Spain Buying Guide
I've created this Spain property guide to help you successfully navigate the process of buying property abroad.
A one-week holiday on one of the Costas each year often isn’t enough for us Brits, such is the allure of Spain. Attracted by a life of sun, sea and sangria, British buyers are firmly established as the largest segment of the overseas property market.
If you want to take your Spanish love affair to the next level by purchasing a property there – whether it’s a holiday home, a retirement retreat, or an investment opportunity – you’ll have the unfamiliar local property market, a language barrier and a different currency to contend with.
In this digestible guide, I’ll walk you through the Spanish property buying process – including the costs, timescales and risks involved – so you’re equipped with the knowledge and understanding needed to make informed decisions at every stage.
This includes the potential for currency risk to wreck your budget if you leave the cost of your international payments exposed to unpredictable exchange rates, and how a currency specialist can help you secure the cost of your property.
You can achieve your dream of owning a property in Europe’s favourite expat and holiday destination – read on to find out how.
Key questions: Why? How? What?
Inform your Spanish property search by asking yourself some pertinent questions that will point you in the right direction.
Why are you buying in Spain?
A definitive answer to this question will provide you with clarity in the early stages of your property search. This could be anything from wanting to enjoy more sun and warmer weather to your pension going much further in Spain.
How will you use the property?
You can start to narrow down your search once you confirm how you’ll use the property, as this will inform what you want from the local area – such as being near an airport for weekend breaks or rental potential or near an established expat community for retirement.
What’s your buying budget?
By establishing a realistic budget from the start, you can focus on properties that are affordable and meet your requirements. As a rule, budget for at least 10% extra for buying costs, such as legal fees.
Remember to insulate your budget against exchange rate fluctuations. This currency risk could increase the cost of a property you love between making an offer and paying the final balance.
What are your non-negotiables?
Ascertain what’s top of your must-have list by asking things like: do you want to live in a coastal resort? How many bedrooms do you need? Do you want a swimming pool?
Visas
Find out if you need to apply for a visa early in the buying process. If you plan on spending more than 90 days out of every chunk of 180 in Spain, you will need to get a visa, unless you have previously been resident there or you’re joining a close relative who’s covered by the Brexit Withdrawal Agreement.
Applying for a visa to stay in Spain permanently for the first time won’t be an issue provided you have: a work visa or sufficient savings to avoid working, medical insurance, and no serious criminal convictions. Check with the Spanish consulate in the UK to find out what type of visa and/or work permit you will need.
The common visa options if you plan to reside in Spain beyond the 90-day visitor limit are:
· Spanish Golden Visa: This residency through investment scheme allows overseas property buyers to achieve residency by buying a home worth €500,000 or more – without a mortgage.
· Non-Lucrative Visa: If the property you’re buying is less than €500,000 and you want to live, but not work in Spain, you can apply for a Non-Lucrative Visa – a popular option for retirees.
· Work and Residence Visa: If you plan on living and working in Spain you must obtain a work and residence visa. You must have a job offer before moving unless you plan on being self-employed.
Get help from the experts
Don’t embark on your property purchase alone. Get the support you need to manage the practical, legal and financial elements by choosing an estate agent, lawyer, independent financial adviser and currency specialist early in the process.
Estate agent
Choose an estate agent who’s registered with a regulatory body in Spain and has experience working with UK buyers. This property professional will partner with you to find a property that matches your requirements.
Lawyer
You will need the services of an English-speaking solicitor who specialises in property law. Make sure they belong to the local bar association and factor in their fees when establishing your budget.
Independent financial adviser (IFA)
An IFA can help you establish a budget, manage your tax requirements, and reduce your costs. Once you’ve moved in, they can also assist you with other financial requirements like pensions and life insurance. If you’re not a cash buyer, they might be able to help you find a reputable mortgage adviser as well.
Currency specialist
There’s another essential requirement that underpins the overseas buying process: international payments – the value of which are exposed to fluctuating exchange rates. The price of your dream property will constantly fluctuate under the influence of these market movements between your offer being accepted and completing – a notoriously protracted process.
Your exposure to this foreign exchange risk doesn’t end once you pick up the keys to your home in the Spanish sun; it will also impact the value of ongoing international payments like pension transfers and UK income transfers.
Don’t be daunted by the unpredictable economic and political variables that dictate the direction exchange rates move. A currency specialist will help you mitigate the impact of these fluctuations on the value of your purchase by helping you leverage tools that allow you to secure a current exchange rate for future transfers, such as a forward contract – this locks in the price of your property until the time comes to pay weeks or even months in the future.
Buying fees
These fees – typically 10-12% of the property cost – can differ region by region and will be influenced by the final property price and your purchasing preference: cash or mortgage.
