Lucas Fox co-founder Alex Vaughan shares his top tips for buying property in Spain
As we all know, the past 7 years have been a very challenging time for the Spanish property market. Since the start of the economic crisis in 2008, just 3 years after we launched Lucas Fox, prices started tumbling (oh dear!) and all confidence was lost (apart from ours!). There was great uncertainty as people did not know where the economy was heading. Now in mid 2015, we are seeing the start of what potentially could be a spectacular turnaround for Spanish real estate: the tide is turning and people’s faith in the market is slowly being renewed as prices level out and confidence in the economy grows. Now is definitely the time to buy! (but I would say that). If you are thinking about buying in Spain, here are my tips to guide you through the buying process to ensure that it runs as smoothly as possible…
Choose the right real estate agency
Choose an agency that has an in-depth knowledge of the areas you are interested in, who listens to you and your requirements and who speaks the language. A good estate agent should ensure that your property purchase is as smooth and stress-free as possible. Choose Lucas Fox! ;)
Choose the right location
I always go on about location, but it really is key to a good investment in Spain. Buy in the right place and you are guaranteed a better return on your investment in the long run.
Know your restrictions on buying property
If you are from the EU, it makes buying a property fairly straightforward. If, however, you are a non-EU national there might be time restrictions as to how long you can stay in the country. It is definitely worth seeking advice before embarking on the buying process. Specialised emigration companies or the Spanish Embassy will be able to help out.
Get your finances organised
Banks are a bit more enthusiastic about their lending in the current climate but they are still erring on the side of caution. Applying for a mortgage can be lengthy process and you will need at least a 30% to 40% deposit plus extra finance for all the additional costs (at least 10 to 12%) including legal fees and taxes. It’ll save a lot of time in the long run if you speak to a mortgage adviser as soon as possible and try to get pre-approval before starting your property search. We have some really good advisers on our books. Not only will it save time but it will also give you a better idea of your potential budget.
Choose a good solicitor
It is not obligatory by law to use a solicitor when buying a property but I strongly recommended you do so. They normally charge a fixed fee, but it can vary greatly depending on how complex the transaction is. If possible, use a solicitor recommended by someone, be it by your estate agent or a friend who has gone through a similar property process.
Make sure you understand all the steps involved
It really is not that complicated buying in Spain but it helps to be aware of what you need to do before beginning the purchase process. You will need to obtain a Spanish fiscal ID number (NIE, Número de Identificación de Extranjeros) and will also need to open a Spanish bank account. Also make sure your estate agent has fully briefed you on the process and timescales involved, from making an offer to completion and beyond. Lucas Fox Guide to Buying in Spain
Be aware of all the fees involved
When calculating your available budget, as I mentioned earlier, don’t forget that there are lots of other costs involved in buying a property other than the price of the property itself. These will include Government transfer purchase tax, Notary fees, Land Registry fees, legal fees and various other miscellaneous expenses, including structural surveys and mortgage arrangement fees (if applicable). Government taxes vary from region to region and range from 6% to 10%. In Catalunya, for example, where transfer tax is 10%, you will need to budget an additional 11.5% to 12% on top of the purchase price.
Think about using a surveyor
It is not always common practice amongst local buyers to use a professional surveyor before you commit to buying a property in Spain but I strongly recommend you do so. Make sure the surveyor has the relevant qualifications and discuss with him/her what you want to be included in the report and the fees involved.
Check the annual expenses
Once you have purchased your property, unfortunately the costs don’t stop there. The annual ongoing expenses and taxes can include service charges, municipal property tax (IBI), electricity, water and gas rates, non-residents income tax and wealth tax. Make sure that you are fully briefed on the potential running costs and ongoing taxes before making your purchase.
Just do it!
Once you have decided to go for it, then be safe in the knowledge that – if you have followed the above steps correctly – it will be one of the most exciting journeys of your life. The amazing climate we have here, outdoor lifestyle, superb culture and renowned gastronomy and wines will be a constant reminder of why you have decided to purchase a home in one of the world’s truly great places to live!