Realistic net rental yields in Mallorca sit between 2% and 3.5% for long-term lets and 2.5% to 4.5% for holiday rentals, once running costs and tax are stripped out. With average prices around €7,370 per m² and median rents near €2,000 a month, the arithmetic already looks tight. It gets tighter for most apartments once you factor in Decreto 4/2025, which has frozen new holiday-let licences for flats in multi-family buildings.
TL;DR: Most properties in Mallorca offer net rental yields between 2% and 3.5% for long-term rentals, and 2.5% to 4.5% for holiday lets, influenced by property size and licence status. Purchasing unlicensed apartments with hopes of legalising them later is risky due to the freezing of new holiday-let licences under Decreto 4/2025, especially in multi-family buildings. Larger villas and prestige coastal properties tend to have lower yields, often below the island average, because of high prices and limited rental income potential. Yields vary significantly across districts, with practical Palma neighborhoods like Llevant offering modelled net yields of around 5.1%, which can outperform more glamorous coastal zones. Accurate, property-specific yield calculations require careful modeling of all costs, taxes, occupancy rates, and licence status, making local expert guidance highly advisable before investing.
TL;DR:
Explore Mallorca properties
Mallorca’s average price per square metre has climbed to roughly €7,370, up around 9.8% year on year, according to the CRES market study. Median monthly rent island-wide sits near €2,000, and the median sale price hovers around €539,000, which produces a headline gross yield of about 4.8%. That figure looks generous until you remember it is gross, before tax, management, insurance, and the inevitable slow months.
Gross yield varies sharply by property size. Studios and small one-beds tend to sit at the top of the range, often 6% to 7% gross, because rent scales less steeply with size than purchase price does. Larger family homes and villas typically fall well below the island average once you move into three, four, or five-bedroom territory, where the buyer pool thins and per-square-metre rents soften.
A useful way to read the market is the sale-to-rent ratio, roughly how many years of rent it takes to cover the purchase price. At current prices and rents, typical properties may take over two decades of rental income to cover the purchase price, longer for prime coastal homes, shorter for practical inland or Palma flats.
Key figures to anchor your own calculations:
The trend line matters as much as the snapshot. Purchase prices have been rising faster than rents for several years now, which quietly compresses yield even in areas where rental demand looks strong on paper. Buyers who anchor their expectations to a two or three-year-old yield figure will be disappointed by what the market actually offers today.
On paper, holiday letting wins. A well-run holiday rental in a tourist-friendly pocket of the island can produce gross yields noticeably higher than a long-term tenancy on the same property, and net yields of 2.5% to 4.5% against 2% to 3.5% for long-term lets. The catch is that gross-to-net gap is far wider for holiday rentals than most first-time investors expect.
Long-term rental (alquiler a largo plazo) is simple to model: one tenant, one contract, predictable income, low turnover costs. Holiday letting (alquiler vacacional) demands active management. Occupancy rarely holds above typical mid-to-high occupancy percentages across a full year once you account for gaps and quiet spells, and that assumption alone can swing your net yield by a full percentage point or more.
What eats into holiday-rental income:
The regulatory picture now dominates this decision. Decreto 4/2025 has effectively frozen the issuing of new ETV holiday-let licences for apartments in multi-family buildings, which means you can no longer assume you will simply obtain a licence after purchase. That single fact should shape your entire strategy. If the property already holds a valid ETV licence, you have a genuinely scarce asset. If it does not, plan for long-term letting or owner use, not holiday income, unless you are buying a villa or chalet type that sits outside the current restrictions.
The practical decision rule is straightforward: buy a licensed property if holiday income is the goal, buy for long-term letting if it is not licensed, and treat any hope of “legalising it later” as a risk rather than a plan.
Gross yield tells you almost nothing useful on its own. The costs that convert it into a realistic net figure fall into four categories, and skipping any one of them is how investors end up disappointed at tax time.
One-off purchase costs:
Recurring annual costs:
Tax treatment differs sharply depending on residency. Spanish tax residents declare rental income under IRPF, the general income tax scale, with a range of deductible expenses available against it. Non-residents from outside the EU/EEA are taxed at a flat rate on gross rental income with limited deductions, while EU/EEA non-residents can generally deduct allowable expenses before applying their flat rate. Capital gains on eventual sale are taxed separately, and the rate and reliefs again depend on residency status, so this is not an area to estimate from a general blog. A Spanish tax adviser should confirm your specific position before you buy, not after. If you are financing the purchase, remember that mortgage repayments do not appear in the yield formula itself, but interest cost and Euribor exposure directly affect your cash-on-cash return, which is a different and often more revealing number for leveraged buyers.
Location decides more of your net yield than almost any other variable, because price and rent do not move together across the island.
The south-west (Port d’Andratx, Bendinat, Sol de Mallorca) commands the island’s highest prices and attracts the most affluent buyer pool, but yields there are typically compressed. You are paying for scarcity, sea views, and prestige, not rental arithmetic, and ETV-licensed stock in this zone is genuinely scarce.
