27/11/2018 The rental market in Mallorca has been thrust into the spotlight over the last year, with a raft of new regulations and legislation causing confusion and consternation amongst many owners looking to rent out their properties.
Much of the problems surrounding the rental market have stemmed from ‘homesharing’ platforms such as Airbnb leading to an unfettered illegal rental market. This, together with the island’s surge in popularity as a tourist destination, has resulted in spiralling costs of real estate in popular tourist neighbourhoods as investors cash in on the boom.
Local residents being squeezed out of the property market and complaints stemming from illegal holiday rentals led local authorities to clamp down hard – threatening hefty fines of up to €40,000 for unlicensed landlords. Currently, however, any owner can still rent out their property for long term rental (deemed as over one month) without a licence; though the property must have a certified energy certificate and an occupancy certificate.
While the issuing of new licences for holiday lets had been suspended, a review is due this summer by the Council of Mallorca, which is expected to recommence the licensing process. But with all the uncertainty surrounding events of the last year, as well as Mallorca continuing to attract high levels of try-before-you-buy customers relocating here, what should you be paying – or hope to charge – for rents around the island?
Help is at hand. In their Market Report Mallorca 2017/18, real estate agents Engel & Völkers unpicked the rental market around the island to analyse trends and identify average rental prices by region.
Palma
The demand for rentals boomed in this area with prospective buyers preferring to rent for a year or more before buying. Many factors affect the rental price: outside space with privacy, parking, elevator, heating, air conditioning, views, age and general quality of the property. Apartments that have all these facilities are in short supply and this is ultimately reflected in the monthly rental price. Since the introduction of large fines for illegal holiday letting of apartments, towards the end of 2017 Engel & Völkers saw a trend for more owners to put their apartments on the long term rental market with an average entry price of €1,500–€2,000 per month.
Palma Surroundings & Son Vida
Last year due to increased demand, this Engel & Völkers property shop started offering selected long term rentals focusing on property in the exclusive Son Vida area. Monthly rentals start at €6,500 for a house and €2,500 for an apartment. To date, the majority of clients renting have wanted to try the lifestyle with their family before committing to purchase.
Mallorca Southwest
Long term rental lets are also popular in this region with clients who want to experience what it is like to live in Mallorca full time before they buy. Typically, contracts extend from 12 months to 2 years and prices start at €2,500 per month for a house and €1,500 per month for an apartment. These clients tend to focus on the property first and the area becomes a secondary concern, they demand quality furnishings and fittings with air conditioning and heating. The main overseas nationalities renting are from German-speaking countries and some British. Popular areas for families are Palma, Portals and Santa Ponsa – all offer good infrastructure and a choice of international schools.
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Mallorca West
In this area the demand is for high quality, private fincas for holiday summer rentals in the areas of Valldemossa and Deià and there is more interest in Sóller and Port Sóller in spring and autumn. Engel & Völkers offers long term rentals from €10,000 per month for a house and clients are split between English and German speaking with increased interest from Scandinavians. As good rentals are in short supply, more owners are legalising their properties to achieve a good rental yield on the highly lucrative holiday rental market.
Mallorca North
This area offers both long and short holiday rentals. The holiday rental season starts from Easter until October and rental yields can be highly lucrative with the correct paperwork in place. Clients are more aware of the importance of renting with a reputable company that offers legalised property and adheres to the local government regulations to offer a high level of quality and facilities. Weekly prices for holiday lets vary from €2,000–€6,000. Long term rentals start at €2,000-€3,000 per month. Last year, although the Engel & Völkers client mix was diverse, the majority of clients renting were British with more German and Swiss. The most requested properties were modern chalets and villas close to the beach, which is why north coast areas are so popular.
Mallorca Central & South
According to Engel & Völkers, demand for rentals increased last year in the areas of Santa Maria and Llucmajor with fast connections to the airport and good infrastructure – ideal for couples and families who want to try the lifestyle before committing to full-time island life. In the south, monthly rentals start at €1,500 for a house and €1,200 for an apartment. In the central area monthly rents increase from €2,000 for a house and €1,200 for an apartment. Rental clients are mainly German speaking looking for townhouses and fincas with land preferably with a swimming pool, garden and a good heating system. There’s a growing trend for owners to rent long term as they can see the capital growth of their investment growing whilst the property is occupied, earning an income and covering their overheads.
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