interested in buying a property in Spain ?

Decide why you are buying. You will be looking for different things depending on whether you are buying property as an investment that you will rent out, to use as a vacation home, or to live in permanently.

• Investment – Buying as an investment means you will be looking for properties that increase in value and which can provide rental income. Generally, this means you will be best off buying in vacation hot spots like the coasts and islands, or in big cities like Barcelona, Valencia, and Madrid. Although country homes have been rising in value of late, investing in the countryside can prove difficult because it can be hard to find people to manage your property.
• Vacation home – You will want a home that is easy to lock and leave. You don’t want to spend all year dealing with a home that you spend only a few weeks at. Apartments and villas in developments are generally the best option for this, as the grounds will be cared for and the presence of neighbors will help to keep your property safe. Buying in popular tourist areas will also make your property easier to rent if you want to earn income when you are not using it.
• Permanent home – You will want to look for a home and region that fits your budget and offers the quality of life you desire in terms of local infrastructure, facilities, and accessibility. So while you may long for a country home, it may not be reasonable if you also want to be near stores and other expats. You will also need to consider the local schools if you have children, and access (TGV and airports) if you wish to travel or entertain guests.

Make sure you can legally move to Spain. If you are a national from another EEC (European Economic Community) country, then you already have the right to move to and work in Spain. However, you will need to acquire a residency card if you are retiring to Spain, moving to Spain and not working, or are a non-EU dependant of an EU national. If you are from outside the EU, you will need to apply for a residence visa in order to immigrate to Spain, and a work permit if you want to work there. The most common types of visa are:

• Resident Visa to Retire in Spain – This visa allows you to live in Spain without working. You will need a valid current passport, proof of adequate financial resources to live in Spain without working, a medical certificate from your doctor verifying that you do not suffer from contagious diseases, drug addiction, or mental illness, and a fee of $38 to $160, depending on your nationality.
• Resident Visa to Work in Spain – To get a working visa, you will first need to be hired by a Spanish company. They will contact the Spanish Immigration Office to request a letter approving your work permit and residency visa. When applying for your visa, you will need this letter, a valid passport, a Police Records Certificate from the country you currently live in, a medical certificate, and a fee of $38 to $190, depending on your nationality.
• Residence Visa for Investors or Self-Employed – You can acquire this visa if your source of income will not involve being hired in Spain. In addition to the application forms, you will need a valid passport, a Police Records Certificate, a Medical Certificate, evidence of proper degree or academic title if necessary for your work, evidence that you are financially sound, and a work or investment project document showing the type of business you will conduct, projected gains, and positions to be created (if applicable), as well as a list of the authorizations and permits required to conduct your business.

Look at the east coast for beautiful beaches and thriving expat communities.The regions of Catalona, Valencia, and Murcia contain a long stretch of coast that has been called Spain’s California because of its mild climate and beautiful beaches.

• Valencia – Prices Low (south coast) to Hight (north coast) – The Mediterranean coast south of Catalonia features a mild year-round climate, beautiful beaches, and a large expat community, particularly along the Costa Blanca, which runs from Denia to Pilar de la Horadada, south of Alicante. Its popularity with expats from across Northern Europe makes the Costa Blanca a cosmopolitan and varied place to live. However it also means higher taxes on new properties.
• Murcia – Prices Low – This area includes the Costa Calida, which lies south of the Costa Blanca. The climate is very dry, and the region is not highly developed. However, both the cost of purchasing property and the cost of living are very low, making this an attractive retirement location.

Visit the area. The ideal way to do this is to rent for a few months in the area you are considering. If that is not possible, even a week dedicated to exploring the region and talking to ex-pats about their experience can be hugely helpful. Be sure to treat this as a fact-finding mission, not a vacation. Your goal is to get a feel for daily life and to meet the people who you will work with in buying property.

