Buying property in Spain
Spain is an extremely popular destination with expats and it’s easy to see why. With its beautiful weather, gorgeous scenery, and delicious food, there are now over 360,000 UK residents living in Spain as of 2020. If you’re thinking of moving to Spain or making a property purchase there, there is a lot to plan and you might be feeling overwhelmed by the process.
Luckily, we’re here to help. In this guide, we’ve broken down the process of finding and purchasing your dream Spanish home, covering everything from choosing the right region, becoming a Spanish resident eventually if you wish, and step-by-step instructions on the buying process. Let’s get started.
Some Key Facts About Spain
Population in 2021:
46,779,874
Capital City:
Madrid
Time Zone:
GMT +1
Currency:
Euro (EUR)
Average national property price:
€223,380
Average Temperatures:
January 9°C, February 11°C, March 15°C,
April 18°C, May 21°C, June 27°C,
July 27°C, August 30°C, September 26°C
October 19°C, November 13°C, December 9°C
What is the Spanish Property Market Like?
Brits have traditionally made up the highest proportion of international property buyers in Spain. In fact, foreign investment in Spanish property was traditionally encouraged by the Spanish government. However, due to the uncertainty caused by Brexit and the Covid-19 pandemic, there has been a slight slowdown in the number of British homebuyers entering the market.
This can also be attributed to a combination of rising house prices in Spain and a weaker Pound sterling (GBP) (in large part due to Brexit) which has undoubtedly made buying a home in Spain a little more expensive for UK-based buyers. However, there are still bargains to be found if you look in the right places.
Mortgages are currently very affordable in Spain, yet another attraction for would-be property buyers. Golden Visas, which have proved popular for other European countries, such as neighbouring Portugal, are also now gathering momentum in Spain, with increasing interest from investors in non-EU countries such as China, Sweden and Russia, spending a minimum 500,000 Euros on a property in the country.
Can I Still Buy Property in Spain After Brexit?
You can still buy property in Spain as a non-EU citizen and the process should be largely the same, even though the UK has left the European Union. The costs of buying a property also remain the same whatever your nationality.
Should You Buy or Rent Property in Spain?
If you’re planning to move to Spain permanently, then you have the option to either buy or rent. If you have the money to buy a property and know which region you’d like to live in, then owning the property is usually a better investment. However, renting can be a good option if you’re in the country temporarily such as for work. You could also consider renting a property temporarily to get a better idea of what a region is like before buying there.
How Easy Is It for a Foreigner to Buy Property in Spain?
Despite Brexit, it is still a pretty straightforward process to buy a property in Spain as a foreign buyer. The good news is that there are not any special requirements or paperwork for foreigners looking to buy Spanish property. Providing that you have done sufficient research and have a good understanding of how the Spanish property market works, you shouldn’t have any issues navigating the Spanish property market.
To get a Spanish property as an expat, you’ll need a National Identification Number (NIE). You can get this by taking your passport into a Spanish police station. If you’re an EU citizen, you should receive this number the same day. For non-EU citizens, it can take a few weeks for this to be processed.
There is also a Golden Visa option for foreign property owners in Spain. With a Golden Visa, you become eligible for a residency visa if you invest more than £500,000 in Spanish properties.
The Cost of Buying a Property in Spain
The cost of buying a property in Spain will depend largely on the region or city you choose to live in. The Spanish property market has not yet experienced the drop in property prices that people had hoped for in 2021. According to Spain’s Property Appraisal Society, the average price of a new home in Spain is €223,380 (£191,683) in 2021. You can get a better idea of how much property prices vary across the country from the average property prices by square meter.
Can I Get a Mortgage from a Spanish Bank?
Unless you’re able to pay for the full property price upfront, you’ll need to apply for a mortgage. Some Spanish banks do offer mortgages on properties to overseas buyers. However, it might differ slightly from the mortgage you would be offered as a Spanish citizen. You might find that you can only borrow as a lower loan-to-value (LTV) rate than Spanish residents, which means that you’ll need to be able to afford a larger deposit. As a non-resident, you might be limited to 60-70% LTV, whilst Spanish residents can generally borrow up to 80% of the property’s total value. It’s a good idea to look around for mortgages before starting your property search. You could also consider using a broker to help you find the right mortgage. Having someone who understands the system already to provide professional advice can make things much easier.
Deciding Your Preferred Location and Property Type
Spain is divided into 17 regions, with 15 of these regions located on the mainland of Spain. The other two regions are island groups: the Balearic Islands lie off Spain’s eastern coast, while the Canary Islands are off the western coast of Morocco. Spain is one of the most decentralised countries in the world. Although the country is governed nationally by Parliament, each of the 17 autonomous regions also has its own president, government (gobierno or junta), administration, and Supreme Court. This is designed to give each region more responsibility for matters such as economic development, education, health, environment, police, public works, tourism, culture, the local language, and social security.
In Spain’s cities, you’ll find a mix of older properties and new-builds whilst in the coastal towns which are popular with retirees, there is also a mix of new apartment complexes and villas, as well as more traditional-style homes. Below, we have provided a brief summary of some of the most popular areas with overseas property buyers.
