Mallorca Insights

Real estate law and tenancy law in Mallorca - Everything at a glance

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Anyone thinking of buying a property on Mallorca should familiarize themselves with the legal situation in advance. The "Ley de Arrendamientos urbanos" (LAU) regulates rental matters on the Balearic island. The rental law in Mallorca essentially distinguishes between renting for living and renting for other purposes. The first case refers to renting a property as a permanent residence, while seasonal leases or, for example, the rental of business premises are counted among the other purposes. In 2019, there was a significant change in the LAU, with an improvement in tenants' rights in particular. Below we have summarized the most important points regarding real estate law in Mallorca.

What does the real estate law in Mallorca mean?

Anyone who wants to rent a property in Mallorca must comply with certain obligations and is also granted rights. The basis for this is found in the Spanish rental law "Ley de Arrendamientos urbanos" (LAU), which was written in 1994 and last revised in 2019. Article 2 defines the use of private residential rent.

According to this, a residential tenancy is considered when a contract is concluded for the use of a habitable building as a permanent residence. All other uses, such as for commercial interests or a seasonal rental, fall under the "other purposes" according to the real estate law in Mallorca.
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The most important points about real estate law in Mallorca

The tenancy law on Mallorca is quite comprehensive and therefore not always clear. Therefore, we at Neptunus International Real Estate have compiled the most important points for you in a clear list.

Rental period

  • The duration of the lease is in principle freely negotiable between the parties.
  • The binding nature of rental agreements is five years according to real estate law in Mallorca.
  • Leases under five years automatically renew each year until the minimum lease term is reached.
  • The lessor may not unilaterally terminate the contract within this period.
  • According to the real estate law in Mallorca, the rent can only be increased at the initially agreed conditions.
  • Once the five years are up, the lease is renewed for another year unless either party gives notice of termination at least 30 days prior to expiration and after 6 months have elapsed.

The rental price

  • Rental price can be freely negotiated between the parties.
  • A rent cap or a rent brake does not exist in real estate law Mallorca.
  • All apportionments are usually already included in the rental price.
  • Incidental expenses such as electricity or water are added separately according to the real estate law in Mallorca.

Rent increases

  • In Spanish tenancy law, the landlord has no possibility to raise the rent because of, for example, modernization or the like.
  • Only under special exceptions is a rent increase permissible.
  • In the contract, according to the real estate law in Mallorca, an annual rent adjustment can be agreed.
  • Without further regulations, this is done using the "Índice de Garantía de competitividad" index.

Deposit

  • A security deposit for rental properties is required.
  • Here, an amount of one month's rent and a guarantee of a maximum of two months' rent is anchored in Mallorca's tenancy law.
  • In the case of fixed-term leases, the deposit amounts to two months' rent.
  • In addition, the contracting parties may agree on further securities in the contract.
  • The deposit must be made with a public institution.
  • Interest is not required under real estate law in Mallorca.
  • If there are no damages, the deposit will be returned within one month.

Cancellation

  • An ordinary termination is possible according to the real estate law in Mallorca after a minimum period of 6 months for tenants.
  • A notice period of at least 30 days applies.
  • Caution: look for provisions in leases that a penalty must be paid before the maximum term expires.
  • The landlord may, if the tenancy has existed for at least one year, give two months' notice of ordinary termination if he notifies own needs for himself or first-degree relatives.
  • Extraordinary termination right exists under real estate law in Mallorca for tenants, for example, if repairs are not done and undisturbed use of the apartment is not possible. The landlord may, for example, extraordinary termination if the rent or the deposit is not paid.

Deficiencies

  • Defects must be reported to the lessor without delay.
  • These must be removed by the landlord.
  • A rent reduction right does not provide the real estate law in Mallorca.
  • If the landlord fails to remedy the defect, the tenant's only recourse is to go to court.

We at Neptunus International Real Estate will be happy to assist you with all questions regarding real estate and real estate law in Mallorca. Please contact us at any time.

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