Last April, the Balearic Islands Tourism Agency Board initiated the Inspection Plan for the accommodation offer focusing its efforts on controlling advertising and illegal commercial offer of holiday rentals in private housing.

With this, the offers published on the Internet are specifically controlled by verifying data that points to an activity outside of the tourism regulations. In addition, the Balearic Islands Government announced joint actions with other public administration offices, such as the national and regional Tax Agencies.

As a result, the first holiday rental inspection campaign in the Balearic Islands produced sanctioning actions to eight real estate companies with fines for commercially offering illegal holiday rentals.

The current tourism law prohibits the sale of touristic stays in dwellings located in residential buildings and at the same time it modifies the rental regulation considering the possibility of offering touristic stays in residential buildings, if a series of requirements are met and whenever it is done in the authorised areas.

And the fact is that the Balearic Islands are beating all records of visits recorded to date. Hospitality companies and holiday rentals search engines reflect a 90% occupancy until October. The same happens with licensed holiday rentals, where the average price for overnight stays doesn’t go lower than 800 euros.

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To deal with the above, in July a new law will change the holiday rentals to tourists in the islands and it will contemplate the following stages:

  • The properties that are already registered with the Tourism Agency may continue to be rented as before, complying with the same rules and maintaining the same sanctioning regime.
  • The apartments located in residential buildings will still not be able to be rented to tourists or commercially offered through touristic channels.
  • The apartments located in residential buildings whose owners want to rent legally should wait for the zoning and also meet the requirements set by the new law.
  • Villas or semi-detached villas can be rented to tourists, if meeting minimum requirements and if obtaining an authorisation from the Tourist Agency in advance. With the new law, the owner must present a document from his city council that proves that his property is located in an area authorised for holiday This process is the same that must be done for apartments located in residential buildings.

Faced with this type of situation, we recommend that you always search for the help of legal experts on holiday rental and completely legal local companies so that you can make use of your villa or holiday rental apartment with total peace of mind and confidence.

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Prices are increasing in Spain and Balearics

By MenorcaSol

The forecasts of risk measurement agencies say that prices of housing will continue growing in Spain from this year until 2019 to reach 4.7% per year.

This will have a positive effect on bank’s balance sheets and the behavior of mortgage companies. In this sense, the specialists affirm that there is therefore no risk of a mortgage bubble, since for every four euros that were granted in 2007 today is allocated one euro for this purpose. The president of the European Central Bank (ECB), Mari Draghi, ruled out any danger in the euro area of a new housing or credit bubble.

The average price of second-hand housing has been in the Balearic Islands at 2,272 euros per square meter in April, a figure that represents an increase of 6.83% over the same month last year. Palma has been the second city where the price of used housing has increased the most from year to year, with 6.84%, registering an average price of 2.227 euros per square meter, just behind Barcelona.

Balearic Islands is in the sights of foreign investors looking to buy a home. Last year, the volume of transactions by international buyers – mainly European – exceeded 1.6 billion, which was a historical record and a 50% increase over two years ago. The luxury property is the most sought after by European buyers, more interested in purchasing than in renting, which has caused a significant increase in the average price in the last year in several areas of Mallorca

It should also be considered the boom of purchase by Swedish citizens. Property sales to Nordic citizens with high purchasing power have increased by up to 30% in the last three years. In the last four years the number of transactions on the island captained by these citizens has increased by 100% and the trend continues to rise. A demand that has skyrocketed mainly in Palma, where it has gone from three to thirteen specialized real estate agents in Scandinavian market in approximately ten years.

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Among the top areas for the Scandinavians are Palma center, the old town and the municipalities of the Part Forana, especially Serra de Tramuntana. There’s a neighborhood in Palma in which all Swedes want to live, Santa Catalina. Some people call it Little Sweden. The investment boom in the Palencia neighborhood has been spectacular in recent years.

