During last year, the city of Palma has experienced an exponential growth of the luxury tourism becoming Europe’s top city in “cosmopolitan tourism”.

This situation was backed up by the opening of new boutique hotels as well as the excellent gastronomic and complementary offers. This can be also extended to the real estate market in the island, especially the luxury sector, that is going through a very good moment these last few years, with a relevant increase both in number of sales and square meter selling price. These circumstances are especially visible in areas such as the centre of Palma and the southwest of Majorca.

When it comes to nationalities, Germans are still leading the investors list on the luxury real estate market, followed by the English and in third place, the Scandinavians, that show a special preference for Palma. Regarding this information, we have to highlight that 93% of the new residents of Palma in 2017 are foreigners. And again Germans stand out in the numbers, choosing to live in Palma and enjoy its quality of life.

All this that has been stated before contributed to a volume of real estate sales in the island last year similar to the numbers registered in 2007, just before the crisis started, when total transactions reached 4,800 millions of euros and last year ended with 4,500 millions.

In fact, real estate experts started to point out the shortness of luxury housing in the island. Especially in the municipalities of Andratx and Calvià, and some neighbourhoods in Palma, such as Santa Catalina or Terreno, where the Scandinavians have invested immensely during the last few years. The demand for this type of product and its shortness in the island is causing that there is now interest in some other areas that some years ago were not exactly attractive for investors but that are now being revalued, like Platja de Palma or Cala Major.

The German client is still the one claiming most of these properties in Mallorca, and it is responsible for 57% of purchases, followed by the British with 16% not allowing the Brexit to hold them back. The Spanish, with the country’s economical recovery, are next with 7%, followed by the 5% of the Swiss and 4% of the Swedes.
If you intend to purchase a property in Majorca from a foreign country like England or Germany, 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.
Ripoll&Mateu can fully assist you in the buying process.

The last real estate market reports show that second-hand housing in the Balearic Islands has had the biggest price increase in the whole of Spain.

In April 2018 the average price was 2,567 euros per square meter. This number had a monthly increase of 5.57% standing out from other regions in the country. Interannually, it increased 12.97% which is also the most relevant increase nationally.

Palma was the regional capital that went up the most from one year to the next, with a 12.28% increase, and an average price of 2,501 per square meter.

At a national level, in April 2018 Spain registered an average price of 1,572 euros per square meter, casting a monthly increase of 1.09%. From last year to this year the increase was 3.01%

The upward trend in the price of housingconfirms the good health of the real estate sector, that also keeps casting positive numbers relating to purchases andmortgages.

We should also take into consideration that the Balearic Islands is the autonomous regionwhere the free housing transactions carried out by foreignershave greater weight. In fact, they represented 40.5% of the total transactions during the last semester of 2017. Moreover, the number of transactions has increased around 5.3% in the Balearic Islands during the same period of time. The average price per square meter for foreigners is 2,888 euros, what implies an increase of 12.1% and that the archipelago is the most expensive autonomous region.

The main reason behind this situation is the investment intentions. Investors prefer lower risk and good profitability. More and more people buy apartments with the intention of renting them out and that results in the increase of both selling and rental prices. To this we have to add the macroeconomic stability that we have since 2013, with the continuous increase of the GDP, which has stimulatedforeign investment. The investors focused on the areas where it is easier to rent: the coast and large cities.

In this sense, the Balearic Islands is the third most expensive autonomous regionin terms of average rental price, with an average monthly rental of 1,522 euros, behind Catalonia (1,603 euros) and only 27 euros below Madrid (1,549 euros). This important increase is known as the “rental boom” and is mostly due to the tensions between supply and demand, among some other factors.

If you intend to purchase a property in Majorca from a foreign country like England or Germany, 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.

In Ripoll & Mateu Solicitors Mallorca, we offer our clients a comprehensive service in everything required for the sale of a property.

The next month of July will be the first in which the flats and apartments of the city can’t be rented to tourists as holiday rentals

. This is a pioneering measure in Spain that has been activated after several studies and analyzes commissioned by the Balearic government have revealed that the offer of non-regulated tourist flats increased 50% between 2015 and 2017 until reaching 20,000 places sold in the city. These studies reflect that 48% of tourist rental flats are offered in periods of between seven and eight months, which vetoes possibilities for the entrance of long-term residential rental in the market.

According to data presented by the government team, the tourist rental offer has increased by 50 percent between 2012 and 2017 in Palma. Thus, the parallelism between the lack of rental housing throughout the year and the rise in prices due to the increase in demand for holiday homes has been highlighted.

