PropertiesBuying Property in Spain
Date Online: 2005-06-20
Author: Debbie Cooper
Article ID: 1
Author: Debbie Cooper
Article ID: 1
The dream of buying a holiday home 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 Spanish property purchasing process and offer after sales support.
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 property in Spain was at least 20% lower than it is in 2005.
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 with requests 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!
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 property market in Spain, 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 property 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 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 a property through an 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.
Where to buy – Spanish Pueblo or Expat Community?
This in an important issue which should be carefully considered before purchase – if you make the wrong decision it can be costly, bearing in mind reselling and re-purchasing costs. Any profits made on a quick sale will be handed straight over to the tax man! Many people have a vision of living in the ‘real Spain’ amongst the Spanish and away from tourist resorts. Although there are those who have done it, and wouldn’t live any other way – is it for you? There is great community spirit in small Spanish villages – but you will need to live the Spanish way, and speak the language. You are unlikely to be accepted if you insist on going into the bar and asking for ‘a large beer please mate’, but even if your Spanish is poor, you will gain brownie points with the locals for trying!
The advantage of buying on an urbanization where there are other expats, is that you will be mixing with other people in the same situation as yourself, with facilities on hand, and general maintenance of the property and gardens undertaken by the community (although you will be required to pay a yearly fee for this). However, if the community do not agree on matters, problems can arise and it is wise to check the community rules before purchase.For Permanent Living
Many people tempted by a better quality of life, are looking to escape unpredictable situations and climates in favour of searching for 'the good life in Spain'. People leave their home country for many reasons, be it to take advantage of the still affordable market in Spain, a new job, to study, to work, or maybe to be with other family members who are already living in Spain. Whatever your reasons for moving to Spain, the way of life is totally different and for some, it comes as a real culture shock. You have to learn new currencies and languages, and you miss your friends, family and all that is familiar. Many will go through a transition period, which may last up to two years, before they can truly decide whether they can 'fit in', or should give up and go home. For these reasons, buying property in Spain for permanent living is a double edged sword. Not only is it imperative to choose the right location, but you also need to be sure that making the move is right for you.
Buying to rent – If you do not intend to stay in your Spanish property long term, an excellent way to cover the annual costs associated with ownership is to consider letting for either long term, or shorter holiday periods. You can make a substantial income from rentals or just cover the annual costs associated with the ownership of a Spanish property.
Location is the most important consideration when comes to holiday letting.
Distance from the beach and nearest airport, shops and local entertainment are paramount. Successful letting depends on a variety of factors - including the style, standard of the property and facilities, and the availability of a pool, which are all key factors that will influence the success of your holiday letting business. Generally speaking, the better equipped a property, the more likely it is to be rented out. Internet holiday hunters expect to pay less than when they are booking through a high street company. Obviously, a town apartment in an inland area is unlikely to generate the same level of interest as a seaside villa with a private pool in a top holiday spot!
There are an abundance of 2 bed apartments available for holiday rentals, in fact many owners are having to reduce their rental prices to compete. Our advice for those buying to rent would be to go as high up the ladder as you can afford to ensure that the property is rented most of the year round. Three bedroom villas with private pools in a good location are the most popular with holiday makers. On average, a 3 bed villa with a pool will generate around £800 - £900 pw in July and August, £650 - £700 in June and September and between £200 - £550 at other times.
Long term rentals are a different proposition.
Location, such as ‘front line beach’ is not as important. Long term rentees are looking more for the conveniences of living, as opposed to holiday-ing. Many people like to spend a few months looking around for property to buy, but long term rentals are in short supply as most owners opt for the higher weekly holiday prices. However, renting long term can be the source of a regular ‘year round’ income, and should not be dismissed by those buying to rent as a poor source of income.
Buying for investment purposes. Most investors buying a property in Spain will opt for a new build property on which they may only have to put down 30% of the purchase price. Buying off plan can also be a cheaper way of getting onto the Spanish property ladder, with the added bonus of having an input into the fixtures and fittings – sometimes the internal layout and design as well.
Property in this bracket may not be ‘key ready’ for a further two years, by which time the investor could have doubled his investment. It is usual for these properties to be sold on before completion date, thereby making a grand profit before incurring the completion costs and taxes. The most popular investment property in Spain now are those on golf courses or ‘leisure complexs’, many of which are springing up along the coasts and further inland.
We are an Anglo Spanish company who can advise you on all aspects of the Spanish property purchase procedures including: Solicitors, Notary, Mortgages, Bank accounts, Property Management, Holiday rental
management and buy to let advice. Our trained staff in Spain have helped many people through the purchasing process. We can guarantee our clients a professional service before, during and after the purchase of any of our Spanish properties.
