Table of contents
- Are british expats buying property in spain after brexit?
- Will there be any difficulties visiting my property or living in spain because of brexit?
- The spanish property market
- The different regions of spain
- So, is buying a house as an investment in spain a good idea?
- Costs of buying a property in spain
- How to buy a house in spain: financing your property purchase
- What are the taxes i need to pay when buying a house in spain?
- Is it a good idea to buy property in spain 'off-plan'
- What is the process of buying property in spain
- Valuation of the property
- Land registry check
- What is an nie number and how do i get one?
- How to open a bank account in spain
- Is it necessary to pay a deposit when buying a property in spain?
- The property deeds
- Inscription on the spanish land registry
- Removal of the previous mortgage from the register
- Final step: inscription of a new title on the land registry
Are you thinking of buying a property in Spain? If so, you’re not alone. Every year thousands of people from all over the world flock to this Mediterranean country for its stunning beaches, vibrant culture and delicious cuisine.
Expat buyers considering an investment in property in Spain - whether British or EU citizens- the process can seem a daunting one. Inexperienced foreign buyers have discovered the pitfalls of buying property in Spain. However, with a level head and making sure to reach-out to get the appropriate specialist advice from local property experts to help with your property search, there is no reason to fear becoming the victim of any property scams.
When you make a decision to purchase property in Spain, you should do so with your eyes open and a good analysis of the Spanish property market completed. This guide will indeed help you understand your options in the Spanish property market, including the different types of properties available, as well as navigating Spanish laws, taxes and fees. So, whether you're looking for an investment or holiday home or planning on relocating permanently – read on to find out what steps need to be taken when buying property in Spain.
2. Are british expats buying property in spain after brexit?
The UK and Spain have agreed a new bilateral agreement such that British nationals can continue buying property in Spain, despite Brexit. So, while British nationals may continue buying property in Spain, it must be noted that as they are now considered non-EU nationals, residency rights here have changed. You can check our article on Living in Spain after Brexit for more detailed information.
3. Will there be any difficulties visiting my property or living in spain because of brexit?
British nationals are, of course, still able to visit their property in Spain and stay for up to 90 days in any 180-day period, even after Brexit. However, you don't automatically get Spanish residency just because you own real estate there. With a standard tourist visa, included in a British passport, you should be able to stay for up to three months without having to get an official document from the Spanish authorities.
Unless you have been living in Spain before the cut-off date, and fulfil the criteria for proving this, then if you are a British citizen you will need to obtain a residency visa in order to stay more than 90 days at a time.
There are a number of options for Spanish visas for those considering a move to Spain:
- Golden Visa: Buying a Property worth over €500,000
- Non-lucrative visa (visa that entitles the bearer to reside but not work in Spain)
- Have access to another EU Passport e.g. Irish passport due to a grandparent's ancestry or marriage to an EU citizen (Family Reunification Visa)
- Set up an innovative business
- Digital Nomad Visa
Assuming you are able to gain residency in Spain via one of the visa options above, a separate consideration is whether you will opt to purchase or rent a property there.
4. The spanish property market
Buying property in Spain can be a great opportunity for those looking for a second home, a holiday home or a buy-to-let property. Prices are still relatively low compared to similar-sized cities in Northern Europe, although increasing, and this could be a good time to invest.
When considering the Spanish property market, it is helpful to consider the types of property in Spain that you can buy as well the different locations in the country, since these 2 factors tend to have a large impact on property prices.
There are also off-plan and repossessed/bank owned properties available. Each type has its own benefits and drawbacks, so it’s important to know what you’re looking for before starting your search.
5. The different regions of spain
Spain offers buying opportunities for both British and other foreign citizens. Depending on the buyer's preferences, each region may offer different advantages in terms of climate, geography, property types and prices.
The Mediterranean Coast - including the ever popular Costa Blanca and Costa del Sol - is a particularly popular destination for expats buying property in Spain, with its warmer climates, accessible beaches and plethora of villas. Spanish property prices can be higher along the coast than in other parts of Spain due to its popularity, but buyers can still expect relatively low prices compared to buying in northern Europe. In addition to villas, apartments are also common here providing an attractive option for buying investment properties.
