For all sun worshippers it comes as no surprise that Spain is hugely popular as a holiday home destination. Choose from lovely, rustic fincas and village houses to luxury villas, townhouses or brand new apartments, many of which are being sold at bargain prices…
With property prices in many areas down by as much as 50 per cent from peak years, holiday homebuyers are spoilt for affordable properties. They are joined by lifestyle buyers looking for the ideal place to retire in Spain while taking advantage of the strong sterling.
The domestic property market remains slow due to lack of lending, but international cash buyers are snapping up properties on the Costas and taking advantage of the lowest Spanish property prices in years.
Holiday home buying tips
If you are looking into buying a holiday home in Spain, we’ve put together a few useful tips to help you with your purchase:
- Do your homework by checking out the area, including local amenities and finding out who your neighbours will be. View the property during the day and night to be sure you are happy with the amount of traffic, nightlife or other noise levels nearby. If needs be, rent out a property in the same area for a few days as this will give you the chance to see for yourself
- Consider how far it is from an airport and how many flight options are available from the UK. Then ask yourself how often it will be financially and practically feasible for you or your guests to enjoy using your holiday home
- Contract a reputable lawyer to do all necessary searches, the checking of your contracts and to help you to deal with any Spanish documents that you may encounter. Although this is not automatically part of the buying process in Spain, using an independent lawyer could save you work and worry. If you are buying in a community (urbanisation), you could avoid any nasty shocks by getting your lawyer to check that the management committee is up–to-date with payments and maintenance of the buildings and communal areas
- Get a survey done if you are buying an older resale property – again, this is not a legal requirement, but could prevent you purchasing a property with hidden defects
- Be flexible on where you buy your property. Tried and tested areas such as the Costa del Sol can be more expensive than on the Costa de la Luz or coastal towns around Murcia which are fast gaining in popularity. You may prefer to seek out emerging hotspots which should help to keep the purchase price down
- Before you sign anything, be fully aware of the Spanish real estate process and the costs involved when purchasing a property. If you are a property on an urbanisation, such things as community fees and maintenance costs will need to be factored in too
Buying property in Spain
This is a simple enough procedure and, with the help of a lawyer, should run smoothly. The Spanish property buying process generally means taking the following steps:
- Sign a reservation agreement. This is a deposit to ensure the seller removes the property from the market and will normally cost between €3,000 and €12,000, depending on the purchase price. The funds are usually held by your lawyer or agent in an escrow or client account
- After around 10 days, the full private purchase agreement is signed by you and the seller and a deposit of 10 to 20 per cent of the purchase price will need to be paid. During this time, your lawyer will complete all searches on the property in order to confirm that the seller is indeed the current owner and that all payments and debts are up to date. Should there be a legal problem preventing the sale, you will be repaid your deposit. If the seller pulls out of the sale he/she is required to pay you double the amount of the deposit received. If you pull out, you will lose your deposit
- Once the searches are complete and everything is in order, both parties sign the main contract of sale at a Public Notary office and the agreed final payment is required along with any purchase taxes
- The relevant documents are then presented by the Notary to the Land Registry for registration and the property is passed over to you. Bear in mind that final registration of the title deed can take several months
Note: If you are purchasing an off-plan property in Spain, payments are normally made at various stages of the building process. The developer must provide you with bank guarantees to protect each payment, just in case they fail to complete the project.
It’s usual to allow between 10 and 14 per cent of the purchase price, depending on the region in which you are buying, to cater for purchase costs. If you have taken out a Spanish mortgage, you will need to add an additional 2 to 4 per cent.
Purchase costs include:
- Transfer tax (stamp duty) between 6.5 and 10 per cent of the purchase price
- Notary fees at approx 0.5 per cent of the purchase price
- Land Registry fees at approx 0.4 of the purchase price
- Legal fees are usually charged at approximately 1 per cent plus VAT (VAT for new build properties is 10 per cent)
Exchanging currency is another important consideration when you are converting your hard-earned sterling into euros – securing the best possible exchange rate ensures you get even more euros for your pounds.
Working with a specialist currency exchange agency helps you achieve fixed rates which are normally better than at the bank, and could help to reduce the risk of your international payments increasing due to currency fluctuations. For a £100,000 exchange, a currency specialist can often save you up to £4,000 by giving you a better rate than at high street banks, so they could be well worth contacting.