Is buy-to-let investing worth it in the Balearics right now?

The Balearics have the lowest gross rental yield in Spain, around 4.2 to 4.4 percent depending on the source (Idealista and Fotocasa, Q2 2026 data), far behind regions such as Castilla-La Mancha (7.8 percent). The cause is purchase prices running very high relative to rents. Here is what you actually need to know before investing, between modest yields and a locked-down tourist licence system, and what a proposed tax on non-EU buyers could mean for British and American investors.

What yield can you realistically expect?

Palma shows a 4.4 percent gross residential rental yield, a figure confirmed independently by Idealista and Fotocasa for Q1 and Q2 2026. Some towns do a bit better, such as Llucmajor in Mallorca (5.5 percent), while others do worse, such as Santa Eularia des Riu in Ibiza (3.3 percent). For comparison, Spanish 10-year government bonds yield 3.4 to 3.5 percent, a gap several analysts consider too thin to compensate for the risk and illiquidity of a property investment. Long-term letting to residents, in inland areas with a stable working population rather than the tourist coastline, comes across as a potentially more durable option, though data on this specific point remains patchy.

Can you still let to tourists?

This is the most complex part. A moratorium on new tourist rental licences (ETV) has been in force across most of the archipelago since 2022. It was eased in April 2025 (Decreto-Ley 4/2025), which scrapped an automatic phase-out of licences planned for 2026, but the same law also banned any new tourist licence in multi-unit buildings across the whole Balearics from 16 April 2025. Palma went further: since 28 May 2026, the city has banned any new tourist licence, including in single-family homes, across its entire territory (existing licences remain valid). In Menorca, a temporary exchange pool lets you buy a new licence for 2,500 euros (standard use) or 800 euros (a primary residence let for under 60 days a year). In Ibiza, enforcement has tightened, with coercive fines of up to 5,000 euros a day for illegal letting.

In practice, for an investor, the most reliable route is to buy a property that already holds a valid, active ETV licence rather than hoping to obtain a new one. One recent administrative point worth knowing: the national single register (mandatory since July 2025 for listing on booking platforms) was struck down by Spain's Supreme Court in May 2026, ruled to have overstepped regional authority. Only the Balearic ETV register remains mandatory today.

A surtax for non-EU buyers? What British and American investors need to know

The Spanish government announced in January 2025 a tax that could reach 100 percent of a property's value for non-EU-resident buyers. The bill was filed in Congress in May 2025, but fifteen months later it has never been debated or voted on, and appears to be shelved for lack of a majority. If it ever moves forward, this measure would target only buyers resident outside the EU, which would include most British buyers (post-Brexit) and Americans, since the criterion used is EU residence, not nationality. It is worth watching, but there is currently no active tax of this kind: buyers proceeding today are not affected unless and until such a law actually passes.

How is rental income taxed for a non-resident landlord?

As a non-EU tax resident (a British or American landlord who does not meet Spain's residency test) receiving rent from a Balearic property, you fall under the IRNR (Spain's non-resident income tax) at a rate of 24 percent, the rate that applies to non-EU/EEA residents, compared with 19 percent for EU/EEA residents. Unlike an EU-resident landlord, a non-EU landlord generally cannot deduct property-related expenses (property tax, community fees, insurance, management costs, maintenance, mortgage interest) from this income, a meaningful difference worth factoring into your yield calculation. Confirm your exact situation with a tax advisor, since it depends on your residency status and how the property is held.

What costs should you budget for at purchase?

Overall, budget for adding around 9 to 10 percent to the price of a resale property, and 11.5 to 12 percent for a new build, before any legal fees.

Frequently asked questions

Can I still get a tourist rental licence in the Balearics?

It is very restricted in most areas since the 2022 moratorium, tightened further in 2025-2026. The most realistic option is to buy a property that already holds a valid ETV licence rather than applying for a new one.

Does the proposed 100% tax on foreign buyers apply to British or American buyers?

Not yet. The bill, still not voted on fifteen months after it was announced, would target buyers resident outside the EU if it ever passes, which would include most British (post-Brexit) and American buyers. As things stand today, it is not in force.

What tax rate applies to a non-EU landlord's rental income?

24 percent under the IRNR, generally without the expense deductions available to EU-resident landlords, who pay 19 percent and can deduct property-related costs. Confirm your exact situation with a tax advisor.

To understand the rental market pressure behind this weak yield, our guide to renting a home in the Balearics details the situation. And to structure your investment, our article on setting up a company (SL) in the Balearics may be worth exploring depending on your profile.

Information verified in August 2026. The Daily Baleares is an AI-assisted publication with human review.