The Balearic Islands are another popular buying destination offering beautiful coastline views, mild temperatures and plenty of sunshine throughout the year. There is a wide range of property types available on the islands including villas, townhouses and luxurious apartments. Prices tend to be higher here due to the demand from foreign buyers, but buying on the islands can still provide a good buying opportunity with attractive rental yields.
The Canary Islands are an increasingly popular buying destination for British citizens due to their diverse and unique geology, warm climate and range of properties available. Property prices here tend to be lower than many places in mainland Spain, offering buying opportunities for budget conscious buyers. The islands also offer attractive views of volcanoes, rainforest and desert - making them a top choice for those looking for something different.
Buyers who prefer more traditional Spanish culture might opt to buy property in regions such as Andalusia or Extremadura, where buying costs may be lower and the property types more traditional. These regions also offer diverse landscapes including rolling hills, olive groves and vineyards - offering a getaway from bustling tourist areas.
Overall, buying property in Spain presents a range of buying opportunities for British and other foreign citizens. Each region offers different advantages depending on the buyer's specific needs, preferences or budget. From luxuriously modern apartments in the Mediterranean Coast to more traditional properties in Andalusia or Extremadura, buying in Spain can provide attractive investment prospects for those willing to take advantage of what this unique country has to offer. More information is available in our article on the best places to buy in Spain.
6. So, is buying a house as an investment in spain a good idea?
Property prices in Spain, just as in other countries, will vary largely according to location as well as age and style of property, sea or mountain views (if any!) etc.
It is difficult to compare an inner-city apartment in a rural town in the Spanish interior, with a beach property with views over the Mediterranean in, say, Marbella.
In terms of what you should expect to pay for a particular type of property in Spain, the best thing to do is research current market values in your chosen area. Prices can change quickly, so make sure you get up-to-date information before making an offer on any property.
You will also want to take into consideration your motivations for buying a property - you could be investing with a view to renting-out the property either long-term or holiday rentals, or you might be planning a permanent move to Spain.
For more specific information on the legal position if your objective is investment, see the following articles; buy to let in Spain and laws on renting out property in Spain. You may also wish to consider a buy to let mortgage in Spain.
The graph below from Spanish National Institute of Statistics (INE) shows the evolution of average property prices (in thousands of Euros, vertical axis) in Spain from 2007 through to the 3rd quarter of 2022:
While it can be seen that property values have largely - though not quite - recovered to the levels seen before the financial crisis of 2007/8, the graph masks a lot of divergence between different regions of Spain and even greater variations depending on location near to a beach, city centre, park, sea views, style and age of property etc. Accordingly, it’s important to have a clear idea of what type of property and what price range you’re looking for before starting your search.
Latest figures suggest that the rate of price increases are beginning to slow, at least in most Autonomous Communities. In the image below, the Orange bar shows the rate of increase (%) in Q2 of 2022 compared to the same quarter of 2021, while the red bar shows the year-on-year increase for Q3.
7. Costs of buying a property in spain
The headline price of a a property in Spain does not give the full picture, unfortunately. The full costs of buying property in Spain will vary according to what you are buying, where you are buying and how you are buying.
Typically though, you will need to consider the cost of a lawyer and notary as a minimum, though you could also add to this a mortgage arrangement fee if buying with a mortgage.
If you have found the property either via a local estate agent or one of the plethora of British real estate websites (and their Spanish counterparts) that can be viewed online, you may need to consider estate agent fees.
While these are normally paid by the seller, though in theory - as well as practice - anything is possible, and sometimes buyers are expected to pay them in part or in full. It is therefore a good idea to have this detail checked before proceeding further with the purchase.
Legal and notary costs will tend to equal approximately 1.5% of the value of the property.
Also worth noting, when the person selling property in Spain is themselves a non-resident, the purchaser must deposit 3% of the purchase monies directly with the Spanish tax agency. This requirement is in order to ensure that the non-resident seller complies with any tax obligations they may have in Spain, for example, capital gains tax. However, it is the purchaser who must comply insofar as making the deposit of 3% to the tax agency.
8. How to buy a house in spain: financing your property purchase
When buying a house in Spain, it is important to be aware of the various requirements and conditions related to mortgages and deposits. Generally speaking, mortgage providers do offer loans to non-residents of Spain up to 70%. This is a lower loan to value mortgage than currently available to Spanish residents who can expect to obtain up to 80% (subject to the profile of the applicant).
This means that buyers will need to have financing (either from savings or other lenders) sufficient to meet these criteria.
In short, non-residents can get a mortgage in Spain but there are certain legal requirements that must be met. The buyer will need to have sufficient funds to cover a deposit (typically) of at least 30% and should also be aware of their rights and duties under Spanish law when it comes to completing or cancelling a purchase.
In Spain, mortgage arrangement fees are quite different from other countries, so it’s important to be aware of them before entering into an agreement.
Mortgage arrangement fees vary depending on the mortgage and bank offering the loan, but typically they can range anywhere between 0.5% to 1.5%. These fees will be charged when setting up the mortgage and usually cover things such as administrative costs associated with issuing the mortgage.
In addition to mortgage arrangement fees, there will also be bank charges which generally range between 0.2% to 2%, depending on whether you are making a new purchase or refinancing an existing mortgage.
It is a good idea to reach-out to a specialist mortgage advisor in Spain, since banks can be choosy when offering mortgages to non-residents with no local personal finance history, and tend to charge more.
The fees, however, do not end here. You then need to consider Spanish government sales or property transfer tax.
9. What are the taxes i need to pay when buying a house in spain?
Property tax in Spain entails the payment of a rather significant amount - much much than you may have expected or experienced previously in another country.
Property taxes apply to both Spanish residents and non-residents alike. When buying a property in Spain, the buyer must pay a purchase tax (ITP) usually equivalent to 8% - 10% of the declared purchase price, as well as the AJD tax - a kind of title deed tax, equivalent to approx. 0.5%-1.5% of the property value.
In comparison, in the UK, stamp duty land tax is payable when purchasing a property, with different rates applicable depending on whether you’re a first time homebuyer or not. The current rate for a single residential property starts at 2% of the purchase price for properties up to £125,000.
As such, the property tax levied on real estate transactions in Spain is generally much higher than in the UK and other countries, so it’s important to factor this cost into your decision-making when considering buying a Spanish property as an investment.
Taxes are an important consideration when purchasing a property and it is essential that you understand how they will affect your overall costs before committing to buying a property in Spain. Here you will find an in-depth article which lists all of the property taxes in Spain.
Capital gains tax is levied when selling Spanish property. Note that if you are buying a Spanish property from a non-resident seller in Spain, 3% of the purchase monies are paid directly to the Spanish tax agency, in order to cover any capital gains tax liability that the seller may have. This is, of course, deducted from the purchase price.
Finally, there is the question of Spanish inheritance tax - something we naturally tend to avoid thinking about, but it is precisely at the time of buying an asset like a property that we are well advised to take into account the effects of this tax and plan accordingly.
10. Is it a good idea to buy property in spain 'off-plan'
Buying Spanish property off-plan was all the rage in the heady days of 2000-2008. The attraction of this form of property investment was a mixture of being able to invest a relatively small amount of money as a down-payment, then flip the same property 1-2 years later at a healthy profit. Of course, the property crash of 2007-2008 ended this abrubply.
However, there do remain some clear benefits to buying off-plan:
- You get to buy a brand new property, with all modern features
- You can make payments towards the property in instalments which may be more convenient
- It may be the only way to buy a property in a sought-after area of Spain
That said, there are negatives, in particular that you are effectively paying money to someone who is promising to deliver the property, rather than paying for the property itself. It is important to make sure that the builder has the appropriate planning permission to build the property. While this is also required with the purchase of existing properties, it is somewhat easier to discern in the latter case.
