NEW RULES FOR REAL ESTATE AGENTS IN MALLORCA AND THE OTHER BALEARIC ISLANDS

Law 3/2024 came into force in November 2024 and aim to improve professionalism and consumer protection in the property sector.

The main aspects of the new rules are:

Registration requirements

Real estate agents operating in the Balearic Islands must register with the Official Real Estate Register of the Balearic Islands (ROAIIB)

To be eligible for registration, the brokers must fulfil several criteria:

1. Physical address: The estate agent must have a publicly accessible office with a postal address in the Balearic Islands.
2. Professional qualifications: The brokers must prove their expertise through at least one of the following:
   • A university degree in relevant fields such as law, engineering/civil engineering or architecture.
   • At least 200 hours of training in the Spanish property industry
   • At least 4 years of experience in the Spanish property industry
3. Insurance requirements:
   • Liability insurance
   • Casuality insurance

Consumer protection measures

The new rules emphasise transparency and consumer protection:

• Estate agents must provide detailed information about the properties and help clients with additional information from relevant sources.
• All contracts must include the official registration number of the broker.
• Brokers must clearly set out marketing conditions through signed agreements with each seller.

Compliance and enforcement

• Non-compliance with these regulations is considered illegal and may result in sanctions.
• The rules aim to eliminate ‘amateur brokers’ and ensure that only qualified professionals operate in the market.

W Mallorca Invest compliance

• 250 hour course on legislation relating to real estate and land and their sale, in addition legislation on rental properties
• Since June 2019, registered experience in the property sector in Mallorca
• Operated by the Spanish limited company TodoWanre S.L.
• Member number 00663 of ANAI/API (Asociación Nacional de Agentes Inmobiliarios y el Colegio Oficial de Agentes de la Propiedad Inmobiliaria)
• Registered in the official register ROAIIB with number GOIBE605090/2024

The above information ensures that W Mallorca Invest meets the new legal requirements and complies with the professional standards of the Balearic property market.

BUYING A PROPERTY IN MALLORCA

Steps in the access process:

• The property is selected and the buyer and seller agree on the terms. The property must then be secured.
• This is done through an Arras, a private contract between the two parties.
• The usual practice is for the buyer's lawyer to write this contract.
• Once both parties have accepted the terms of the contract, it is customary for the buyer to pay 10% of the purchase price as a deposit (which is deducted from the final payment) and into an account with the notary of the buyer's choice.
• On completion of the purchase, a deed of transfer ‘escritura pública’ must be signed by both parties under notarial supervision in Mallorca.

Legal fees:

• Notary fees are paid by the buyer and it is advisable to hire a local lawyer who speaks the buyer's language or a language convenient to the buyer.
• The lawyer will carry out a title search and advise the buyer on all aspects of the investment.

Taxes on property purchases:

• Every property transaction in Mallorca is subject to a transfer tax ITP-Impuesto de Transmisiones Patrimoniales, if the purchase is between private individuals or if the seller is a developer (new build properties), VAT + a notary fee/stamp duty is payable instead.
• In all cases, a surplus value tax, Plusvalia (not to be confused with capital gains tax paid by the seller on the profit made on the sale of the property) is added.
• Plusvalia is a municipal tax only on the increase in the value of the land on which the property stands and is paid by the seller.
• ITP depends on the purchase price, see example in the Laws and Taxes tab
• VAT is 10% of the purchase price (only on newly built properties)
• Stamp duty is regional and 1.5% in the Balearic Islands
• The deadline for the payment of stamp duty is 1 month after the signing of the notarised contract.
• Within the same time, the buyer should make sure that the notary has all the necessary information and registers the title deed of the property = Escritura Publica in the official land register.

Ownership

• In addition to individual ownership, a property can be owned by one or more companies. Owning companies can be Spanish, from countries with double taxation treaties with Spain, a Spanish subsidiary of the buyer's company (when the buyer is not Spanish) or offshore or a combination of these.

Lawyer and legal fees

• Generally between 0.7-1.5% of the purchase price
• Property valuation (Tasador). This is only necessary if you are going to apply for a mortgage.
• Estate agent fees (paid by the seller) - Generally 5% of the final purchase price, which is stated on the public deed and is payable at the time of notarisation of the purchase. For the seller, this cost is fully deductible from the profit on the property.
• Notary fees, inscription in the land registry (title tax and land registration fee) 1.5% in the Balearic Islands.