Buying Property in Spain
Whether it’s the endless TV holiday property shows, disillusionment with life in the UK or simply the lure of over 300 days of sunshine per year, more Brits than ever are expected to purchase a holiday home abroad in the next few years, with Spain being the number one destination. Foreign property ownership has increased by 85% in the last ten years, as three quarters of a million of Brits own a property in Spain, according to American Express.
With this in mind, we’ve compiled a few do’s and don’ts to help make sure your dream of owning your own Spanish home doesn’t turn into a nightmare.
DO...
Take your time. Rushing to grab a dream property or to tie-in the purchase with holiday plans will blind you to potential problems. Think about renting first for a month or longer in your chosen destination to get to know the area and the property market. Perhaps stay in peak season and out of season to make sure the summer rush doesn’t drive you crazy and the winter isn’t too quiet.
Budget carefully. Think carefully about how much work the property needs on it and whether you plan to live in it full time or rent it out for most or part of the year. Remember that the rules and requirements will vary from one country to another. Buying property in Spain is very different than in the UK. Probably the single most important difference is this: In Spain, it is the Buyer who pays for all the costs, not the seller. On top of the purchase price, expect to pay valuation and legal costs together with local or regional taxes and fees.
An estate agent will charge the buyer up to 5% of the seller's asking price (sometimes more), purely as a commission. A property selling for €150k with an estate agent will include around €7.5k for their commission alone. In the UK, it is the opposite; the estate agent charges the seller (and far less, only around 1%).
In addition to the estate agent's commission, there are taxes and other purchasing costs to be added. 7% of the final selling price has to be paid to the government & around 1% is paid to the Notary & Land Registry. A further 2% is the norm for things such as fiscal representation & lawyers fees etc.
This comes to 10% and it is safe to say that this is around the normal amount usually added on top of the final selling price for the buyer to pay.
Watch our for currency fluctuations over the months building up to purchasing your property. Transferring large amounts of your money to Spain can prove to be a very expensive exercise if not done at the right time. Thousands of your hard earned pounds can be lost. Thankfully there are currency companies that specialise in helping you with this process and can offer fixed rates.
Be realistic about DIY. How much of the work can you do yourself? How much time and knowledge do you have to employ, instruct and supervise local tradesmen?
Use qualified professionals to protect your interests and make the purchase as stress-free as possible. Property agents and other reputable experts can be found through the Federation of Overseas property Developers, Agents and Consultants (FOPDAC).
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