Real-estate associations in Mallorca estimate that five out of every 100 homes sold in Mallorca have squatters. On banks' property websites as many as 50% have squatters. These properties are offered as 'bargains' at a discount of up to 75% of the market value.
The legal impossibility of evicting vulnerable families at least until the end of the year (within the framework of the plan of measures to alleviate the effects of the cost-of-living crisis and inflation) is leading more and more private owners to sell properties with squatters. This is a practice that banks and other financial entities started adopting some time ago.
Natalia Bueno, vice president of the API association of real estate agents in the Balearics, says that there are now even cases of squatters purchasing the properties. "There are squatters with very different profiles. Some have jobs and can access the mortgage market."
This is a phenomenon that occurs more or less everywhere in Mallorca, but especially in Palma, Inca and Manacor. Properties can be found from 40,000 euros, but some can exceed one million euros.
"The price depends on the criteria of the owner, the square meters and the location. It also usually varies depending on whether or not the eviction procedure has been initiated. In many cases the discounts reach 75% because buyers have the uncertainty of not knowing what condition the home will be in, which they cannot visit at the time of purchase."
Buying a home with squatters allows registration of the real value of the home, not the cadastral value, so there is a tax benefit. For this, it is essential that a judicial eviction procedure is under way at the time of purchase.
Buyers must have liquidity, because financing is not possible when purchasing squatted properties. It is difficult to get the bank to approve the mortgage for a price lower than the value that appears in the property registry. The majority of individuals who buy therefore have savings. Some complement them with a personal loan.
In all instances these are 'blind' purchases. By law, the buyer must be warned that it is a property with squatters, that it cannot be visited during the purchase process and that there is no guarantee as to the condition of the property. With luck, the property will be in good condition, but this is not always the case.
"Faced with this risk, there is no other option than to depreciate the value and there is no other option but to have savings," explains Bueno.