A Breakdown of 7 Popular Locations in Spain
Costa del Sol
Located on the southern coast of Spain, the Costa del Sol includes the popular resorts of Marbella, Malaga, Fuengirola and Puerto Banus. Historically one of Spain’s major tourist destinations, over the years, the Costa del Sol has become something of a Mecca for expats and foreign second-home seekers. It is home to several large expat communities, including the British Association of Marbella, which has been running for more than 20 years. As well as a warm year-round climate, the Costa del Sol offers something for everyone, including some of the country’s best golf resorts, renowned shopping centres, beaches aplenty and, for those with deep pockets, the opulence of Marbella.
Average property price: €827,916
Costa Brava
Costa Calida
Costa Almeria
Costa de Luz
Madrid
Barcelona
Finding a Property in Spain
Estate Agent (Inmobiliaria)
If you already know the area of Spain that you want to buy in, you can find a property through a real estate agent or ‘inmobiliaria,’ as it’s called in Spanish. The main benefit of using an estate agent is that they will have a wealth of information about your chosen region. Most estate agents in Spain are bilingual too and will be experienced at dealing with overseas buyers. One thing to be aware of is that regulation of estate agents in Spain is low, so you should be careful and wary of anything that seems fraudulent. One indicator of this is an estate agent who asks for payment upfront or suggests cutting corners in the buying process. Also remember that you can choose your own notary and mortgage provider, and do not need to go with what is suggested by the estate agent.
Property websites
Using property websites to find a Spanish home is also popular with overseas buyers. Some British real estate websites also list Spanish properties e.g. Rightmove, however, these are mostly holiday homes, so you might prefer to use a Spanish property site instead. These websites can be a great starting point in the research process when you want to get a better idea of what the different Spanish regions are like. Some popular property websites include: Idealista, Servihabitat, Fotocasa.es, and Kyero. Make sure to go and view any property that you are interested in before placing an offer.
The Process of Buying a Property in Spain
Making an offer
Once you’ve found your dream property in the right region, you’ll be ready to place an offer. You can make an offer on a property through the seller’s estate agent. Remember, you can negotiate on the price like in other countries. You will need to sign a ‘contrato de reserva’ which is a reservation contract that expresses intent to purchase and takes the property off the market. You will usually need to pay a holding fee of between €3000-6000. This fee will be held for 14-21 days in escrow. During this period, you’ll have time to do checks on the property and a purchase contract will be drawn up.
Hiring a Solicitor or Notary
Although it’s not a legal requirement to have a notary in a property sale, they are very important in the property buying process so it’s advisable to have one. The notary prepares all the contracts for signing and makes sure that they comply with local laws. As a buyer, you’ll also be responsible for registering the property. Your notary may be able to do this for you in exchange for a fee.
As well as a notary, you’ll also need a property lawyer to help with other aspects of the sale such as checking that there are no existing debts attached to the property you’re buying. This is important in Spain, because any debts associated with the property such as outstanding mortgage payments will be transferred to the new ownership.
Having a property lawyer to complete the due diligence is not only highly advisable but is also a requirement from most mortgage lenders. Your lawyer should be registered with the local bar association or ‘Colegio de Abogados.’ You can request to see their registration number or verify with the bar association to check.
Arranging a Property Survey
It isn’t mandatory to have a property survey on your own property however it’s advisable. Some houses, particularly those that are over fifteen years old can have hidden structural issues that are costly to repair. A survey will flag up any serious issues and ensures that there are no serious defects with the property that could end up being very costly down the line. There are two main types of surveys available to you: a valuation report and a binding survey. A valuation report is a briefer survey that breaks down the property’s market value. A building survey is a more in-depth report that covers the structural condition of the property. A building survey is a more expensive option however it’s also a more comprehensive guide.
Paying Your Deposit & Signing the Forms
If the offer is accepted, then the buyer and seller sign a preliminary contract, also called the ‘contrato privado de compravento’, and the buyer will pay the deposit which is usually 10% of the purchase price. You will then need to finalise your mortgage with your mortgage provider. Then, it’s time to sign the contract of sale or ‘escritura de compravento’, which is signed in front of the notary. Once this form is signed, the full sale price, taxes, and other costs of purchasing the property must then be paid.
Taxes and Fees
Don’t forget that there will be some property taxes and fees attached to the overall cost of your Spanish property so it’s important to factor these into your overall budget. Property taxes vary depending on whether you’re buying a new property or a resale property. When you are looking at a property, it’s a good idea to ask the estate agent what the quoted price includes. Any prices displayed on an estate agent’s window should include the estate agent fees, however, it’s best to double check. Some fees you might have to pay include:
- Property transfer tax (usually 6-10% of the purchase price)
- Notary fees, land registration fee, and title deed tax (usually 1-2.5% of the purchase price
- Legal fees (usually 1-2% of the purchase price, including VAT)
- Estate agent fees (usually 3% of the property price)
- Property registry fee
How Do I Pay for My Spanish Property from Abroad?
Many overseas property buyers assume using your local bank to send money abroad is often better. but in fact, using a bank is often more expensive. High street banks typically charge a money transfer fee, and these can soon mount up. Instead, working with an FX Specialist such as Halo Financial to send money to Spain to pay for your Spanish property from the UK, can help you save time and money.
As Foreign Exchange Specialists, our team can help you implement simple and effective risk management strategies that will provide quick and effective payment execution, so that you can get on with living your brand-new life in Spain.
To find out more about how Halo Financial can help you to get the best exchange rate when buying a property abroad, get in touch via 020 7350 5474. Or, register with us to start the process of transferring money overseas today.
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