12/05/2021 by High Standing House 0 Comments
Buying a house in Menorca, all you need to know about the property market
How buying a house in Menorca works
Rising and perfect for investment. That's the property market in Menorca, one of the most beautiful and unspoilt islands in the Mediterranean. Buying a property on the island is, for many, a dream and for others a bargain.
Having a property to rent out to tourists is, in fact, a perfect way to invest money. In this article we want to take a closer look at how to buy a house in Menorca and the steps to follow between taxes and bureaucracy.
Is it convenient to buy a house in Menorca?
The answer, without a doubt, is yes. Thanks to its small size, Menorca is the ideal destination for retirement, for a change of life with the family or for singles who want to turn their future around.
The cost of living is also lower than other Spanish or European destinations, both in terms of goods and services offered. If we add to this the direct flights to the main European capitals, Menorca is growing as a second residence for many European citizens.
Today, the property market in Menorca is more than active, with growing percentages of both those looking to sell and those wishing to purchase a property in this jewel of the Mediterranean.
In fact, Menorca closed 2018 with a new growth in terms of property purchase and sale transactions. The 1782 transactions, representing a growth of 9% over the previous year, demonstrate a higher level of dynamism in the market in the last ten years. In fact, we need to go back to 2007 to see higher indicators.
Limitation on the construction of new houses
One of the things that differentiates Menorca from the rest of the Balearic Islands, apart from the beauty of the island and its beaches, is the protection of the territory. If you want to buy a house in Menorca you should know that, unlike Mallorca, for example, Menorca has limited the construction of buildings over the years.
In this sense, and especially since the designation of Menorca as a Biosphere Reserve by UNESCO in 1993, the town planning and environmental regulations notably protect the Menorcan territory, especially the countryside, one of the most protected areas.
Houses to buy in Menorca
For those who want to dispose of their property in Menorca in the short term, the best option is to buy a house that has already been built. Fortunately there are many of them, spread all over the island. It is no coincidence that according to the National Institute of Statistics, Menorca is the only island of the Balearic Islands whose sales activity is continuously increasing, mainly thanks to the second hand market.
What to do if you decide to buy a house or land in Menorca?
When you decide to buy a property (house, villa, plot, agricultural land), it is essential to find out its legal and physical situation.
Where to buy a house on the island of Menorca?
Unlike Mallorca, which also has marvellous coves, there are no beachfront constructions here. Buyers' budgets range from 150 to 500,000 euros. There is no shortage of luxury villas for sale in Menorca with sea views and even private mooring, ranging in price from 2 to 7 million euros in Cala Llonga, the most exclusive residential area of the island.
Undoubtedly, the houses near the sea or in the beach urbanisations are the most sought after and the most expensive. The prices here will always be higher than in other areas due to the Coastal Law that has been protecting the coastline for more than 20 years, prohibiting the construction of other buildings near the sea.
Houses in the main towns of the island, especially Mahón and Ciutadella, have more affordable prices which increase if it is a country house or a house with land. Fascinating Ciutadella (1547€/m2) beats the capital Mahón in terms of quality, with the lowest price per square metre on the island (1385€).
House prices in Menorca:
The prices of houses in Menorca, as we have seen above, depend on the areas with more demand. We can state that the maximum average cost to buy a flat is 1815€ per square metre.
There are also cheaper and more economical houses, usually for renovation or located in the interior of the island, far from the sea.
Looking hard enough and if you are content to be far from the sea, you can find occasions from 60/70 thousand euros.
The costs of the purchase:
Another fundamental service offered by the advisor, is to inform the buyer of the cost of the purchase of the property, as well as its annual maintenance.
Whoever buys a second hand house has to pay the Transfer Tax, which implies 8% of the sale price if it does not exceed 400.000€, plus if the price is higher, Notary and Land Registry fees.
In any case, the approximate cost of the purchase can increase by 11-12% once taxes and advisor fees have been paid".
Once the property has been purchased, the annual Real Estate Tax, the municipal taxes (rubbish collection, for example), and the Non-Resident Income Tax (to be paid within the calendar year following the accrual) must be paid.
How is the purchase process for a non-resident in Menorca?
This process is the one that surprises the client the most; with new technologies and the experience of a good advisor, nowadays purchase operations can be carried out with or without bank financing, without the client being in Menorca: from the preparation of a power of attorney in their country of residence, to the exchange of supply contracts, opening the bank account, obtaining the Foreigner Identification Number, signing the contract, signing the purchase before the Notary, etc... it is a safe process that hardly requires the intervention of the buyer".
What to do once the house has been purchased?
If you do not live in Menorca, it is recommended to have a representative on the island to assist you. In this sense, we always recommend a non-resident in Spain, and for a low cost, to appoint a representative, who will receive the correspondence, inform you periodically of the municipal taxes to be paid, prepare the Income Tax in Spain, pay the taxes, represent you in the meetings of the community of owners or urbanisation, before the Town Hall, or even be able to control the house or control the works carried out in the house when the owner is not on the Island.
Likewise, as far as the care of your property is concerned, Menorca has good professionals in all the sectors required (gardening, swimming pool, maintenance, etc.), which will ensure that your investment is safe.
The advice, as always, is, before investing money, to go directly and visit the property you wish to purchase and seek advice. Of course the costs can be scary at first, but buying a house in Menorca can be a long term investment as well as opening a business focused on tourism. The return can be as high as 4-5% per year.
In any case it is important, in order to know everything about the purchase procedure and to execute each of the phases with due caution, to contact a real estate consultant, who will guide you through the whole process, and will recommend the most professional real estate agencies according to the area of Menorca where you want to buy.