“How can I rent my house in Mallorca”? This is one of the questions that many owners ask themselves when they have an empty house in Mallorca and want to make a profit on their rental as a holiday property.
The truth is that, nowadays, if you want to rent out your home in Mallorca, you have two options. One is to rent it permanently, that is, for residential use. The other is to use it as a holiday home, a market that has become increasingly popular in Mallorca due to the increase in demand for accommodation alternatives by tourists who visit the island.
In this article we want to talk to you about this second option: renting as a holiday home in Mallorca. Below we will explain what steps to follow to rent your house in Mallorca and we will give you some tips to make the experience a success. We will also try to solve some of the most common doubts that many of the owners who have trusted us to manage the rental of their holiday property in Mallorca ask us.
Renting my house in Mallorca to foreign tourists, is it profitable?
The answer is yes. The holiday rental business, if managed properly, is an economic activity that can bring you a lot of income and, therefore, is an investment that is attractive to any owner who has an empty home.
Proof of the above is that every year more tourists choose to stay in holiday homes during their vacations, instead of resorting to a hotel. A phenomenon that has only increased more with the health crisis caused by COVID-19.
Given this increase in demand, the supply of holiday homes has increased considerably. In fact, a study by the University of Valencia indicates that an owner who advertises his home as a holiday rental will earn an average of 150% more than if he opts for residential rental, that is, long-term.
However, in this greater profitability it is necessary to consider that holiday rentals require much more management than residential rentals. That is why many owners turn to holiday rental real estate agencies, like us, to take care of managing their properties and thus avoid putting the profitability of the activity at risk with inadequate management.
To rent my house in Mallorca, what steps should I follow?
Whether or not you decide to have an agency to rent your villa or Finca in Mallorca, such as Reservatum, to enter the holiday rental business there are a series of preliminary steps you must take. In this article we have summarized the most important ones. Keep on reading to know them.
Is it necessary to make a business plan?
Regardless of whether the holiday rental sector in Mallorca is currently prosperous, it is always advisable to carry out some basic calculations to analyze the profitability that any business can report. Preparing a simple document will help you get to know the tourist rental market on the island before entering it.
To do this, carry out the exercise of detailing the type of client you want to have and the existing competition, as well as an estimate of the income and expenses that you expect to make, both to start operating and for maintenance.
You can also try to make a list of all the problems that could unexpectedly arise, as well as a plan to deal with them.
Rent my home in Mallorca: where do I start?
Managing a holiday rental finca requires a lot of time, if you want to achieve a high occupancy of the property and, therefore, a high level of income. However, if you own a house in Mallorca and would like to use it for holiday rental, there are two things that are a priority to be able to enter this sector:
The tourist license
Many of the owners who contact us, to include their villa on the website of Reservatum, ask us: “can I rent my holiday home in Mallorca without a tourist license?” The answer is: “no, we must comply with the law”. In fact, our agency only works with properties that have a tourist license.
Holiday rental conditions vary from one autonomous community to another, so it is always important to review the regulations that apply in each territory before entering this market. In the case of the Balearic Islands, the regulation is included in the following regulations:
- Law 8/2012, from 19 of July tourism of Balearic islands (B.O.I.B. núm. 106, de 21 de julio de 2012)
- Decree 20/2015, of April 17, on general principles and coordination guidelines in tourism matters; of regulation of advisory, coordination and cooperation bodies of the Government of the Balearic Islands, and of regulation and classification of companies and tourist establishments, issued in development of Law 8/2012, of July 19, of Tourism of the Balearic Islands. (B.O.I.B núm. 56, 18 de abril de 2015).
In the previous legal framework, it is considered that the rental of a home for periods of less than 1 month, where it cannot be proven that the purpose of the lease is different from tourist use, is a tourist activity and, therefore, must benefit from the holiday rental regulations.
Marketing a house, without a tourist license, using concepts typical of the tourism sector (holidays, tourism, etc.) or using channels specific to that field is considered a serious offense.
The condition of the property
One of the first questions you should ask yourself when considering renting your holiday home in Mallorca is: “in what condition is the property”? To be able to rent a villa in Mallorca it is essential to prepare the property to receive guests.
Does the house need any reform? Does it have all the necessary furniture and services? Is the decoration sufficiently cared for or does it need to be redecorated? Asking these questions is vital in order to prepare the business plan, since if you need to make changes to your house to rent it, you will need to have some budget for it.