Within Palma, the picture is far more mixed than most buyers assume. Prestige pockets like Portixol and the old town (Casco Antiguo) drive strong resale demand and lifestyle appeal, but net yields there can fall as low as roughly 1.4% for larger properties, according to neighbourhood-level analysis. More practical, less glamorous districts like Llevant and Son Oliva tell a different story: one-bedroom flats in Llevant have modelled gross yields around 6.6%, with net yields near 5.1%, a meaningfully better yield-to-price trade-off than the coastal names most buyers gravitate towards first.
The north-east (Alcúdia, Pollença, Can Picafort) and south-east (Portocolom, Cala d’Or) offer rising supply and pockets of relative value for both long-term and holiday strategies, particularly where tourism demand is strong but price growth has not yet caught up.
Inland towns (Sineu, Algaida, Petra) offer the lowest entry prices on the island and modest but genuinely achievable long-term rental yields, appealing to buyers prioritising capital preservation over headline income. As a general rule, smaller one and two-bedroom units in resilient, well-served districts tend to combine better liquidity and a deeper tenant pool than large luxury villas bought purely for rental purposes.
Two formulas do the heavy lifting. Gross yield equals annual rent divided by purchase price, multiplied by 100. Net yield equals annual net income, after every cost and tax, divided by total capital invested (purchase price plus buying costs), multiplied by 100.
Here is how that plays out with three realistic scenarios:
Investors regularly underestimate the premium built into a licensed property’s asking price and forget to amortise that premium across their expected holding period when comparing it against an unlicensed equivalent.
The single most common and costly error is buying an unlicensed flat on the assumption of legalising it for holiday letting later. With Decreto 4/2025 freezing new ETV licences for pisos in multi-family buildings, that assumption is no longer a reasonable bet in most of Palma and the coastal towns.
A second, quieter trap is buying prestige property for its rental income potential. A €2 million villa in the south-west can look impressive on a brochure, but its running costs, insurance, gardening, pool maintenance, and its thin pool of tenants who can afford it, routinely crush the net yield relative to a modest Palma apartment.
Building-level problems catch buyers out too: unresolved comunidad disputes, an ITE (technical building inspection) flagging structural work, or restrictive comunidad rules that quietly forbid short-term letting altogether, regardless of what the ETV register says.
Before you commit, insist on:
International buyers approaching Vogue Properties Mallorca tend to fall into a few recognisable groups: lifestyle buyers wanting a holiday home with rental potential, retirees planning a permanent move, and pure investors chasing yield. Matching the right area to the right goal is where local knowledge earns its keep, because a villa that suits a retiring couple rarely suits an investor chasing occupancy numbers.
Due diligence on any rental-focused purchase should always verify ETV licence status, review comunidad minutes for letting restrictions, and request genuine rental history rather than a seller’s projections. Many buyers ultimately settle on a hybrid approach: personal use for part of the year, professional management for the rest, which balances lifestyle value against realistic income rather than treating the property as a pure investment vehicle.
The conventional advice on Mallorca rental yield hasn’t caught up with 2026’s regulatory reality. Most guides still quote gross yield figures as if holiday letting were open to anyone with a spare flat. It isn’t, and Decreto 4/2025 has made licence status the single most important variable in the entire calculation, more important than location, more important than property size.
My honest read: buyers who chase the highest headline yield number are usually solving the wrong problem. The better question is which combination of income, capital growth, and personal use actually matches why you’re buying in Mallorca in the first place. A licensed studio in a practical Palma district will often out-earn a trophy villa on paper, but the villa might still be the right choice if your priority is long-term capital preservation and a place you genuinely want to spend time in.
Prioritise licence verification first, realistic occupancy modelling second, and location prestige a distant third. The island rewards buyers who model their numbers honestly and punishes those who don’t.
— Sophie
An experienced local agency can help navigate the complications this article has just walked through: licence verification, realistic yield modelling, and matching the right district to your actual goals rather than a headline number.
Whether you’re considering a licensed Palma apartment for steady long-term letting or a south-west villa prioritizing lifestyle and capital growth over yield, local expertise can help you avoid costly mistakes covered above. Browse current properties for sale in Mallorca to see what’s genuinely available and licence-checked right now, or explore luxury villas in Mallorca if lifestyle and long-term value sit at the top of your list.
This article is general information, not a substitute for advice from a qualified financial advisor. Consult a qualified financial professional about your own circumstances before acting on anything here.
Realistic net rental yield sits between roughly 2% and 3.5% for long-term lets and 2.5% to 4.5% for holiday rentals, depending heavily on licence status and occupancy.
New ETV licences for apartments in multi-family buildings are effectively frozen under Decreto 4/2025, so buying an unlicensed flat expecting to legalise it later is a significant risk rather than a safe assumption.
Holiday letting can produce higher gross yields, but management fees, cleaning costs, and realistic occupancy assumptions narrow the net gap considerably against long-term rentals, and licence scarcity now limits who can even pursue that option.
Practical Palma districts such as Llevant have modelled net yields around 5.1%, often outperforming prestige coastal areas where prices are driven by lifestyle demand rather than rental arithmetic.
Divide annual rental income after all costs and taxes by your total invested capital, purchase price plus buying costs, then multiply by 100; expert agencies can help model this against a specific property before you make an offer.