New Build vs Resale Property in Mallorca: Pros, Cons, and What to Watch Out For

Should you buy a brand-new apartment from a developer or a resale property from a private owner? It is one of the first decisions any buyer in Mallorca faces, and the answer is not as straightforward as it might seem. Tax treatment, customisation options, energy efficiency, location availability, and risk profiles differ substantially between the two. This guide sets out the full picture so you can make an informed choice.

The Tax Difference: IVA vs ITP

The most immediate financial difference between new builds and resale properties is the tax you pay on purchase. This is not a minor detail — it can amount to tens of thousands of euros.

New Build: IVA + AJD

When you buy a new property directly from a developer (first transfer), you pay:

• IVA (VAT): 10% of the purchase price
• AJD (Stamp Duty — Actos Jurídicos Documentados): 1.5% in the Balearic Islands
• Total: 11.5%

IVA is a flat rate regardless of price. There is no progressive scale. So whether your new-build apartment costs €300,000 or €3,000,000, you pay exactly 10% IVA plus 1.5% AJD.

Resale: ITP (Transfer Tax)

When you buy a resale property (second or subsequent transfer), you pay Impuesto de Transmisiones Patrimoniales (ITP) instead of IVA. In the Balearic Islands, ITP follows a progressive scale:

Purchase Price Bracket	ITP Rate
Up to €400,000	8%
€400,001 – €600,000	9%
€600,001 – €1,000,000	10%
€1,000,001 – €2,000,000	12%
Over €2,000,000	13%

This is a marginal scale, so for a €500,000 resale property, you pay 8% on the first €400,000 (€32,000) plus 9% on the remaining €100,000 (€9,000), totalling €41,000 — an effective rate of 8.2%. For a detailed breakdown of all purchase costs, see our complete buying costs guide.

Which Is Cheaper?

For properties up to approximately €750,000, the resale ITP is generally lower than the new-build IVA + AJD combination. Above that price point, the progressive ITP scale starts to push the effective rate towards and beyond 11.5%, making new builds relatively more attractive from a pure tax perspective. At the €2 million+ level, ITP at 13% substantially exceeds the flat 11.5% on new builds.

Price Comparison: New Build vs Resale

New-build properties in Mallorca typically carry a premium of 15–30% over comparable resale properties in the same area. This premium reflects:

• Modern construction standards and energy efficiency
• New-build warranty (see below)
• Contemporary layouts and finishes
• Developer margins and marketing costs

However, the comparison is not always like-for-like. Many resale properties in Mallorca were built in the 1980s or 1990s and need significant renovation to bring them to modern standards. When you factor in renovation costs of €1,000–€2,500 per square metre, the price gap narrows or even reverses.

In sought-after areas like Palma, Calvià, or Andratx, new-build supply is extremely limited due to land scarcity and building restrictions. This scarcity supports new-build premiums. In contrast, emerging areas in the east and north may offer new developments at prices closer to resale levels.

Build Quality and Warranties

New Builds

Spanish law provides a structured warranty for new construction, known as the Ley de Ordenación de la Edificación (LOE):

• 1 year: Defects in finishes (paintwork, tiling, fixtures)
• 3 years: Defects affecting habitability (plumbing leaks, damp, insulation failures)
• 10 years: Structural defects (foundations, load-bearing walls, structural elements)

The 10-year structural warranty is backed by a mandatory insurance policy (seguro decenal) that the developer must take out before selling. This provides genuine protection: if the developer goes bust, the insurance policy still covers structural defects.

Resale Properties

Resale properties are sold as seen. There is no legal warranty. This makes a thorough pre-purchase survey essential, particularly for older properties where issues like rising damp, inadequate foundations, outdated electrical wiring, asbestos in older insulation, and corroded plumbing are common.

Budget €500–€1,500 for a professional building survey. It is one of the best investments you can make when buying a resale property in Mallorca. Surprisingly few buyers commission one, and those who do often uncover issues worth many times the survey fee.

Energy Efficiency and Running Costs

This is one area where new builds have a clear advantage. Modern construction in Mallorca must comply with Spain’s Código Técnico de la Edificación (CTE), which sets minimum standards for thermal insulation, energy efficiency, and renewable energy generation. New-build properties typically achieve an energy rating of A or B, compared to E, F, or G for most older resale properties.

In practical terms, this means:

• Lower electricity bills: Better insulation means less need for air conditioning in summer (critical in Mallorca’s 35°C+ summers) and heating in winter.
• Solar panels often pre-installed: Many new developments include photovoltaic panels as standard, reducing electricity costs further.
• Aerothermal heating/cooling: New builds increasingly use heat pump systems (aerotermia) instead of gas boilers or traditional air conditioning, cutting energy consumption by 50–70%.
• Better windows: Double or triple glazing with thermal break frames is standard in new builds; many older properties still have single-glazed aluminium windows.

The difference in annual running costs can be significant: a modern, well-insulated villa might cost €1,500–€2,500 per year in electricity, while a poorly insulated older property of the same size could cost €4,000–€6,000.

Customisation and Finishes

New Builds: Off-Plan Advantages

If you buy off-plan (before or during construction), developers typically allow you to customise:

• Kitchen layout, units, and appliances
• Bathroom tiles, sanitaryware, and fixtures
• Flooring materials and colours
• Some internal wall configurations (moving non-structural walls)
• Upgraded finishes (stone worktops, underfloor heating, home automation)

The degree of customisation depends on the developer and the stage of construction. Major developers like Taylor Wimpey España or Balearic Properties offer structured upgrade packages. Smaller boutique developers may offer more flexibility.

