Buying Guide Details

Buying Property in Spain

Overview

The British have been buying property in Spain as second homes for many years; in fact, it's the number one choice for decades. Despite the soaring cost of buying a property in Spain and over-development in certain areas, the country still offers new property 'hotspots' to tempt the bargain-hunting overseas property buyer, for example the Atlantic coast of the Costa de La Luz towards the Portuguese border, the lush countryside of its northern regions and the rural hinterland stretching back from the established coastal resorts.

Buying property in cities such as Madrid and Barcelona for property investment is popular despite being expensive, though their historic siblings Cadiz, Granada and Seville, among others, are on the property radar now at a fraction of the price.

From inexpensive renovation farmhouses to its island hideaways to the swankiest villas in the most exclusive resorts, there's something for almost everyone looking for property for sale in Spain.

The Property Market in Spain

It is an increasingly common opinion that to talk of "the Spanish property market" is an oversimplification of a complex phenomenon - far better to talk of "the Spanish property markets" so as to distinguish between some very different geographical locations, buyers and economic factors. As with many countries, whatever is generally taken to be true for an area is subject to both vast and subtle variation at the "micro" level, even down to adjacent streets. The detail of these subtleties is too great to attempt to explain it here.

Recent stock market activity has once again raised the subject of the Spanish property crash that has been "imminent" for the last few years. Many analysts agree that the property market in Spain, while slowing considerably from the huge annual gains of yesteryear, is on course for a "soft landing" as opposed to a disastrous sudden drop.

Oversupply of homes and a more discerning type of buyer these days, combined with greater investment gains perceived in the so-called "emerging markets" of Eastern Europe, Central America and the Far East, have certainly put the brakes on rampant demand and large short-term increases in the value of property in Spain, but this ignores the fact that many people buying property in Spain do so as a lifestyle choice, lured by climate, amenities and culture (local and/or expat) rather than earning a prospective fortune on their home there.

It remains one of the most appealing overseas home destinations. Those looking for the "quick buck" will rarely find it in Spain today, whereas those prepared to search for good property at a reasonable price will be well rewarded - whether as a holiday or retirement home, permanent relocation or long-term investment.

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Property Hotspots

• Costa de la Luz - the Atlantic coast of western Andalucia has been a favourite destination for the Spanish for many years. Overseas buyers will be delighted with the culture, the climate and the property prices.
• Canary Islands - with a warm climate all year round, dramatic volcanic scenery and excellent value property, there's more to these islands than simply its stunning beaches and popular resorts
• Barcelona - the throbbing capital of Catalunya is a major city break destination and growing commercial centre, but even its high property prices don't detract from its continuing appeal to overseas property buyers
• Lugo (Galicia) - there's much more to Spain than its sunny southern costas. The rolling green hills of the northwest provide a unique and dramatic contrast - as well as some dramatically cheap property bargains too.

Homes Overseas Property Club

Homes Overseas has joined forces with a collection of IFA specialists to form the Homes Overseas Property Club (HOPC), designed for existing and prospective overseas property homeowners.

The Club – which has access to international lawyers in no fewer than 43 different countries - has been set up in order to guide people through some of the various issues relating to buying and maintaining a property overseas. It offers advice on a range of topics, including financial, legal, insurance, taxation, property management and foreign currency matters.

For further information please telephone 0845 838 7142 or email info@homesoverseaspropertyclub.com

The Process of Buying Property in Spain

• Anyone buying (or selling) a property in Spain must first obtain from the state - in person - a fiscal number for foreigners known as NIE (numero de identificacion de extranjeros).
• Once the buyer has received the NIE number, the buyer's lawyers can make an offer on their behalf. When a price has been agreed, it is recommended that both parties sign a preliminary agreement which outlines details such as the completion date.
• A deposit of 10% is the normal amount placed to secure the purchase of a property in Spain. After this, if the buyer pulls out they lose the full deposit but, should the seller decide not to go ahead, he/she must return double the amount of the deposit - i.e. 20% - to the buyer.
• If a property in Spain is purchased off-plan, it is usual for payments to be broken into stages, the balance being paid when construction finishes.
• On completion, when all the necessary checks have been carried out, both parties sign the escritura (title deeds) in the presence of a notary. The buyer then pays the balance, plus all other fees and taxes. Copies of the deeds are sent to the Land Registry and the tax office.

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Read Spanish News Regarding the Spanish Property Market

Fees & Taxes

• Taxes and fees usually amount to around 10%  of the total purchase price of the property
• Taxes payable depend on whether the property in Spain being purchased is new-build or resale. Currently, transfer tax of around 7% is applied on resales, which includes stamp duty. For new-build properties, VAT (IVA) of 7% is payable in addition to 1% stamp duty
• On top of this there is also plusvalia (capital gains tax), which is set by the local authorities and depends on the area concerned and the amount of profit being made on the sale. This is usually paid by the seller.
• If the buyer is purchasing land or commercial property rather than residential, VAT is 16% as opposed to 7%. Stamp duty remains the same
• Most Spanish lawyers charge around 1% of the final purchase price, and notary fees are around 0.5%
• Agents' fees can vary anywhere between 2% and 15% - so be careful not to be ripped off.

For more information on buying property in Spain, please select from the following list of regions of Spain: