Is it a good idea to buy a property in Spain?Before making a decision, we recommend to consider carefully the reasons why you are purchasing.
Typical reasons given for buying a property in Spain include the fact that the average price of the properties are lower than most of northern Europe, the good weather and the lifestyle. However, before making a decision regarding purchasing a property in Spain, we recommend that you consider carefully the reasons why you are purchasing.
The first thing to consider, before buying a property, is the reason the purchase:
- Holiday home
- Permanent residence
- Long-term rent: if the reason of the purchase is basically investing in Spain, before buying it is important to check the profitability ratio but not only that. Most of the times, in the areas where the profitability ratio is higher, also the risk of non-payment (default risk) is higher, and this is an important aspect to consider before buying a property to rent.
- Short-term rent: it is really important to check that the property has the required licence to allow the owner to rent it our for short-term rents (less than 30 days). In most areas, particularly in the most touristic areas of Spain, special licences are required. If you rent it out for short-term without the appropriate licence, when required, you could receive a considerable fine. Profitability can be higher, but it is also important to count on a person of trust to take care of the property and of the business on your behalf, if you are not able to it yourself, for example if you don’t plan to live in Spain yet.
See this article for more information on buy to let in Spain.
Holiday Home or Permanent Residence
When considering the purchase of a property in Spain as a home-holiday or for permanent residency, the criteria are different, as first of all, it is important for everybody to consider their own needs and requirements. In any case, it is always a good idea, before buying this kind of property, to also check
- That the property is not overpriced, comparing it with similar properties on the market; don’t trust only the Realtor who is selling it to you, it is highly recommended to make deeper research.
- How easy it will be to sell/rent it out later on, even if, obviously, these factors might vary in the future, as circumstance might change.
As concerns particularly holiday homes, it is also possible to think about a combined purpose: using the property as a holiday home and also to rent it out on short-term lets. As stated previously, it is always important to check that the property has the necessary touristic licences for short-term rentals in Spain.
Requirements And Taxes
In order to buy a property in Spain, you will be required to hold a NIE (Identification number for foreigners). It can be obtained directly in Spain (either personally or via your lawyer through a power of attorney) or via the Spanish consulate in your country of residence (note that this can often take a considerable amount of time). Advocate Abroad also offers a unique express service in which you can obtain an NIE number in as little as 48 hours.
In order to buy a property, it is necessary to pay a tax calculated as a percentage of the purchase price (it varies according to the region, but the amount is usually 8 -10% of the value of the property), Notary Fees (as the contract should be signed before a Notary) and Land Registry fees.
In fact, it is highly recommended to register the property before the relevant Property Registrar, in order to have it legally registered in your name and avoid any issues.
As an owner of a property in Spain, you will be liable to pay a Real Estate Tax on it every year (IBI) and, in case you are non resident in Spain, you are liable to pay a non resident tax on the property.
Non-European Citizens: Is it a Good Idea To Buy A Property In Spain?
According to the current legislation, buying property/ies (one or more) for a total amount of 500.000.-€ (without mortgage) allows the the buyer to obtain a renewable Spanish residency visa. That is a really good option for non-European Nationals who wish to relocate to Spain. For a full discussion on options, read Moving to Spain after Brexit.
In conclusion we can say that the decision to buy a property in Spain is not necessarily a good or a bad idea, it simply depends on the the circumstances of every single person and on the purpose of the purchase.