For many nationalities, buying property in Spain is a lifelong dream. And why not? The Mediterranean climate, delicious cuisine, and all those gorgeous beaches make Spain the perfect base to own a second home or, in many people’s cases, relocate permanently to live a life in the sun.
Whether you want to buy a villa, townhouse, apartment, or residential property also presents many lures and benefits to owning. It is not just Brits that flock to purchase property in Spain either. Statistics show Germans, Russians, French, Italian, Belgians, and Swiss nationalities all adore the country. So, buyers interested in houses for sale in Spain should read on for some helpful advice about tax, costs, Spanish contracts, house values, and what to avoid.
Guide to Buying Property in Spain
Can a Foreigner Buy a House in Spain?
While some countries make foreign buyers jump through hoops, Spain is the opposite. They recognise foreigners buying residential properties in Spain boost the Spanish economy, whether buying a holiday home or becoming permanent expats. As much as it is easy though, it still pays to do research in Spain, much like buying a house for sale in your own country. This is where we step in as real estate agents to help every first-time buyer in Spain understand the process with our local buying knowledge, work expertise, and years of experience.
Where to Buy Spanish Property
Foreigners interested in buying property in Spain gravitate to the same regions. These areas mainly centre themselves in southern Spain or the south-east coast because of the gorgeous Mediterranean climate with 300 days of sunshine a year. One popular place in Spain is Marbella in the Costa Del Sol that includes Estepona, Mijas, Torrevieja, Alicante, Malaga, and the Golden mile suburbs of Puerto Banus.
These belong to the Andalusia region that includes Catalonia and boasts of a fantastic, traditional Spanish culture. Other places to look at in Spain are the Costa Blanca, and Benidorm, Murcia, Costa Calida, Mar Menor, and Moraira in the Valencia region. Otherwise, the Balearic Islands also attract foreign homebuyers in their droves.
Is Property for Sale a Good Investment?
House prices in Spain still have not recovered to their 2008 high spot. However, buyers looking to invest in property have the price index, and potential capital growth easily lures them to Spain. With any house in Spain, if your primary purpose for buying is to invest, further research and considerations are needed. For example, a renovation home in Spain rarely becomes an excellent opportunity, but as with many other overseas properties, off-plan villas and apartments for sale make more capital growth.
Be aware of any bargain opportunities as there is usually a hidden catch. Buyers borrowing money should also consider monthly mortgage payments. Any property investor in Spain will agree that negotiating the price is essential, but overall, look at it mid to long term property investment. Lastly, where you buy a house makes a big difference. Municipalities constantly reinvesting in the community, infrastructure, and future developments positively affect investment property.
Taxation and Closing-costs
In addition to the property price, every home buyer in Spain should also factor additional purchasing costs and legal fees of Spanish property into their budget. These can include conveyancing, valuation, solicitor, transfer tax, land registry, notary, and stamp duty. When buyers purchase property with us, we outline a payment plan, which details what to pay and when. Remember, affordability is the critical factor when deciding on budgets.
Buy-to-let in Spain
Some real estate investors look to Spain for an income from buy-to-let purely because of the solid tourism market. Likewise, some property owners advertise flats to rent because they only bought them as holiday homes. Both short- and long-term landlords should think carefully before buying if a rental income is part of their strategy. In some areas of Spain, rental properties flood the market.
Additionally, advertising your home to rent when remote and far away from local amenities will not net any tenants. Luxury homes make a roaring trade, but don’t forget to advertise and take care of property management like welcome packs and cleans. A significant income from rents also means paying income tax in Spain.
One advantage of buying property in Spain is the short flight from all European countries. Regardless, homebuyers who won’t live in Spain permanently need to think about property management and maintenance. Some owners employ a company in Spain as key holders, and they regularly check the property. In comparison, others look to neighbours and friends. Remember, apartment owners often pay a communal fee towards the upkeep of shared areas or swimming pools, so factor this into year on year running costs.
How to Find the Best Property For Sale
1: Before looking at property listings in Spain, sort out finances. Don’t forget that the Spanish housing market operates in euros, so find an excellent foreign exchange company that offers reasonable rates. Know what you can afford, and don’t forget to consider the yearly running fees of your first home. This is where the timeline for buying property in Spain starts.
2: Decide on what property type to buy. For example, is your requirement a new build or furnished city resale, duplex, or ground-floor property? Villas for sale are either detached or semi-detached. Decide on the number of bedrooms and baths your family home should have. Different penthouses often boast amazing terrace views, but some prefer a bungalow with a small garden. Townhouses in Spain are a popular choice, as are luxury houses with a swimming pool.
3: Start your search by browsing our featured properties in Spain; each listing contains everything to know, including the house price, location, home type like gated luxury community property, new build, mansion, or penthouse, and enquiry details to find out more or arrange a viewing in Spain. Our listings give a great insight into how the Spanish property market operates. Additionally, please speak to any of our local agents by contacting us via phone.
4: Once buyers find a property, we help obtain a tax identification number and open a registered bank account in Spain. The second one is not required by law, but it is savvy financial planning to have one.
5: Pay deposit to be held in your name with credit card or bank transfer. We wouldn’t recommend carrying cash in your pocket, but the money should be readily available as a delay with deposits doesn’t work in your favour. This deposit payment fixes the price, confirms the intention to buy and takes the property off the market without fear of being gazumped. When budgeting for your new property, you will pay about ten per cent of the property price in taxes and fees. Know exactly where you stand with finances and, if necessary, use a financial advisor.
6: After paying your initial deposit and confirming your intention to buy in Spain, you need a Spanish lawyer. Choose one with local knowledge who speaks your language. Your chosen lawyer will arrange contracts and carry out numerous checks to ensure the person selling your desired property is the legal owner. Are there any issues, and is it being delivered as promised? They ensure no debts are owed on the property and that all the service bills and taxes are up to date. Using a lawyer in Spain safeguards your purchase to make sure you don’t inherit any outstanding debts. If purchasing off-plan, the lawyer will ensure the developer has insurance policies in Spain or necessary bank guarantees. If anything goes wrong and the purchase doesn’t proceed (due to the developer), you will have your money returned plus 6% interest.
7: If buying off-plan in Spain, the developer or agent may offer a mortgage with very favourable conditions. However, look at mortgages carefully or raise capital in your own country before coming to Spain. If you need a Spanish mortgage, we can tell you what planning documents you need and give you lots of other agreement advice and information. Your legal property purchase repayments should not exceed 35% of your net monthly income or joint monthly income if applying for two people. Remember that you will probably pay about 3-4% of your borrowing amount in costs. Usually, the right lawyer charges 1% of the purchase price of your property plus 16% VAT for his services during the sale process.
8: If you want a third party to sign and receive the keys for the property on your behalf, ask your lawyer to provide a legal power of attorney in Spain. This might be possible with off-plan property, as you sometimes don’t have the occupancy licences granted for weeks after the property is completed. In addition, you can’t connect services such as water and electricity until licences to occupy are in place with the relevant office.
9: The final process of contracts and purchasing your property is completed before a Public Notary in Spain when the vendor signs the property over as per the agreement. This is when you sign and exchange money and get the keys to your new home. If buying from a promoter or construction company, you pay 7% transfer tax or 7% VAT plus 1% Stamp Duty. You’ll also have the notary fees, ranging from 300-1000 Euros, depending on the price of the property you’re buying, plus fees to register the property. These are about 60% of the notary charge. You may want to seek advice from an expert on whose name to sign on the title deed. There can be complicated inheritance taxes in Spain to consider about your estate.
Buying Property and Living in Spain
Some homebuyers in Spain want a holiday home and remain non-residents, while others want to become an expat and live here all year round. The visa types for residency in Spain vary from short to long term and permanent. Buyers can only gain the latter after living permanently in Spain for five years, with no interrupting months. Some buyers also opt for the golden visa to gain permanent residency in Spain like a citizen, with the minimum purchase level being $500,000.
Guide to Selling Your Property
When researching property for sale, consider liquidity as well if you want to convert bricks and mortar back into hard cash. The good news is that homes for sale in most southern coastal parts of Spain command a healthy turnover on the market. Sellers in Spain have two advantages because potential purchasers are not only Spanish but also worldwide. But also research locally. While a small renovation home in the middle of a small village might appeal to you, there is always a problem, and you cut out half of the market if you sell in later years.
Spanish Home Guide
Our professional blog about buying property and living and working in Spain is full of helpful articles and information for anyone thinking of making a move. Discussing current topics, Spain’s status as an overseas property destination, and places that stand out read more content here.
We are Spot Blue professional property agency. We advise and connect hundreds of interested parties and sellers in Spain. Besides helping foreign purchasers find their dream home, we are with them every primary step through the property buying process in Spain. Whether you are interested in budget or luxury properties, we can assist you when buying to settle into your new home with peace of mind. So call us today to start your journey of buying property in Spain, or follow us on Facebook to stay updated with property news from abroad.
(Featured property – 6 bedroom Golf view house for sale in Benahavis – Spain ref number ESBENV465)