Another concern is what happens if the property never gets built? While this possibility may seem unlikely, it has come before the courts frequently due to the effects caused by the global financial crisis and the pandemic. One would assume that any monies paid over could be claimed back from the builder, but of course if the builder has gone into bankruptcy, what happens then?
Fortunately, for many who may have found themselves in this situation, Spanish legislation came to rescue in the form of law 57/1968 (which has been modified by the law 38/1999) allowing recourse against the bank in which the funds were deposited.
Effectively, the law imposes to the bank the obligation of requiring to the promotor the opening of a special bank account with a guarantee of refunding in case the promotion is not finished, but the main characteristic of that law is that the bank is not consider as a guarantor but as joint responsible with the developer as per Law 57/1968
11. What is the process of buying property in spain
Once you have identified a property - either privately or with the help of local real estate agents - and an offer has been accepted by the seller, you begin the legal/purchase process of acquiring a property in Spain. Below we looks at the most important aspects:
12. Valuation of the property
The first step in a typical home purchase is to have the property valued. This is often at the insistence of the financial institution that may issue the mortgage although they will insist that you, the buyer, must pay.
The person carrying out the survey must be certified by the Ministry of Finance under the Law Regulating the Mortgage Market (Ley 41/2007).
The minimum amount chargeable for the carrying out of a valuation is €208 and will ultimately depend upon the following factors:
- Not all surveyors or survey companies charge the same
- Where the property is located
- Will the surveyor need to charge expenses (mileage etc) to reach the property
- Does the surveyor need to access technical information (plans etc)
Ultimately, the financial institution will have to accept the surveyors report and so you will most likely use one recommended by them or by an independent surveyor like TINSA that is well known and has links with most of the financial institutions. You can find a list of suitable English-speaking architects in Spain.
13. Land registry check
To ensure that the particulars of the property are correct i.e. the identity of the current owner(s), the mortgage charges and any other encumbrances that currently exist on the property and the existence of any court judgments affecting the property etc it is necessary to check with the land registry office, usually located at the local town hall where the property is located.
If you do this yourself the cost is a nominal administration charge of approx. €10.
14. What is an nie number and how do i get one?
Before being able to do, well almost anything in Spain (and certainly to purchase a property) you will need to get an NIE number - either at the Spanish Consulate in your country of residence or in Spain at a specially designated "Office for Foreigners" (Oficina de Extranjería) or via the National Police.
It typically involves arranging an appointment date at the relevant location, nowadays often over of the form that needs to be presented at a nearby bank to pay the administrative cost and then return to present your identity documents and proof of payment.
Certain regions will require proof of the purpose for obtaining the NIE, such as buying property in Spain.
An NIE may also be arranged by your legal representative upon completion of a power of attorney or similar document. Advocate Abroad also offers an Express NIE service so you can obtain an NIE number in a few days.
15. How to open a bank account in spain
Spain has an active international network of residents and as a consequence, there's a growing population of people wanting to open an account in Spain and it is not difficult to find a Spanish bank that caters specifically for foreigners looking to open bank accounts in Spain.
A local bank account can make it much easier to set-up standing orders for the payment of utilities.
However, opening a bank account for non-residents in Spain can be a little trickier than you might think. If you're looking to open a Spanish bank account, you'll probably need to fulfill one of the following requirements: you need to be a national of Spain or you need to be an EU citizen; or, you need to have permanent residence in Spain. These are the requirements that affect the overall eligibility of an individual to open an account in Spain.
Spanish banks tend to have different rules for foreigners, with some being more strict than others. For example, some Spanish banks won't deal with UK citizens unless they can provide proof of residence or that they are a property buyer.
Be prepared to pay a fee and, indeed, ongoing fees at a higher rate than you would typically see in the UK. Spanish banks tend to be more expensive than in the UK and a premium will be attached if you are a non-resident.