If you are going to acquire a property in Mallorca do not hesitate to contact Ripoll & Mateu Solicitors Mallorca. We advise, defend and represent our clients at all levels. Our greatest asset is an infrastructure of professional leaders in each field of action, especially Real Estate and Tax, as well as our international vocation and multilingual capacity.

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Capital gain when no increase in value

By MenorcaSol

The High Court considers that the capital gain tax is unconstitutional in these cases, very common since the outbreak of the economic crisis. We must consider that the tax is not annulled but its automatic application in cases where there’s no revaluation of the property.

Last February, the Constitutional Court (TC) has already the unconstitutionality of the capital gain tax on the increase in value of the Urban Nature Land (IIVTNU) of Gipuzkoa, when in the transmission of a property would have been sold at a loss. With the new sentence, the Constitutional extends this doctrine to the whole national territory. According to the judgment of the Constitutional Court, the seller of a property can’t be required to pay a tax that levies an increase in value which, in fact, has not occurred.
The TC values that the constitutional principle of economic capacity is violated since the tax is not linked to the existence of a real increase in the value of the property, but simply to ownership of the land over a period of time. For all this, the Court declares the unconstitutionality and nullity of arts. 107.1, 107.2 (a) and 110.4 of the challenged law. All those taxpayers who sell a house and obtain a profit from the transaction, must continue to pay it.

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In view of the foregoing, it’s estimated that the number of properties on which the repayment of the surplus value could be reclaimed because it was transmitted for a value lower than that of acquisition would be around 550,000 properties. Any natural or legal persons who have paid the tax by virtue of the transfer of a property to losses in a non-prescribed fiscal year can claim the payment of a non-corresponding capital gain.

What is needed to claim?

1.- Appeal to the council, although it may subsequently be necessary to resort to the courts.

2.- A technical report performed by an independent expert, which proves the loss of value produced between the moment of purchase and that of the sale. A specific technical report is required on the property transmitted, which shows the variation of the market value of the land between the moment of acquisition of the property and the transmission.

3.- The deeds of purchase and sale of the last and penultimate transmission of a property.

4.- Statistics of average prices of the residential market of the municipality or the postal code where the asset is located.

Contact us if you are faced with the need to claim a capital gain overpaid or have questions about the status of your property.

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"Quality tourism for all", manifesto about holiday rental

By MenorcaSol

Few weeks after the start of the summer season, the Balearic Islands Government, entities and companies continue to laps with the Holiday Rental Law.

Earlier this month, the bill that will regulate holiday rentals in the Balearic Islands was approved by the Government Council after incorporating 200 of the 294 allegations it received in the public information period to which it was submitted.
These days, fourteen entities have adhered to the manifesto “Quality tourism for all”.
This manifesto has been promoted by the Association of Holiday Rental Apartments and Homes of the Balearic Islands (APTUR) in defense of the holiday rental, with the aim of obtaining the highest number of accessions and demonstrating social support towards holiday rentals.

The entities that have signed the document are: PIMEM, PIMECO, AFEDECO, ACOTUR,  municipal markets of Santa Catalina, Pere Garau, El Olivar and Inca, AMAT (Mallorcan Association of Tourist Attractions), ABONE (Balearic Association of Nightlife and Entertainment), Municipal Taxi Automotive Association (AMTAT), the Association of Golf Courses of the Balearic Islands, the Business Association of Rental of Vehicles and the Association of Nautical Companies of the Balearic Islands (AENIB).

The signatories argue that holiday rental is an aid to the local development of areas that could not have had the opportunity to access the income generated by tourism with the offer of traditional accommodation. APTUR-Balears states that vacation rental is a complementary accommodation model where the end user decides based on privacy and flexibility arguments. It also stresses that it is transverse from the point of view of sharing the benefits of tourism between the complementary offer and helps reduce the seasonality.

The entities affirm that they are looking for a regulation of the appropriate sector in which everyone can develop this activity with guarantees and fulfilling their fiscal responsibilities.

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