The Deal With Rentals In Mallorca

After having the chance of living here for some time and getting to know the local real estate market we have a better understanding of what opportunities there are for renting in Mallorca, and what they mean both as a renter and the owner.

We would always advise to work closely with a lawyer if you’re buying a house with the prospect of renting it out. Mallorca has a huge tourism industry and as such, it has plenty of rules and features that make it very different from other markets. Using your own knowledge and experience from markets like Germany or the United States might lead you to costly mistakes in the best of cases, or to being exposed to serious legal consequences in the worst. Here we won’t go into the legal details, but just give a general summary of how it works so you can decide how to proceed from here.

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And that’s why we will always find the best choice for your purpose and investment goals.

There are three different categories of renting where you might find yourself on either side, as an international owner or renter in Mallorca: short term, temporary rental and long term.

Here is the breakdown of each type:

• Short term rentals: Defined by stays of 30 days or shorter, these are what we usually understand as vacational rentals. They can be charged per day or per week. This is, of course, where investors can expect to make the best of their property by having it rented during the long holiday season. In all Baleares, including Mallorca, you must have a license to be able to rent out your home as a vacational property. With some exceptions, it’s not allowed to rent out single bedrooms. The good news is that you can buy a house that already has the license to be rented out so you don’t have to apply for a new one.

• Long term rental: These rental properties are regulated under the Law of Residential Rentals (LAU) and also have to meet specific requirements. One of them is that they can’t be shorter than a year. New changes in the law have enhanced the rights of the tenants with the purpose of limiting the abuse that happens often in places like Mallorca and the surrounding islands: sky-high prices and low availability make it very difficult for the residents with average income. This new regulation might put-off potential investors who are seeking to buy for this purpose, but there are still many advantages to this option. For example, residents who rent out their home for long term can get up to 60% of their rental income tax free.

• Temporary or seasonal rentals: Vacational or seasonal rentals that go for longer than one month is a bit of a grey area. This type of residence rental covers those contracts that last up to 11 months and are meant for those who are having to change their residency only temporarily for work, or studies, or just an extended vacation. It is assumed (and should be put on the contract) that these tenants do have a permanent home somewhere else. The new residential law prohibits agencies to charge their commission or agency fees to the renters (again, this is to protect consumers from abusive practices), but if they can prove this is a seasonal rental, then the LAU doesn’t apply here.

This last point is where most people start their journey of seeking a home to buy in Mallorca. They would first stay in an area renting before they make up their mind. So it’s very important for those who are seeking this path to get familiar with the contracts they sign and what regulations apply to them.

As we are advisers on long term returns for your investment, we would always recommend to make this “trial period” of rent as short as possible so you can start earning equity on your own property. We are ready to meet with you and set the path that is going to make the most of your money, from finding the right house to making all the renovations and paperwork following regulations. Menzel Mallorca is there to make your investment worth it, but also that you can enjoy it sooner.

Some of the information included here has been gathered from the site in Spanish of the Real Estate agency Porta Mallorquina.