Guide to Buying Property and Real Estate in Spain
The Spanish Property Market
When it comes to investing in property in Europe, Spain has been on the top of the
list for nearly thirty years. A significant number of foreign nationals have spent
a great deal of money on property in Spain during this time
period.
As time moves forward into the 21st century, the Spanish real estate
market has not been as hot as it was some five years ago. Nonetheless, the returns
that most investors have realized through real estate holdings and
property investments in Spain have remained high. In addition, the market
itself has remained fairly stable overall.
- Population: 43.4m
- Currency: Euro
- Capital: Madrid
- Country dialling code: 0034
Investment Property in Spain
As referenced previously, a significant number of buyers from different countries
around the world have invested rather heavily in real estate in Spain.
Since the restoration of the monarchy in Spain, the gates have been opened to heavy
foreign investment in property ownership by overseas buyers.
(During the reign of General Franco in Spain, foreign investment in real estate
was restricted. The regime of Franco enacted fairly stringent laws that limited
foreign investment in real estate.
Residential Real Estate in Spain - Single Family Properties
Over the course of the past decade, many foreign nationals have spent vast amounts
of money on single family homes in Spain. Primarily
these foreign nationals are buying the residences for use as second homes, for use
on holidays to Spain. (Spain has been a popular end destination for European travellers
for years.)
In many locations of Spain, the single family residential
market is what some people would term a "buyer's market." In other words,
people interested in buying residential, single family homes in Spain -- including
foreign nationals -- have a significant number of housing choices available to them
(in major cities and in rural communities alike).
While the residential property market in major cities in Spain have found brisk
sales for years, the rural areas in the country have also been experiencing an upswing
in the property market in recent times also. Many people, including foreign nationals,
are finding the ownership of homes in rural environments to be pleasing, appealing
and cost effective. Generally, these people are buying in smaller communities in
order to escape the hustle and bustle of the Spanish urban scene.
Residential Real Estate in Spain - Apartments
In large cities, such as the Spanish capital of Madrid and the coastal resort towns,
the apartment market has been booming for the past fifteen to twenty years. A significant
number of people have turned to apartment ownership when it comes to the buying
of property in Spain.
Overseas buyers have expanded into the apartment ownership market with a vengeance
over the past decade. Some industry experts in Spain estimate that as many as twenty
percent of all apartment purchases in Spain during this time period have involved
foreign nationals buying apartments in Spain.
Foreign nationals tend to be making the purchase of
apartments in Spain for three primary reasons. First, these foreign citizens
are buying apartments for retirement. Many people have been flocking to Spain from
different European countries (and from some other nations around the world) for
retirement because of its milder climate.
Second, with the creation of the European Union, and with Spain being a leading
economic region in the EU, many people are finding it imperative for them to present
themselves in Spain for a part of each year. As a result, these men and women are
buying apartments to serve as second residences in Spain.
Finally, people are snatching up apartments in Spain in record numbers to
provide them with a second home to be utilized for holiday or vacation purposes.
Apartment ownership is proving to be a convenient, practical and economic means
through which a person or a family can own a second residence that can be used for
a holiday retreat and for similar situations not only today but well into the future.
Holiday Property in Spain
As referenced, many people are buying property in
Spain for vacation and holiday purposes. (This includes both apartments and
single family residences in different parts of the country.)
In many instances, foreign nationals are buying real estate in Spain
that they can utilize for their own travel and holiday purposes during part of the
year and which they can rent to other individuals seeking a vacation spot at other
times during the course of a given year. Thus, these men and women are buying property
in Spain for a dual purpose: holiday travel and income generation.
The tax and related laws in Spain make this kind of dual property ownership a profitable
enterprise for most overseas buyers. Indeed, it is expected that more and more foreign
nationals will invest in vacation real estate for this dual purpose well into the
coming decade. They suggest that the growth of the European Union will spur on this
type of real estate investment in Spain and in some other countries that comprise
the EU at this time.