Currently in the Balearic capital there is an offer in the market of some 11,000 tourist rental places, of which only 645 are licensed, all for single-family homes. Before the approval of the autonomic regulations in August of last year the places offered amounted to 20,000, but the high fines contemplated in the law caused the withdrawal of ads on the large platforms.

In Palma, only tourist rental will be allowed in single-family homes, isolated houses or villas, except for those located in protected rustic land, in the vicinity of the airport and in areas of non-residential use such as industrial estates. After the aforementioned zoning process, the government has decided to consider the city as a single zone and maintain the restriction of this practice in flats and apartments throughout the territory. The Balearic Islands Government imposed a fine of 300,000 euros on this platform in February for hosting advertising for up to twenty homes in Mallorca that do not have the compulsory license for the holiday rental.

The new standard has been collected internationally and has not been well received by companies in the sector who argue that the impact of this new situation is going to harm not only those who obtained income directly from holiday rental homes but also for all the complementary offer.

In this way, the Spanish Federation of Housing and Tourist Apartments goes further, and plans to take legal action against this prohibition in the Balearic capital. In the same line, the Association of Small and Medium-sized Trade of Mallorca (Pimeco), has agreed that the vacation rental “dynamised the local economy and trade by the purchases of tourists who will now disappear at least from the center and also because the entrance of tourist rentals stimulated the consumption “.

If you are determined to invest in Mallorca or think that the island is the perfect place to settle, do not doubt that our services will be necessary for you.

We are a multidisciplinary law firm specializing mainly in Real Estate Law, Urban Planning and Administrative Law, as well as in other civil areas, such as general contracting, family law and civil procedure.
These are our strengths:

• 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.

• We have 30 years of experience of legal practice in Mallorca but we’re in constant process of renovation, internationalisation and specialisation.
• We’re specialist in property law in Mallorca, we offer our clients a comprehensive service in everything required for the sale of a property. acquiring a property in Mallorca is a very different process from other foreign countries and requires information and professional advice that facilitates the purchase while minimizing the risks. If you intend to purchase a property in Majorca from a foreign country like England or Germany, 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.
• 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.

This allows us to offer detailed advice in the field of internationalisation by providing services such as: International Trade Consulting, recruitment, formation of companies, subsidiaries and branches.

Advice on tax issues: tax incentives for the internationalisation of companies, income earned abroad, international operations, etc

• We’ve deep knowledge of the Tourism Law of the Balearic Islands as well as the recent zoning process, do not hesitate to contact us. Our team of professionals will solve all your doubts and advise you in the most effective way.

You can contact us through our form in our website, we will attend with no obligation. Our team is committed to providing the best work processes to provide you with the best results, in a constant quest for professional excellence establishing external collaboration when circumstances require.

The declarations may be submitted this year from April 4 through the Internet or telephone, but for face-to-face attention it will be necessary to wait until May 10.

In addition, the fiscal data consultation service and the reference number is advanced to March 15 with the aim of streamlining the campaign itself. The deadline for delivery will be July 2 and a few days before, on June 27, in the case of direct debits.

From April 4 you can submit statements that do not need to add information from the new app, while those that require modifications will have to be processed through its web program. Once modified, all can be confirmed through the mobile application of the Tax Agency.

One of the questions that can be asked is how the income obtained from vacation rentals is taxed. In this sense, we must take into account different variables.

In the same fiscal year it is necessary to differentiate two periods:

• The time that the dwelling has been rented, from which the full income obtained will be declared and the expenses specified for the rental can be deducted

• The period in which the property has been free, which will correspond to the income imposed by the Treasury for having a second property.

The net return for which the tax will have to be paid will be the result of subtracting the expenses from the income obtained. In other words, the cost of advertising for the property, the interest on the mortgage, repairs, some payments such as the IBI, the community, the rubbish rate or household insurance, etc. may be discounted. You can only deduct the proportion of the expense at the time that the rented property was held, except for the promotion of the property that may be deducted in full. To know what is to be taxed for the time that the house has been free, it is necessary to calculate 1.1% of the cadastral value (2% if the last cadastral review was made before 1994), divide that value between twelve months (or between 365 days) and multiply the result by the months or days that the rented property has not been. This will result in the attributable performance.

In the case of not declaring, the Treasury sends the taxpayer a settlement proposal, which includes the undeclared income to be included within a certain period. If it is understood that the action taken has been originated with the intention of fraud, a sanction may be imposed that would go from 50% and 150% of the undeclared.

At 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.