The Tailored Home Property Buying Guide to Spain

Overview
TailoredHome.co.uk’s Property Buying Guide to Spain covers many countries but few nations can match Spain for interest from buyers in the UK or for choice of property. After years of steady growth, the slowing of the property market in spain recently means there are some great deals to be done for overseas investors there now.

The wonderful climate of Spain’s southern and eastern coasts, along with its two island groups, the Balearics and Canaries, has made them a magnet for tourists from all over Europe for several decades now. Hundreds of resorts provide an amazing selection of properties, from traditional old homes in need of renovation to the latest luxury off-plan schemes aimed directly at the overseas buyer. Many of the resorts have excellent facilities for holidaymakers and expats.
 
At around two hours away via a host of airlines, a home in Spain is an ideal choice for a weekend getaway, though many have opted for a longer stay. There are numerous pockets of British communities who have made Spain their permanent home. Schools and hospitals of an excellent standard already serve a large population who have relocated or retired.
 
The buying process in spain is straightforward and secure and British buyers have no restrictions on ownership, visiting or living in Spain. Whatever type of spanish property you’re looking for, our property finders can source homes for all budgets and requirements.
 
The property market in Spain at present has some brilliant bargains for buyers prepared to negotiate. Financing is widely available with many British institutions and local lenders offering mortgages on Spanish property.
 
Property hotspots

Costa del Sol

The coast around Malaga is one of Spain’s best-known holiday and retirement destinations thanks to its great year-round climate, fabulous beaches and wide range of high-quality facilities. It has become, in parts, one of Spain’s most expensive property regions, particularly around its many first-class golf courses and the marina at Puerto Banus.
 
However, those on a more modest budget can also find some great property in dozens of small resorts along this 300-kilometre coast and there is a huge choice of homes on the market, from small apartments to luxury family villas.

Costa Blanca

Since the first British holidaymakers started visiting Benidorm many years ago, the Costa Blanca has continued to draw thousands of UK tourists and homebuyers, attracted by well over 300 sunshine days a year and a wealth of choice of resorts and property. Though some of the main resorts may be too overdeveloped for some, there are plenty of quieter corners with great appeal.
 
Sun worshippers are spoilt for choice for Blue Flag beaches along the whole coast, while golfers can enjoy numerous high-quality courses in resorts such as Denia and Javea in the north to Vega Baja in the south, twelve months a year. Good hospitals, international schools and an established expat community make the area a popular one for relocation and retirement.

Balearic Islands

Comprising Mallorca, Menorca, Ibiza and Formentera, the Balearics are one of Spain’s most enduring holiday hotspots. Infamous resorts such as Magaluf (Mallorca) and San Antonio (Ibiza) are actually very few and far between: overall, the wonderful climate and beaches and stunning rural scenery have made these islands among Spain’s finest (that is, most expensive) property regions.
 
There is, though, a variety of property available. While some of the islands’ secluded finca estates may be the preserve of the millionaire and celebrity, it is possible to pick up apartments, townhouses and even family villas at more affordable prices. Strict planning laws mean the islands are unlikely to be overdeveloped in the future and should retain their high-end reputation.

Canary Islands

Volcanic islands situated off the coast of northern Africa, the Canaries comprise seven islands, the best-known of which, Gran Canaria, Lanzarote and Tenerife, are among Spain’s most popular holiday destinations. Along with their smaller neighbours, they offer buyers a vast choice of property to buy, from compact apartments in busy resorts to golf villas and family-friendly traditional rural fincas. They also offer a great deal of spectacular natural beauty.
 
Though not one of Spain’s cheapest real estate regions, prices in the Canary Islands are generally lower than on some of the mainland costas. Though the longer flight makes them a less likely weekend getaway, their fabulous climate makes them a wonderful year-round holiday home or relocation option.

Barcelona

Cosmopolitan, colourful and vibrant, Barcelona is one of Europe’s major city destinations. In addition to its architectural and cultural marvels, it’s also an important commercial and educational centre with a flourishing expat community of foreign workers and students, making it one of the country’s most promising property investment spots.
 
Whether the winding alleys of central El Ravel or the stylish suburb of Sarria-Sant Gervasi appeal to you, each of its districts has a unique character that combine to make Barcelona the diverse city it is. Though it’s one of Spain’s priciest property markets, few other locations can offer culture, the beach and the mountains on their doorstep the way that Barcelona does.

Galicia

Spain’s verdant northwestern corner has started to attract some interest from intrepid British buyers in recent years. The region is quite different to the country’s southern costas, with lush green countryside and dramatic mountains as well as many beautiful, deserted beaches. The climate is wetter than in the south but milder than in the UK.
 
Buyers’ money stretches a long way in this part of Spain, though there’s no shortage of variety: traditional country homes, village cottages, quaint houses in one of the region’s charming old towns and modern oceanfront homes. Buyers looking to find the “real” Spain might find an inexpensive home to suit them in Galicia.
 
Tourism

Tourism is one of the cornerstones of the Spanish economy. Spain is one of the most visited countries in the world, in fact second only to France in terms of annual visitors. There are countless scheduled and charter flights to Spain year-round bringing holidaymakers from all over Europe, including services from numerous low-cost airlines to established and emerging destinations alike.
 