Specific steps to buying real estate property in Spain
At the present time, there are no significant restrictions to a foreign national
purchasing and owning real estate in Spain. Indeed, foreign
nationals are able to purchase and invest in nearly any type of property to be found
for sale within that country -- commercial, residential or other types of investment
real estate.
When it comes to making the purchase of property in Spain,
many experts maintain that a person is well served is he or she takes the time (and
spends the money) to hire a lawyer to assist in managing and overseeing the legal
affairs associated with the successful purchase of real estate in Spain.
Once a person identifies a piece of real estate that he or she is interested in
purchasing, the first step in the purchase process (after an oral offer to purchase
has been made by the buyer and accepted by the seller) is the creation of a preliminary
or initial contract for sale. In Spain, it is highly recommended that a person makes
absolutely certain that the ownership of the property and any encumbrances on the
property are clearly identified before this agreement is signed.
In most instances, a preliminary contract is a fairly substantial and a firm legal
agreement. Along with the agreement itself, a buyer will need to put down a deposit
of at least 10% of the total purchase price. Under the real estate laws of Spain,
the buyer has a more significant burden than is found in some other countries to
ensure that the title to the real estate has a title that can be conveyed to the
buyer at the conclusion of the sale (clean title). Thus, there are instances in
which a title proves to be imperfect, in which the ultimate transfer of ownership
cannot occur, and in which the buyer may lose out on the deposit he or she paid
because they simply did not carry out the correct checks at the outset.
Many people who have experience in dealing with the buying and selling of property
in Spain suggest that foreign nationals should retain the assistance of a capable
lawyer at this juncture. While Spanish real estate laws are not particular confusing
or difficult to understand, a person seeking to buy a property in Spain bears a
greater due diligence responsibility early on in the real estate buying and selling
process than do buyers in some other nations.
During the period following the signing of the preliminary or initial contract,
the buyer has the opportunity to obtain financing and a mortgage loan to consummate
the sale and actually purchase the real estate.
Again, as referenced earlier, the buyer of real estate in Spain has a bit of a stiffer
burden to make certain that the title to real estate in Spain is clear before he
or she makes a purchase. Additionally, a buyer bears a greater burden than buyers
do in other countries when it comes to making certain that there are no mortgages
or liens from other lenders on a particular piece of property. While in most other
countries the world over, the burden for "clearing title" generally rests
nearly exclusively with the seller, such is not the absolute case in Spain.
Unlike in some other countries the world over, the laws governing the buying and
selling real estate in Spain generally are uniform across the country. There really
are no regional or local differences. (There are some local differences when it
comes to matters relating to municipal taxes.)
The final task in the sales process is the payment by the buyer of the amount due
and owing under the terms of the initial contract and the conveyance of the deed
and possession of the property from the buyer to the seller.
Property Abroad always recommends using a Solicitor
or Lawyer
Mortgage Options
When considering the options for a mortgage on your overseas property there are a
couple of choices to consider;
- Do you consider raising finance on your existing property in the UK to cover the
whole cost of your purchase abroad? A good idea if the interest rate in the country
in question is a lot higher than it is here in the UK as you will pay a lot less
in monthly repayments.
- Do you secure a mortgage against the property from a local bank in the country of
purchase? This can be a wise option especially if the interest rate is lower than
our current UK interest rate. Most overseas mortgage / bank lenders will require
upto 30% deposit on mortgages. However, you will need to give some thought to how
you will service your mortgage payments each month especially if you are not living
or earning in that country as you may well lose out on exchanging money each time
to cover monthly expenses. Check out our Foreign
Currency page to see how you can save money in this example
- Some Builders and developers may well offer their own mortgage facilities on their
properties for sale. This can be beneficial to both parties depending on the logistics
of the mortgage or loan facility. Always check and compare with the two options
above before making your final descision.
For more details on Mortgages in Spain
visit our Mortgage page in the Spain section.
Further information on Spain