Check your house insurance
You should know that tourist rental properties must have home insurance and a policy that covers civil liability up to 300,000 €. You can also choose to take out specialized holiday rental insurance.
At what price can I rent my house in Mallorca to tourists?
Establishing the price of a holiday home is not a trivial matter. Setting a price too low or too high can both cost you a lot of money.
To set an optimal value, it is necessary to know the competition, that is, to know at what price other houses with the same characteristics are being marketed in the different areas of the island. Of course, for the activity to be profitable, the fixed price must be able to support the current expenses generated by the home, which is why it is essential to make a business plan before entering the tourist rental market.
Another fact that you have to consider when setting a price for your holiday home in Mallorca is seasonality. It is common for some prices to be set for the high season and others for the low season.
At Reservatum we know that setting the price to rent a holiday home in Mallorca is one of the main questions that torment owners. That is why we offer a property valuation service to all those people who trust our services to manage their property in Mallorca and advise them at all times on the rental price to be set.
Renting a holiday villa in Mallorca: self-management vs holiday rental agency
As we mentioned at the beginning of the article, managing a holiday home requires more dedication than long-term management and being very attentive to details. This is one of the reasons why many people delegate this activity to a holiday rental agency, although it is not the only one.
Deciding if the management will be carried out directly by you or if, on the contrary, you will use the services of an agency, such as Reservatum, is another vitally important factor that will affect both your business plan and the number of steps you will have to follow to start making your house in Mallorca profitable.
If you use a holiday rental agency, there will be a percentage of the income that you will have to dedicate to paying for their services, therefore, it will be a current expense that you must include in your business plan. At first glance, it might seem that this type of service is adding an additional cost and that therefore, you will earn less money with your home.
However, the truth is that by resorting to a specialized holiday rental service, you ensure that the marketing of the house is in the hands of experts, which can significantly increase the income of your holiday rental home in Mallorca. At Reservatum, for example, we know that a picture is worth a thousand words, so we take photographs and video, both of the interior of the house and from a drone view, of all the holiday homes we work with on our portal, without any type of cost to owners.
Self-manage my holiday rental home
In case you decide not to have the services of an agency, you must bear in mind that to manage your rental property in Mallorca you must do at least, in addition to all of the above, the following:
- Have a rental contract and the operation rules for the house.
- Promote your home through your own website and/or specialized tourist rental portals.
- Document all management and attend to guests during their stay
Holiday rental agencies: advantages
Some headaches that you will not have to face if you choose to rent a house in Mallorca through an agency specialized in tourism are:
- They will advise you on the best insurance you can take out to protect your home.
- Will be responsible for administering the guarantee charge, if there is any damage to the home.
- Will manage all incidents, such as complaints, that may occur during the guests’ stay.
- It has a team specialized in tourism marketing. Unless you are an expert in marketing and social networks, delegating the promotion of your rental property in Mallorca to professionals is the best strategy to get a greater number of clients.
Income and taxes
Finally, it is important that in order for it to be easy to comply with your tax obligations, all the economic activity associated with the rental of the holiday house is correctly documented and that the property has all the documentation in order. To declare the income obtained from the activity, you can resort to a consultancy.
Some people ask us “what happens if I decide to rent my house in Mallorca and do not declare the income”? Our answer is always that if you want to take a risk, take a risk, but our duty is to inform you that the tax authorities control more and more tourist homes, in order to avoid all the underground economy that has arisen around holiday rentals. Proof of this is the implementation of model 179, which forces portals intended to promote holiday rental to provide information on the homes that have used their platform to attract customers. You can download our complete free guide on the 179 model by clicking here.
If the tax authorities detect that you are carrying out fraudulent activity, since you are not declaring the income from the holiday rental, you will be sanctioned. The penalty will vary depending on whether the non-payment is considered minor, serious or very serious, as well as whether the tax authorities consider that the infraction has been carried out intentionally or not.
Both the economic sanction, which varies between 50% and 150% of the undeclared amount, and the term available to make the payment, will depend on the foregoing, without facing higher surcharges.
Rent my house in Mallorca with Reservatum
If after everything that we have told you in this article, you decide that you want to enter the holiday rental sector in Mallorca or you already have a house for rent in Mallorca but you are not obtaining all the profitability that you would like, remember that at Reservatum we can help you.
Visit the page of our website dedicated to owners and contact us. We will explain everything we can do for you to successfully rent your finca in Mallorca!