2005 – 55.9 million visitors
2006 – 58.2 million visitors
2007 – 59.2 million visitors
 
Climate

Spain’s southern costas and the Balearic Islands have the definitive Mediterranean climate with long, hot, dry summers and mild winters. Some areas along the coast are subject to microclimate variations due to the presence of mountains or prevailing winds. Galicia, in the northwest of the country, has an Atlantic maritime climate with four distinct seasons. Summers are dry and warm, though there is rain during the rest of the year. Winter is notably colder than summer, though mild compared to the UK. The Canary Islands enjoy a sunny, mild-to-warm climate all year round, though there is some variation locally around the islands.
 
Location Summer (Jun-Sep) Min/Max Winter (Dec-Feb) Min/Max
Costa del Sol 20ºC/31ºC 9ºC/17ºC
Costa Blanca 16ºC/32ºC 5ºC/16ºC
Balearic Islands 20ºC/29ºC 6ºC/15ºC
Canary Islands 21ºC/26ºC 14ºC/22ºC
Barcelona 22ºC/30ºC 10ºC/14ºC
Galicia 20ºC/25ºC 8ºC/10ºC

Fast facts

Currency
Euro (EUR). GBP1.00=EUR1.10 (Feb 2008).

Population
40.5 million (2008 estimate)

Time zone
GMT 1

Visas
Citizens of the UK and other EU countries are not required to obtain visas to visit, work or buy a home in Spain. They should register with the Foreigners’ Office (Ofinicinas de Extranjeria) if they intend staying in Spain for more than three months, where they will be issued with a residence certificate.

Buying process

Ownership restrictions
Foreigners are able to buy, own and sell residential and commercial property and land without restriction in Spain, regardless of their residential status.

Financial
A Spanish bank account is essential when buying a home in Spain, but before you can apply for one (or buy a property!) you must obtain an NIE number - a Foreigners Identification Number, akin to a National Insurance number - from the Spanish authorities. An NIE is mandatory whether or not you’ll be resident in Spain, and must be obtained in person from the Foreigners Department of a Spanish police station.

Mortgage availability
A Loan-to-Value (LTV) of 70% to 80% is typically available for loans from a wide range of UK lenders and local lenders in Spain.

Legal
The property buying process in Spain is straightforward, though quite different to the British system:
Obtain an NIE (Foreigners Identification Number) from the Spanish authorities (see Financial above). You’ll need one to open a Spanish bank account and prior to undertaking any further steps to buying in Spain.
Organise legal representation. You’ll need to appoint:
A public notary (notario), an impartial government lawyer who will oversee the entire purchase process and make sure all the legal requirements and taxes are discharged properly;
A Spanish lawyer, preferably bilingual, to undertake the legal processes for you in Spain;
A UK lawyer, versed in the Spanish buying process and tax system, who can advise on the international aspects of the purchase, particularly in respect of your tax obligations.
Conduct a survey, not obligatory under Spanish law, but almost certainly essential if taking out a UK mortgage or if you’re buying a property without a builder’s guarantee.
Pay a (usually non-refundable) negotiable reservation fee while your lawyer conducts initial legal searches and prepares the Private Purchase Contract
The buyer and vendor both sign the legally binding Private Purchase Contract detailing all aspects of the transfer. A deposit is payable by the buyer at this point, usually between 5% and 15% of the purchase price. At this stage, if the buyer pulls out of the purchase, the deposit is forfeited. If the vendor pulls out, the buyer is compensated with twice the amount of the deposit.
At completion, the public deed is signed before the notario, officially transferring ownership of the property. If you don’t speak fluent Spanish, the notary will usually insist that you have someone there to explain to you fully the terms of what you’re signing.
All outstanding purchase monies, fees, taxes and charges are now paid and the title deeds lodged with the local Land Registry. 

Transaction costs

The costs involved in purchasing a home in Spain are:
Property Transfer Tax (ITP) – Applicable only when buying re-sale property, ITP is charged at 6% to 7% of the property price, depending on the autonomous region where you’re buying
VAT/Stamp duty – When purchasing new-build property, the property price is subject to VAT (IVA) at 7% plus stamp duty of between 0.5% and 1%.
Notary and Land Registry fees – Up to 2% of the purchase price, charged on a sliding scale fixed by law, capped at EUR1,900 (£1,520). This is payable to the municipality where the property is located.
Title Deed tax – 0.5% of the declared value of the property
Legal fees – These are negotiable and may be charged on an hourly fee basis or as a percentage of the value of the property, usually between 1% and 1.5% of the property price, and subject to VAT (IVA) of 16%.
Withholding tax (“rentencion”) – If buying a property from a non-resident, 5% of the purchase price should be withheld and paid direct to the Spanish tax office. This is an incentive to non-resident vendors to file their sales documentation promptly before being refunded the withheld sum.
Agent’s fee – Normally paid in full by the vendor.
 
Also allow costs for UK lawyers’ fees, mortgage arrangement fees, survey fees, translation fees and foreign exchange transfer charges.

Emigration

Eu citizens are no longer issued with residency cards, but do have to register with the Foreigners’ Office (Oficinas de Extranjeria) if they intend to stay in Spain for more than 90 days. They will be issued with a residence certificate.
 
People not needing a residence certificate: 
People living and working legally in Spain who pay contributions to the Spanish Social Security system;
Retired workers who have moved to Spain, lived there for more three years and paid into the Spanish Social system for 12 months prior to retiring.
Students
EU-national dependants of an EU national
Fully declared self-employed workers who are paying into the Spanish Social Security system

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