Holiday rental market – a brief introduction

Most owners of holiday homes decide to rent it during the season. Tourism records in the last years (13.7 mn. visitors in 2017) together with an increasingly strong holiday rental market are a solid basis to transform Mallorca property purchases into an attractive income investment.

What do you need to participate ?

  • A marketable and adequately equipped property with valid rental license and a
  • A reliable, serious rental agency (of course you can basically manage the letting of your home by yourself)
  • A professional service team which is responsible for guest management and maintenance

With this conditions in place, your home will be producing good income that generally covers all maintenance cost and usually even provides comfortable reserves for investments or refurbishments.

For orientation purposes the average daily income per bed is approximately EUR 50,in the peak season (July – September) and around EUR 40,– in the shoulder season (May, June, October). March and April are offered around 10 % less of shoulder season. That means for instance a daily rate of EUR 300,– for a 6-bed holiday home in July. The indicated average rates are of course depending on location, technical conditions, property features and overall appearance including furniture. Seaview – not only on tiptoes -, a generous pool area, colorful mediterranean gardens, not to mention indoor Spas and similar non-standard quality equipment allow owners to charge higher daily rates. Occupancies between 150 and 180 days a year are quite realistic prospects if holiday home characteristics meet guests requirements.

In January 2018 the Island Council of Mallorca has presented the new zoning regulations, which determine where private homes on the island are eligible for future holiday rental. According to the draft, owners of houses and apartments which are situated in “saturated” areas are limited in their rental activities to the maximum of 60 days per year. Owners of existing rental licenses enjoy asset protection. The same applies to all declarations which have been filed until end of July 2017. Note: the registration of the application for holiday renting with the ministry of tourism and the relevant registry number are sufficient for immediate rental activities, no matter how much time authorities need to verify the information provided by applicants and to grant the final permission. If you do not yet own a license, you have to wait for the termination of the present moratorium (authorities do not accept new applications for rental licenses since 1st of August 2017) and to go for an approval under the new regulations.

According to the draft the following locations are classified as “saturated”: the Llucmajor associated part of Playa de Palma, Peguera, Santa Ponca and Palmanova-Magaluf. In the interior area the rule applies for Alcudia, Randa (Algaida), Ariany, Banyalbufar, Port des Canonge (Banyalbufar), Orient (Bunyola), Ullaró (Campanet), Deia, Llucalcari (Deià), S’Empeltada and Ses Coves (Deià), S’Esgleieta (Esporles), Estellencs, Es Carritxó (Felanitx), Fornalutx, Marratxinet (Marratxi), Pollenca, Santanyi, Llombards (Santanyí), Ruberts (Sencelles), Ses Salines, Soller, Biniaraix, L’Horta (Sóller) and Valldemossa as well as the Valldemossa related villages Es Port, S’Arxiduc and Son Ferrandell.

Since it is not always entirely clear if a property without rental license basically meets the general requirements of obtaining it, we recommend to instruct a local legal adviser to check the situation in the course of his legal due diligence.