If you require more in depth advice on buying a property in Spain, please do not hesitate to contact us
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 property in Spain was at least 20% lower than it is in 2005.
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 with requests 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!
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 property market in Spain, 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 property 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 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 a property through an 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.
Where to buy – Spanish Pueblo or Expat Community?
This in an important issue which should be carefully considered before purchase – if you make the wrong decision it can be costly, bearing in mind reselling and re-purchasing costs. Any profits made on a quick sale will be handed straight over to the tax man! Many people have a vision of living in the ‘real Spain’ amongst the Spanish and away from tourist resorts. Although there are those who have done it, and wouldn’t live any other way – is it for you? There is great community spirit in small Spanish villages – but you will need to live the Spanish way, and speak the language. You are unlikely to be accepted if you insist on going into the bar and asking for ‘a large beer please mate’, but even if your Spanish is poor, you will gain brownie points with the locals for trying!
The advantage of buying on an urbanization where there are other expats, is that you will be mixing with other people in the same situation as yourself, with facilities on hand, and general maintenance of the property and gardens undertaken by the community (although you will be required to pay a yearly fee for this). However, if the community do not agree on matters, problems can arise and it is wise to check the community rules before purchase.For Permanent Living
Many people tempted by a better quality of life, are looking to escape unpredictable situations and climates in favour of searching for 'the good life in Spain'. People leave their home country for many reasons, be it to take advantage of the still affordable market in Spain, a new job, to study, to work, or maybe to be with other family members who are already living in Spain. Whatever your reasons for moving to Spain, the way of life is totally different and for some, it comes as a real culture shock. You have to learn new currencies and languages, and you miss your friends, family and all that is familiar. Many will go through a transition period, which may last up to two years, before they can truly decide whether they can 'fit in', or should give up and go home. For these reasons, buying property in Spain for permanent living is a double edged sword. Not only is it imperative to choose the right location, but you also need to be sure that making the move is right for you.
Buying to rent – If you do not intend to stay in your Spanish property long term, an excellent way to cover the annual costs associated with ownership is to consider letting for either long term, or shorter holiday periods. You can make a substantial income from rentals or just cover the annual costs associated with the ownership of a Spanish property.
Location is the most important consideration when comes to holiday letting.
Distance from the beach and nearest airport, shops and local entertainment are paramount. Successful letting depends on a variety of factors - including the style, standard of the property and facilities, and the availability of a pool, which are all key factors that will influence the success of your holiday letting business. Generally speaking, the better equipped a property, the more likely it is to be rented out. Internet holiday hunters expect to pay less than when they are booking through a high street company. Obviously, a town apartment in an inland area is unlikely to generate the same level of interest as a seaside villa with a private pool in a top holiday spot!
There are an abundance of 2 bed apartments available for holiday rentals, in fact many owners are having to reduce their rental prices to compete. Our advice for those buying to rent would be to go as high up the ladder as you can afford to ensure that the property is rented most of the year round. Three bedroom villas with private pools in a good location are the most popular with holiday makers. On average, a 3 bed villa with a pool will generate around £800 - £900 pw in July and August, £650 - £700 in June and September and between £200 - £550 at other times.
Long term rentals are a different proposition.
Location, such as ‘front line beach’ is not as important. Long term rentees are looking more for the conveniences of living, as opposed to holiday-ing. Many people like to spend a few months looking around for property to buy, but long term rentals are in short supply as most owners opt for the higher weekly holiday prices. However, renting long term can be the source of a regular ‘year round’ income, and should not be dismissed by those buying to rent as a poor source of income.
Buying for investment purposes. Most investors buying a property in Spain will opt for a new build property on which they may only have to put down 30% of the purchase price. Buying off plan can also be a cheaper way of getting onto the Spanish property ladder, with the added bonus of having an input into the fixtures and fittings – sometimes the internal layout and design as well.
Property in this bracket may not be ‘key ready’ for a further two years, by which time the investor could have doubled his investment. It is usual for these properties to be sold on before completion date, thereby making a grand profit before incurring the completion costs and taxes. The most popular investment property in Spain now are those on golf courses or ‘leisure complexs’, many of which are springing up along the coasts and further inland.
We are an Anglo Spanish company who can advise you on all aspects of the Spanish property purchase procedures including: Solicitors, Notary, Mortgages, Bank accounts, Property Management, Holiday rental
management and buy to let advice. Our trained staff in Spain have helped many people through the purchasing process. We can guarantee our clients a professional service before, during and after the purchase of any of our Spanish properties.
If you require more in depth advice on buying a property in Spain, please do not hesitate to contact us
