Do you know? The year 2023, proved to be the best year in terms of foreigners buying property in Spain. Approximately, 131,388 foreigners buying property in Spain.
Significant market contribution was made by this, Particularly in locations like the Balearic and Canary Islands, as well as the coastal regions of Andalucía and Comunidad Valenciana.
Find out if Spain market is right for you:
When it comes to settling up your living in Spain one must consider buying or renting the property. Although both of them involve their own set of pros and cons. However, buying property in Spain gives you a sense of security and ownership that renting cannot provide.
Additionally, Statistics show that only 23% of people prefer renting out a property rest all invest in buying property in Spain. Buying Property in Spain provides you with long-term stability and also enhances your financial goals.
Here are the top 3 reasons one should consider before buying property in Spain:
- Favorable Climate And Lifestyle:
The season in Spain is long and warm, with lots of sunshine. This means spending more time in nature, having relaxing nights, and maybe paying less for electricity since you won’t need to heat as much.
- Investment Opportunity:
Since 2016, Spanish real estate prices have been rising, with an average gain of 4.2% in 2023. While analysts expect a slight slowdown to 2-3% in 2024, long-term growth remains possible.
- Strong Infrastructure And Amenities:
High-speed rail (AVE) and a good road network connect major cities. Access to quality healthcare, education, and cultural attractions is always achievable.
A step-by-step guide to buying property in Spain:
1. Research and Property Selection:
Before diving into Spanish sunshine and property viewing you must consider the below parameters which will guide you to your perfect investment and help you explore the options smoothly.
- Understand your needs and budget:
For property transactions, non-residents require a Foreigner’s Identification Number (NIE), which can be acquired from Spanish diplomats abroad or at local police stations. To make payments on the loan and other transactions easier, open a Spanish bank account.
Major cities like Barcelona and Madrid typically have greater prices than rural areas or smaller villages. Well-known vacation spots like the Costa del Sol will also cost a higher price.
- Barcelona
Price per m2 in the city center: € 5810
Price per m2 outside the city center: € 3445
Average Price for a 100m2 property: € 463000
- Madrid
Price per m2 in the city center: € 4010
Price per m2 outside the city center: € 2460
Average Price for a 100m2 property: € 323000
- Malaga
Price per m2 in the city center: € 3615
Price per m2 outside the city center: € 2290
Average Price for a 100m2 property: € 295000
In July 2024, the average cost of property in Spain was approximately €638,717. The cost of real estate can vary greatly, from as little as €329 in Extremadura to more than €4,000 in popular regions like Barcelona and Madrid.
- Consider your lifestyle and market research:
The cities have an excellent mix of recently constructed and older homes, and the coastal towns are particularly well-liked by Spanish seniors. Foreigners generally invest in buying property in Spain to retire, that is the reason why many real estate agents list out the new property in Spain as per the requirements of the consumers.
Think about the property type like apartment, villa, or townhouse, and the locations such as beachfront, city center, rural, and the accessibility of the facilities. Expenses such as pricing, possible rental income, and renovation costs should all be considered when buying property in Spain.
Use trustworthy websites such as Idealista, and Kyero to go through listings and filter properties according to your requirements. Think about engaging with a respectable real estate broker that specializes in the area you have in mind. They can offer you legal guidance and local experience.
2. Know About Taxes on Buying Property in Spain:
All property purchases come with extra costs attached. Depending on whether the purchase is a new construction or a resale, there are two basic possibilities for taxes paid while buying property in Spain.
- New Build Property:
The two taxes one needs to consider before buying property in Spain are the value-added tax (VAT) which is 10% of the purchase price and the Stamp Duty (AJD) which varies regionally from 0.5% to 2% of the purchase price.
- Resale property:
This is a type of tax that involves Transfer Tax (ITP). This tax ranges between 4% and 10% depending on the region and on the property’s c value.
3. Getting the legal work done:
Make an Offer: The seller’s estate agent usually makes an offer. Research the asking price and make a reasonable offer below it. Consider including conditions in your offer, such as the property passing a survey.
Secure the property: Agree on a Price and Sign a Preliminary Contract. Once a price is agreed, a contract is signed. This is a legal document outlining the terms of the sale. You’ll pay a deposit (around 10%) at this stage, held by the seller’s lawyer until completion.
Secure Financing: If you require a loan, finalize the application process now. Spanish loans can only be obtained once you own a property in Spain, so plan accordingly.
4. Due Diligence:
The major reasons why due diligence matters is because of hidden debts, structural issues unclear ownership. According to a 2023 survey by the Spanish consumer association OCU, 35% of buyers faced unexpected repairs after buying property in Spain. A thorough inspection during due diligence can reveal structural problems or potential renovations needed.
Below are a few steps that could be taken:
- Hire a Spanish lawyer to review the contract, conduct property searches, and ensure everything is in order. This helps avoid any legal issues with the property.
- Understanding the community fees associated with the property, including maintenance costs and potential future contributions.
- Verifying with local authorities confirms the property complies with zoning regulations and doesn’t have any restrictions on future development.
5. Complete the Purchase:
Once everything is finalized, the final sale contract is signed by a notary. This is when the remaining balance of the purchase price and any taxes are paid. You’ll receive the keys and officially own the property.
Common issues in buying property in Spain:
- Legal Complications:
Imagine you find your dream villa, but the seller can’t prove full ownership or there are outstanding debts on the property. A lawyer can uncover these issues earlier, but skipping this step could lead to legal battles and lost money. So consider clearing the property titles before the process ends.
- Hidden Costs:
You budget for the purchase price but forget about closing costs, which can be significant in Spain. This might include transfer tax, notary fees, and lawyer fees. Suddenly, your dream home becomes more expensive than you considered. So focus on unexpected taxes.
- Market Fluctuations:
You fall in love with a property during a good market and rush into an offer without proper research. Later, the market cools down, and similar properties are selling for less. You could be stuck with a property worth less than you paid. Don’t overpay for properties.
Conclusion:
As you consider buying property in Spain, remember its diverse culture and stable market. Your dream home is waiting for you along with the sunny skies and rich cultural heritage.
Don’t let the dream of Spanish homeownership remain just a dream. We hope by following this guide and its valuable insights, you’ll be well on your way to securing your perfect property in Spain.
Happy House Hunting!