Resale: Renovation Potential

Resale properties offer virtually unlimited customisation potential — but at a cost. A full renovation gives you complete control over layout, materials, and systems, and can transform a dated 1990s villa into a contemporary home. The trade-offs are:

• Higher total cost when purchase price + renovation exceeds new-build prices
• Extended timelines: renovations in Mallorca routinely take 6–18 months, sometimes longer
• Living elsewhere during works, adding rental costs
• The stress and complexity of managing a construction project, especially from abroad
• Planning permission requirements for structural changes

Completion Timelines and Off-Plan Risks

Buying off-plan in Mallorca typically involves a construction period of 18–30 months from purchase to handover. During this period, you make stage payments according to a schedule tied to construction milestones (foundation, structure, roofing, interior fit-out, completion).

The Risks

• Delays: Construction delays are common in Mallorca. Labour shortages, material supply issues, and planning complications can add 3–12 months to the quoted timeline. Build in a buffer when planning your move or rental strategy.
• Developer insolvency: The financial crisis of 2008–2013 saw numerous Mallorcan developers collapse, leaving buyers with incomplete properties and lost deposits. Spanish law now requires developers to provide a garantía bancaria (bank guarantee) or insurance policy protecting all stage payments. Never pay a deposit without confirming this guarantee is in place.
• Specification changes: Developers may substitute specified materials or finishes. Your contract should include a detailed memoria de calidades (specification of qualities) and specify your rights if the developer deviates from it.
• Currency risk: For British buyers paying in sterling, a construction period of 18–30 months means significant exposure to GBP/EUR exchange rate movements. Consider a forward contract with a currency specialist to lock in your rate for future payments.

Protecting Yourself

When buying off-plan in Mallorca:

1. Verify the developer has a valid licencia de obras (building licence) — not just a planning application.
2. Confirm the bank guarantee or insurance policy for your stage payments.
3. Review the memoria de calidades in detail, ideally with an independent architect.
4. Include penalty clauses for late delivery in your contract.
5. Have your own lawyer (not the developer’s) review all documentation.

Location Trade-Offs

This is perhaps the most significant practical difference between new build and resale. In Mallorca’s most desirable locations — the Old Town of Palma, Port d’Andratx, Sóller, Deià — there is virtually no new-build supply because there is no available land. If you want to live in these areas, you are buying resale.

New-build developments tend to be concentrated in:

• Palma outskirts and suburbs: Son Espanyolet, Son Vida, Establiments — modern apartments and villas near the city.
• South-west coast: Santa Ponsa, Palmanova, Sol de Mallorca — resort-area developments from major developers.
• Emerging areas: Cala Ratjada, Manacor, Campos — where land is more available and prices are lower.
• Golf urbanisations: Son Gual, Bendinat, Son Vida — gated communities with premium facilities.

The trade-off is clear: new builds offer modern comfort but may be in less characterful locations. Resale properties give you access to the most sought-after areas but come with older construction and potential renovation needs.

Investment Perspective: Which Holds Value Better?

Both new-build and resale properties in Mallorca have shown strong capital appreciation in recent years. However, there are some differences worth noting:

• New builds depreciate initially: Like a new car, a new-build property loses the “new premium” once you move in. If you need to sell within the first 2–3 years, you may not recover what you paid, especially after transaction costs.
• Resale in prime locations appreciates most: Property in Palma’s Old Town, Deià, or Port d’Andratx consistently outperforms the island average because supply is permanently constrained.
• Renovated resale can outperform both: Buying a dated property at a good price, renovating intelligently, and adding features like a pool or tourist licence can create substantial value. This is effectively the Mallorca property development play for private buyers.
• New builds in resort areas track the tourism cycle: Apartments in holiday developments are more sensitive to tourism trends and economic cycles than character properties in established towns.

A Quick Comparison Table

Factor	New Build	Resale
Purchase tax	11.5% (IVA 10% + AJD 1.5%)	8–13% (ITP, progressive scale)
Price per m²	15–30% premium	Lower, but renovation may be needed
Warranty	1/3/10-year legal warranty	None (sold as seen)
Energy rating	A or B	Typically E, F, or G
Customisation	Off-plan choices available	Full renovation potential
Location choice	Limited to areas with available land	All areas including prime/historic
Move-in timeline	18–30 months (off-plan)	4–8 weeks after signing
Risk	Developer insolvency, delays	Hidden defects, illegal construction
Character	Modern, uniform design	Individual character, history

Which Should You Choose?

There is no universal answer. The right choice depends on your priorities:

• Choose new build if: You value modern comfort, energy efficiency, and low maintenance. You do not mind a less central or less characterful location. You can wait 18–30 months for completion. You want warranty protection and the peace of mind of new systems and infrastructure.
• Choose resale if: Location is your top priority. You want character, history, and individuality. You are comfortable managing a renovation (or buying a recently renovated property). You want to move in quickly. You are buying in a prime area where new builds simply do not exist.
• Consider both if: You are flexible on location and are comparing total cost (purchase + renovation vs new-build price) rather than headline price alone.

Whatever you decide, getting the right financing in place is essential. Spanish banks offer competitive mortgage rates to foreign buyers, and our free mortgage comparison service can help you find the best deal from every major lender.