House Hunter: The Balearics

'Is buying in Mallorca too ambitious?'

NICHOLAS HODGES OF NEWCASTLE WRITES:

It is now possible to fly direct from Newcastle airport to Mallorca for under £40 return if you book online in advance. As we live less than 20 minutes from Newcastle airport, this is too good an opportunity to miss. I am at last going to fulfil my ambition to own a holiday home on the Balearic island.

My family of two teenage boys and my wife Marilyn have visited Mallorca several times since the mid-1990s but although we dreamed of owning a place there it never seemed feasible until now. We'd appreciate some advice on what we can get within our £275,000 budget; we're pretty sure that means no sea views, which is not a problem for us, although we would want to avoid any property in the centre of the island, which does take quite a while to reach from Palma airport. Areas within a 30-minute drive of the coast would be nice.

Is it too optimistic to think that we would be able to get a two- or even a three-bedroom house?

The Advice

GRAHAM NORWOOD REPLIES:

There are three factors making the Mallorcan holiday-home market more lively after being relatively subdued in the past two years.

First, there has been a return of German buyers. The place has been a long-term favourite with Germans, but domestic economic woes have kept them away for some years. Second, large infrastructure projects are now being completed, including much better motorway access to the airport for the north-east and south-west of the island. Palma is getting a renewed amount of attention from overseas buyers, especially the British. Third, as you have discovered, Mallorca is now easily reached from across the UK, thanks to low-cost airlines.

So for that reason, you are right to assume that £275,000 is low. But if you are happy with a small property, you could easily get a two- or three-bedroom house if you look to a secondary location or one a little inland from those coastal spots that are popular with holiday-home buyers or tourists.

We have selected properties in three different areas. According to Kuhn & Partner, one of the island's leading estate agents, German buyers are back in some force in Cala d'Or on the east coast, and are looking for old fincas to renovate, while Britons tend to concentrate on new apartments. Soller, a picturesque coastal and mountainous region in the north-west of Mallorca, is a favourite for British buyers in your price range. There is a good deal of coastal development under way in Soller town, although inland towards Valldemossa and Deia there are unspoilt areas.

Alaro, just west of El Pia - the plain of central Mallorca - is now easily reachable from the main PM-27 road, and is in one of the best vineyard areas on the island. There are a variety of properties available - mainly older, private and rural. Villas or fincas with land here tend to appreciate in price very well, Kuhn & Partner reports.

The Solution

Property one: Stone house.

Price: £239,000

Agent's details: About five minutes from the main town square at Soller, this traditional stone-built house is in perfect condition following a full renovation. The property stretches over three floors and comprises three bedrooms, one bathroom, separate sitting and dining rooms and a kitchen. The small garden is studded with lemon, orange, avocado, peach and grapefruit trees and there is room and permission for a pool.

Agent: Engel & Volkers, 0034 971 214 140.

Property two: Stone house.

Price: £240,000.

Agent's details: Two-bedroom and two-bathroom stone house close to the village of Alaro, enjoying mountain views and set within a large plot stretching to 42,000sqm. There is also a small cultivated garden.

Agent: Hampton International, 020-7589 8844.

Property three: Three bedroom villa.

Price: £242,000.

Agent's details: Three-bed, three-bathroom villa in Cala D'or. This property is in a heavily developed area but has a pool, a pool house and sauna, a staff apartment and garages for two vehicles.

Agent: Jackson-Stops & Staff, 020-7828 7387.

Fact File

Remember that transaction costs when buying property in Spain remain among the most expensive in Europe, and Mallorca is slightly dearer than most other regions.

Usually a 10 per cent deposit is paid by the buyer when a contract is signed, and it is increasingly common that buyers also pay legal fees - using a notary is mandatory on Mallorca, and this is up to 2 per cent of the purchase price. The buyer is also charged for Spanish Land Registry and search fees, which is up to 1 per cent. There may also be local transaction taxes, which on the Balearics can be as high as 7 per cent of the purchase price.

Because of these costs, experts on Spanish property advise purchasers to build in a 10 per cent contingency when they buy; therefore the homes we recommend for your budget are under £250,000.

Once you own a property, and assuming you do not live in it permanently, you must pay an annual property tax each 31 December based on your home's value - there is a sliding scale of 0.2 per cent to 2.5 per cent.

For some properties there is also tax payable on income from renting out. And when you come to sell, there may be 35 per cent capital gains tax to pay on the profit you make.

Annually, you also have to pay a rubbish collection tax to the council and community fees if you buy a home in a development or condominium; sometimes there are service charges, too, if you buy a new property.