There’s a raft of buying costs you must account for when planning your budget:
· Impuesto de Transmisiones Patrimoniales or ITP: A tax paid on existing properties – the national rate is currently 7% but can differ regionally.
· Impuestos sobre el Valor Añadido or IVA: Charged on any brand-new properties.
· Actos Jurídicos Documentados (AJD): Spanish equivalent of stamp duty that also varies regionally.
· Notario fees: This legal professional officiates the sale. Their fees are fixed by law and are typically relative to the sale price.
· Solicitor fees: They will probably charge an hourly rate.
· Property registration fees: Required to change the names on the deeds.
· Surveyor fees: If required.
Viewing trip
Online research is a great place to start but this convenience can’t replicate the tangible and emotional insight you gain from physically visiting the property and exploring the surrounding area – from testing the shower to walking to the shops.
With your search refined, it’s time to head to Spain on a viewing trip, meet the local estate agents and view properties. Whether you want to be walked through the process by your agent or want to do it independently, these tips will help make it a success.
· Do your research: Maximise your time on your trip by using Google Streetview before you travel to rule out properties that lack curb appeal.
· Don’t rush: Plan to spend at least three days on your trip. When you’re not viewing properties you will have enough time to explore the local area, speak to the locals and visit the amenities – and remember: you can always return for another viewing trip.
· Avoid peak season: Avoid expensive flights, hotels, and crowds of tourists by visiting in the off-season to see what the area’s like when the tourists leave. You might also be able to negotiate a better price as demand will be lower. Check Spain's public holiday calendar, so you don’t turn up and everything’s shuttered.
· Take pictures and videos: Use your smartphone to take photos and video clips of properties during your trip, so you can refer to them when you get home.
· Find a local estate agent: This local property expert will help you find properties to view that match your budget and requirements – so you don’t waste any time.
· Have your deposit ready: Be prepared to secure your dream property by having enough euros available for a reservation deposit.
Register with a currency specialist when planning your budget so you’re ready to part with some cash on your viewing trip.
Making an offer
Having found a property on your viewing trip that ticks all the boxes, it’s time to make an offer. To give you the best chance of success, you should: ask your agent what’s an acceptable offer, act quickly and be prepared to make counter offers quickly. Before you follow this advice, contact a currency specialist to check how the pound is performing against the euro.
The Spanish buying system
Be prepared to encounter some differences to the property buying system in Spain compared to the UK – consult your English-speaking solicitor for guidance.
The notary
A notary (notario) is mandatory for any property transaction in Spain. This legally trained professional is employed by the government, meaning they don’t act for you or the vendor. They oversee and authorise the paperwork, check the taxes are paid, and register the property with the Spanish Land Registry.
NIE number
You must register for a Número de Identidad de Extranjero (NIE) at the local police station, which can take up to six weeks to receive. This tax identification number, along with other things like opening a bank account, is required for buying a property in Spain.
Contracts
With your offer accepted, it’s time to sort the contract, so talk to your solicitor first.
Reservation contract
The reservation agreement (contrato de reserva) and reservation deposit – typically around 3,000 to 10,000 euros – ensure the property is taken off the market while you complete the necessary checks and legal procedures.
If you decide to pull out of the sale, your deposit could be lost – depending on the terms of the contract. This underscores the importance of making the agreement subject to legal checks, mortgage availability and a building survey. To help avoid a situation where you pull out, your lawyer should check that the property is legally the vendors to sell, has planning permission and has no debts or restrictions on the sale.
Private purchase contract
Once the checks are completed, you and the seller will sign a private purchase contract. This stipulates the terms and conditions of the sale, including the purchase price and completion date. You’re now committed to buying the property and the seller to sell it to you.
Most British buyers also request a deposit contract (contrato de arras). You pay a deposit – typically 10% of the full price – until the sale goes through. If you pull out now you will lose your deposit, while if the vendor backs out, they must pay back double the amount.
Ensure the deposit is secured in a separate account that’s overseen by the lawyers and not transferred to the seller until the final agreement.
Sale contract
You must sign the contract of sale (escritura de compravento) in front of a notary to complete the buying process. If you can’t make it to Spain, you can give your lawyer Power of Attorney to sign the contract on your behalf. Once this is done, it’s time to pay the balance on the property price.
The notary will register the sale with the Spanish Land Registry and provide you with a copy of the registered deed. You will also need to pay the relevant taxes, such as the Property Transfer Tax (ITP) or Value Added Tax (VAT), depending on the property type and location.
After that, the keys are yours and you can start making memories in the Spanish sun!
I hope this guide will help you on the path to buying a home safely and successfully in Spain.