Buyers Guide

The most important and commonly asked questions when considering purchasing a property in Spain.

1. WHAT IS THE REAL COST OF BUYING A HOME IN SPAIN?

When you purchase a home in Spain as in the UK you have several costs which you must add to the salesprice of the property.

Property purchase taxes, notary fees and registry costs are unavoidable in Spain, like in every other European country and you must allow 8% on top of the value of your purchase to cover your puchase costs, or 10% if you intend to arrange a mortgage in Spain to fund your purchase. These costs are without the services of a gestor and / or a sollicitor, which can save you a lot of work and problems (also in future).

2. DO I PAY ANYTHING TO AN  ESTATE AGENT?

The service to the buyer is normaly free of charge as the commission is paid by the vendor. That means that the estate agent works for the vendor and not for the buyer. Therefore it is always better when the buyer appoint a buyers agent, which in most cases does not invrease the total purchase costs, because mostly the vendors agent splits his commission with the buyers agent. If the buyers agent introduce you as a client. Please be aware of the rules to play in these cases.

3. IF I NEED A MORTGAGE HOW MUCH CAN I BORROW?

It is still possible in these critical financial times to get a mortgage of up to 70% of the value of the property based on the bank valuation.

Spanish banks offer sometimes lower interest rates than elsewhere in the EU and and most Spanish banks do not run sophisticated credit checks. As long as you have 30% of the property's value in cash from your own, a mortgage specialist can help you to secure a mortgage.

4. CAN I MAKE AN OFFER ON A PROPERTY I LIKE?

Yes you can make an offer in exactly the same manner as elsewhere in Europe and with ouw system you can make that offer direct to the vendor, or via a special buyer agent.  

In the current market it is not uncommon for a vendor to accept between 10% and 20% lower than their asking price depending on the property and the urgency with which a sale is required.

In our website behind the prices is stated if you can make an offer, or that the price is already so low that it is very unlikely that the seller will accept a much lower offer.

5. HOW LONG DOES IT TAKE TO COMPLETE MY PURCHASE?

Mostly the time the buying process takes is dependent on you the buyer - it can be as short as 2 weeks or as long as 3 months for an existing property or up to 2 years for a property in the process of being built on a new development.

6. WHAT IS THE BEST STRATEGY FOR BUYING AN INVESTMENT?

Rapid short-term capital growth is unlikely unless you are buying a new construction or renovation, although the overall increase in your property's value is likely to average 4 to 5% per annum over the longer term. We advise all buyers looking for an investment to opt for the Buy2Let route and sit on their investment for at least 5 years. 

Villas with private pools in general offer the highest ratio of rental income to property value and buy2let is an ideal, safe strategy for long term gain.

7. I HAVE READ HORROR STORIES ABOUT LAND GRAB, COULD THIS AFFECT MY PURCHASE?

This is much less common these days since EU intervention has begun and has only ever affected properties built on land classified as rural or that have previously been built illegally. Most of the properties are built on land classified as 'urban' so unaffected by the much hyped land grab laws. If you are buying a rural finca then more care must be taken to ensure: a) that the build is legal and recognised as such by the local town hall b) that there are no plans in place to develop the surrounding area. If you really have your heart set on a country finca on a large plot or wish to purchase a house in a rural location we strongly recommend an investigation by a specialised sollicitor.

8. WHAT ARE THE ONGOING COSTS OF OWNING A PROPERTY IN SPAIN?

The costs of running a home in Spain are indicated as follow:

Suma (Council tax) -                                       € 250 to € 1000 per annum

Swimming pool cleaning -                              € 800 per annum (only necessary for homes with private pools)

Utilities (water, gas, electricity) & Insurance - € 800 to € 5000 per annum depending on usage and size of home 

House insurance -                                          Between €150 and €400 per annum

These prices are only an indication for you.

9. WHAT PROJECTED RENTAL INCOME COULD I MAKE, HOW DO I GO ABOUT RENTING?

In many cases annual repayments on a 70% mortgage can be fully covered by only 12 weeks of holiday rental leaving the remaining 40 weeks free for your own use.

The right choice of property is essential as rental returns are not governed by property price and the right type of property must be chosen.

In general you have to earn your rental income for holiday houses in the 12 weeks of the summer holiday season.  If you can expand these 12 weeks with some more weeks (f.i. in a golf project) than you are lucky.

You also can try to offer your house for rent on a yearly base, which gives you a fixed income, if your client pays of course. Beware for problems in the future with these kind of rental.

10. WHAT SIZE OF DEPOSIT DO I REQUIRE?

If you see a property you wish to purchase you first need to make an offer which must be relayed and hopefully accepted by the vendor.

You must then lodge a € 3.000,- reservation fee which is payable to the owner, this does not obligate you to buy the property but allows the real estate agent to take the property off the market whilst the private purchase agreement is arranged and surveys and mortgages performed if necessary. (N.B. This deposit is non-refundable and kept by the vendor and sometimes by the agent should you later pull out of the sale.)

Later, at the time of signing the Purchase Contract (usually within 2 to 3 weeks of paying the reservation fee) a 10% deposit must be made and a completion date contractually agreed, the €3,000 euro reservation fee is deducted from the 10% deposit required.

11. DO I NEED A SOLICITOR TO PURCHASE A PROPERTY?

Yes, it is always better to appoint a sollicitor or specialised gestor to handle the legal aspects of the purchase process, and to the neccesary checks and investigations. Sometimes it is advisable to also appoint a surveyor for a full structural survey.

Legal fees for the purchase of a property are very reasonable in Spain and range from    € 1.500,-  to € 4.500,- euros (depending of the value of the property and the problems around that property).

12. WHO CAN ASSIST IN THE MANAGEMENT OF MY PROPERTY?

In your absense you may wish your house to be managed. In our directory you will find specialised companies with services as key holding services, pool cleaning, gardening, maintenance, cleaning and linen services and regular property checks if required. 

13. IF I SELL MY PROPERTY WILL I PAY CAPITAL GAINS TAX?

Yes of course, if the price rises the tax equates to 18% of the gain you have made, this equates to approximately 3% to 4% of the value of your property at the time of sale. Please ask a specialist (see directory) for further details about Capital Gains tax and how it can be reduced or avoided.