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Overview of the Spanish property market
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 purchasing 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.
Spanish property in cities such as Madrid and Barcelona bought 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 in Spain.
The Spanish Property Market
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 in Spain 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.
The Process of Buying Property in Spain
- Anyone wishing to buy (or sell) 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 usual amount placed to secure the deal. 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 – 20% – to the buyer
- If a property 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.
Buying Property in Spain - 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 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 plusvalía (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 rises to 16%. 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 no to be ripped off
Spanish Property Hotspots
Costa de la Luz propertyThe 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 propertyWith 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
Costa Blanca propertyAlthough it's property market is reeling from one blow after another, it will recover, and will remain the first choice for British holidaymakers and holiday-home buyers for years to come.
Costa del Sol propertyHas long been a favourite. It’s easy to reach, has a wonderful climate and lifestyle, sheltered beaches, top-class golf courses and marinas, and continued investment in its infrastructure has been reflected in the capital growth and rental yields achieved from Costa del Sol properties in recent years.
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Barcelona propertyThe 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
- Population: 40,491,051
- Capital: Madrid
- Languages: Spanish (Castilian), Catalan, Basque, Galician
- Area (km2): 504,782
- Currency: euro
- Exchange rate: £1 = €1.25
- Dialling Code: +34
- Emergency services: 112
- Embassy in UK: http://www.mae.es/Embajadas/Londres/en/Home
The Spanish healthcare system has improved dramatically over the last few years and generally has a reputation for being excellent. Even if you should choose at any time to go private, it will cost a fraction of what it would in the UK
The cheapest and quickest way to get to Spain is to fly. The majority of destinations on mainland Spain are only two hours away and there are plenty of budget flights available year-round to most regional airports. Charter flights can also offer good deals in high-season, especially to the Canary Islands
Buying Property in Spain - Top Tip
The much-publicised land grab scenarios are, for the most part, a thing of the past. However, it is vital that thorough checks with the land registry are carried out, and the issue of title is made clear from the start
Some information contained herein may have changed since it was first published. Homes Overseas strongly advises you to seek current legal and/or financial advise from a qualified professional.