Buying Property in Spain?..
The dream of buying in Spain has been realised by hundreds of thousands of foreigners. Many people are now looking to escape bad winters and unpredictable summers for a taste of the good life in Spain. Whether you are looking for the holiday home of your dreams, a permanent home in the sun, buying to let, or for purely for investment sake - whatever your reason for buying property in Spain, deal with trained specialist staff who will help you through the purchasing process and offer after sales support.
People will buy for one of the following reasons, and different considerations need to be given for each type of purchase:
Buy to Let | Buying to Rent >>
Investment Property in Spain >>
Buying a holiday home in Spain >>
Buying a permanent home >>
Most of the British public tend to be influenced by TV programmes which are often misleading. You may not notice that some of these shows were filmed over a year ago when the price of purchasing property in Spain was at least 20% lower than it is in 2006.
Often, you will see ads either paper based or on the internet that list cheap property prices, but when you make an enquiry you are informed that the property has been sold – probably last year! You may then be offered ‘similar’ properties but of course the price has increased.
We still have clients coming to us to buy property in Spain looking for a three bedroom villa with private pool near the beach for a budget of around £50,000 pounds – be warned - you just wont find it!
Buying Spanish property - Buying guides & books >>
The best way to get a realistic idea of the type of property you can get for your money, is to do your homework in Spain, and spend some time looking around. More and more people are looking for long term rentals – 3 months or more – to get a taste of the ‘real Spain’, thereby giving themselves a true insight into property prices, maintenance costs and living expenses. If you are looking for a ‘buy to let’ property, take advice from letting agents who will know their market and advise you on the most rentable areas, furnishing, and rental income.
The cost of buying property in Spain has risen substantially in the past three years and is still rising at a rate of 17%, making a good return on investment for buyers. Spain offers a ‘feel good factor’ to many Brits who may have had their first ever holiday abroad on a Spanish ‘Costa’, and despite the fact that there are other places in Europe which can compete in price with Spain, they do not offer the same ‘familiarity’.
Estate Agents operating a business in Spain do not actually need any formal qualifications, and many agents are only in the business for the short-term gain and high commissions which can average between 10% and 25%. Be sure to pick your agent carefully, and ensure that he is not going to just make his money and leave you high and dry. In 90% of cases, you will need at least the minimum of ‘after sales care’.
Due to the fast moving Spanish property market, if you see your `dream home´ it is advisable that you act quickly - remember, you are competing against buyers from all over Europe. It is also advisable that you take time to visit different areas to see what is on offer, never buy the first thing you see.
More and more British buyers are opting to buy land and build their own property rather than buy a resale, but are not usually familiar with building regulations and permissions with the belief that this responsibility falls to the builder. In most cases this assumption is incorrect, the builders are only concerned with building homes, it is the purchasers responsibility to ensure that the property is legal and that they have the correct paperwork.
If you are interested in purchasing in the Valencia region you will need to be aware of the law which allows developers to take your land and build on it, then demand that you pay money towards their building project, of which you will see no return. However, there is now an insurance to protect you against this.
You will often find many companies operating in the same area will have some of the same properties for sale. It is advisable to look at the prices in each agency as they will vary depending on the commissions added by each individual agent as commissions are not regulated by any governing authority.
Many people believe that when they are buying in Spain, they can avoid the agents commissions by going directly to the developers, however this is no longer true as prices are set. It is actually more sensible to buy through a Spanish property agent as they will help you with all the legalities whereas the builders normally would not.
Purchase Costs
Below is an approximate list of charges which will apply to the purchase of your property in Spain. These are approx 10% of the property purchase price:-
The charges below are based on a property for 100,000€
IVA (similar to VAT) @ 7% = 7000€
STAMP DUTY (new builds) @ 1% = 1000€
LEGAL FEES = 600€
NOTARY FEES (approx 0.5%) = 500€
LAND/GESTORIA (approx 0.5%) = 500€
APPROX TOTAL = 9600€
It is common in Spain for the Escitura to list a price lower than the actual purchase price of the property, this is a well accepted tax dodge which reduces the tax (plus valia) that the vendors pay. The tax is based on the profits made on the property since the vendors originally purchased it. The difference between the purchase price and the Escitura price is often paid direct to the owners in cash.
Connection charges for water and electricity also apply to new build properties are approx 450€.
If you require a mortgage this also carries a charge of 1% of the mortgage amount to register the mortgage with the Spanish authorities.
If you require more in depth advice please do not hesitate to contact us
If you are seriously considering buying property in Spain, we recommend here some good books that will point you in the right direction
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