16. Is it necessary to pay a deposit when buying a property in spain?
It is typical in Spain to expect to be asked for two deposits:
- An initial deposit of between 1,000 and 3,000 euros as a “reservation fee”
- A second deposit of 10% of the property price.
(Note the point made earlier regarding foreign buyers who qualify for a lower loan to value mortgage than residents).
The initial deposit will be required if you have found the property via a real estate agent. They will tell you that it is necessary for a "reservation" of the property i.e. to take it off the market, but in reality it is not an actual reservation. However, unless the real estate agent has an exclusive right to market the property, this is likely to be an empty promise.
Even though you have paid a deposit they will not take the property off the market, nor will they remove the online ads, and of course they will not stop negotiating with other interested parties. The real reason why estate agents require this first deposit when dealing with property purchases is to see that your offer is serious, that you are not there to waste their time.
Assuming that all of the preliminary checks determine that the property is as stated and can be purchased safely, the purchaser may need some time to put together the funds necessary to complete the purchase.
The Spanish property purchasing process provides for this by use of a "preliminary" or "deposit" contract. Effectively this is a "contract-to-contract" and normally stipulates that before a stated future date, the property will have passed from the seller to the buyer. Should either side fail to complete there are penalties.
The buyer will forfeit the deposit (up to 10% of the value of the property depending on the value) and the seller must return the deposit and pay to the purchaser a penalty equal to the amount of the deposit ie return twice that amount. Any refundable deposits will usually depend on the terms agreed between seller and purchaser (in the arras contract), so make sure you understand what your rights are before signing anything. For more information, see: payment of a deposit when purchasing a property in Spain.
Here, Oscar, one of our lawyers in Barcelona discusses in more depth the deposit required when buying a property in Spain:
17. The property deeds
While it is perfectly legal to arrange for the transfer of a property in Spain via a private legal contract, this is not the typical way of doing so.
The reason is that for the new property title to be registered in the public property register it is necessary to complete the transfer of the property by public deed or ‘escritura publica’. From a practical point of view, no financial institution will offer a mortgage to facilitate the purchase without a public deed.
The process involves the drawing-up of the deeds of transfer by a public notary. This is an independent official, who oversees the process and ensures that the proceedings take place according to the law and that the documentation is verified.
The amount charged by the notary is prescribed by law and varies in function to the price of the property.
Below is a table with approximate costs according to house price. Please note these may vary and the cost must always be confirmed by the notary before proceeding to avoid any problems:
18. Inscription on the spanish land registry
Once the property has been transferred it is advisable to register the new ownership details with the land registry office.
Apart from not being able to obtain a mortgage without doing so, failure to register can cause multiple problems in the future with regard to future property transfers, inheritances, defending title against third parties etc.
Below are approximate costs of the land registration fee for having this carried out. It will be necessary to check specific prices with the individual registry.
19. Removal of the previous mortgage from the register
While not a legal requirement, it is preferable to have the previous mortgage removed from the property register. This is the case even though the mortgage has been paid off by the vendor (when selling Spanish property this is the typical scenario). The charge will still appear on the register and it’s removal incurs a number of charges, notably notary and registry charges.
The process involves obtaining a certificate from the financial institution that issued the mortgage that the mortgage has been discharged.
This certificate is then presented to the notary who draws up a public deed to that effect. The deed is then presented to the registry for inscription on the property register which thereby removes the mortgage charge from the property.
20. Final step: inscription of a new title on the land registry
Once the property has been transferred it is advisable to register the new ownership details with the public property register.
Apart from not being able to obtain a mortgage without doing so, failure to register can cause multiple problems in the future with regard to future property transfers, inheritances, defending title against third parties etc. In conclusion, there is a lot to consider when buying a property in Spain.
However, if you seek good quality legal advice, you should have no problems whatsoever - in fact, getting good legal advice is the best way to safeguard your property investment in Spain and to avoid losing money. Just make sure that the lawyer you select is registered to the local bar association or law society.
For your convenience, a Spanish solicitor list with contact details and client testimonials of English-speaking solicitors across Spain.
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