Know how much you can spend. Get your finances in order and investigate a mortgage. You will need to do this in advance so that you can move quickly when you find the property you want. There are three options: remortgaging your current home (i.e. taking a home equity loan), borrowing from a bank in your current country, or arranging a mortgage on your Spanish property through a Spanish lender. Bear in mind that an overseas mortgage may incur higher set-up costs (sometimes 3 to 4 per cent of the amount borrowed) and that Spanish lenders will not be interested in doing business if existing loans exceed 35 per cent of the borrower’s income, as is the case in much of Western Europe.

• Remortgaging – This is typically the cheapest and easiest solution. Releasing equity in your current home means that the second home can be purchased for cash, without the need for another mortgage. However, this is only feasible for those who own their first home outright. Also, you may lose your home if you cannot make your payments.
• Loan in your country – Most banks that lend for purchasing in Spain will have offices there, meaning you are technically borrowing in Spain. However, it can be easier to work with a local bank. You will also need to consider the type of currency you take the loan in. If you will be living off of income in your home country, then it is a good idea to take the loan in that currency to avoid exchange-rate fluctuations that might increase your repayments. If you will be generating income in Spain – buy renting your property, for instance – then consider taking out the loan in euros.
• Loan in Spain – Taking out a mortgage in Spain can simplify repayments, save you on the bank commissions charge for international transactions, and allow you to take advantage of low interest rates. However, a Spanish mortgage will increase initial costs, since the stamp tax you pay upon purchasing a new home will be based not on the loan amount, but on the value of the mortgage including interests and costs. This will increase the stamp tax from .5% to 1% to somewhere between 1.5% and 2%.

Be aware that taxes and fees will increase the listed price by around 13%. When evaluating properties, you should budget 13% on top of the agreed purchase price to cover the various fees and taxes that must be paid.

• Legal fees – Many lawyers charge 1% of purchase price or more. A typical transaction should cost 1,000 to 2,500 euros.
• IVA (Spain’s equivalent of VAT) – This tax is 10% for residential properties that have never before been occupied, plus stamp duty. The stamp duty is 1.5% in Valencia and 2% in Murcia.
• Notary and property registration fees – These range from .5% to 1%.
• Land registry costs - The cost to register is usually around 1%

Decide the type of property you want. There are a variety of different types of home available in Spain, from small apartments to large villas. What you are looking for will depend on your budget and how you intend to use the property.

• Villa – These are relatively large detached properties with a home and grounds. They are great permanent homes, but function less well as vacation homes, since the grounds entail a good deal of maintenance year-round and their value results in higher taxes.
• Apartment – Apartments are the most widely available type of property in Spain. They are ideal vacation properties, as they are easier and cheaper to manage. It is also easier to find apartments close to town centers.
• Country house or farm house – These properties are less expensive than coastal properties. They offer good value and idyllic surroundings. However, particularly for those who are not fluent in Spanish, they can also be isolating. They are not ideal as vacation homes or rental properties, as upkeep and management at a distance is challenging.

Consider the state of readiness you are looking for. There are different rules and taxes in Spain depending on whether you are buying off-plan property, new construction, or resale property.

• Resale property – These properties are generally safer investments, as you don’t have to worry about whether or not they will be completed. Taxes upon purchase are also generally lower. However, you should be prepared to spend money on repairs and updates, particularly in the kitchen and bathrooms.
• New construction – This is the most expensive type of property, although recently rampant construction in Spain has led to a market with too many homes and not enough buyers, bringing down the price. The biggest advantages are that unlike with off-plan properties, you know exactly what you are getting, and unlike with resale properties, you won’t have to do any remodeling.

Hire a lawyer. It is best to hire a lawyer before you set out to inspect possible purchases. Otherwise, you may find yourself pressed for time and be unable to properly interview and research the lawyer you choose. You will want a lawyer who is fluent in English and Spanish, and who specializes in Spanish land law. They can help guide you through the purchase process and inform you of the tax implications.

I hope this information helps, If you would like any more information on buying property on the Costa Blanca don´t hesitate to contact us.