30th October, 2020

Buying property in Spain: Everything you need to know

Buying property in Spain: Everything you need to know

As one of the healthiest countries in the world, with a supreme quality of life, attractive beaches, beautiful landscapes, excellent climates, modern infrastructure, plus a combination of traditional and cosmopolitan parts, Spain is truly a dream destination. International schooling welcomes families from all over the world, whilst mortgage and tax rates appeal to those looking to retire. With unlimited outdoor activities, such as water sports, world-class golf, horse riding or even skiing, the lifestyle is elevated in Spain.

On Thursday 22nd October, Chris Hara, Director of Fine & Country Costa Blanca North, was joined by host, Daniel Harrington, to take us through the benefits of life in the Mediterranean. Having relocated to Spain over 16 years ago and having worked in estate agency during that time, Chris shares his experience and knowledge of how estate agency operates in Spain, all you need to know about the property buying process and valuable information about tax and residency.

Whether you want to invest in property or relocate and embrace the life of a Spaniard, we reveal all in our latest Worldwide Wanderlust webinar.

Benefits of living in Spain

The country itself

There are few places in the world where there is such a contrast between the northern and southern areas of a country. The 17 regions of Spain are host to a variety of cultures, landscapes and climates, offering something for everyone.

Costa Blanca North enjoys some of the most spectacular and unspoilt scenery. The region is extremely picturesque, with stunning mountain ranges forming a panoramic backdrop to the dramatic coastline. Some of the best Blue Flag beaches in Europe can be found in the Costa Blanca North Region.

Inland, you will find an abundance of ancient vineyards that are famed for their wine quality, whilst green and lush valleys are dotted with quaint villages where orange, lemon, almond and olive groves thrive in the hot sun.

Throughout the country, Spain is well-connected nationally and internationally, served by airlines from cities across the UK and Europe. High-speed rail links provide access to several cities in and out of Spain and the road network is excellent.

Climate

Spain is well-known for its Mediterranean climate and many people from Northern Europe decide to move to Spain or purchase second homes to escape harsh winters. Being such a large country with varying landscape, there are three different climate zones.

In the central region of Spain, expect to experience all the seasons, with hot dry summers, rainfall in spring and autumn, and cold winters with heavy snowfall on the mountain peaks.

The Mediterranean climate is the dominant climate in Spain, with warm and dry weather in summer and cool and wet weather in winter. The cities of Barcelona, Madrid and Valencia enjoy this highly desirable climate, as well as regions along the Mediterranean coastline and in the inland areas of the Iberian Peninsula.

The Basque Country, north of the Cantabrian mountains, has a maritime climate to suit those who prefer milder weather. The summers are cool, winters are mild and there are often clouds with rainfall throughout the year. The Balearic Islands also have a maritime climate, with warmer, dry summers.

Health benefits

The World Health Organisation recognises Costa Blanca as one of the healthiest regions to live in Europe for its microclimate, healthy lifestyle and Mediterranean diet. The average life expectancy in Spain is one of the highest in the world. The daily siestas and relaxed way of life take Spaniards later into their years. According to a study of 169 nations by Bloomberg in 2019, Spain is the healthiest country in the world.

Spain is known for its excellent healthcare system, spending a greater proportion of GDP on healthcare than the UK, as well as having more practising doctors. Another bonus of the Spanish healthcare system is that pharmacists do more than just provide prescriptions. They are highly qualified, and it is normal for a pharmacist to give advice about minor conditions that you might otherwise have visited a doctor for in the UK. They will happily check your blood pressure on request and provide certain medications on their own diagnosis and without a prescription. Pharmacies in popular resorts on the Costa Blanca North will usually have an English-speaking member of staff and there should always be a 24-hour pharmacy open nearby.

Lifestyle and culture

The excellent climate and landscape offer plenty to do in terms of outdoor pursuits. Crystal-clear waters allow the enjoyment of a wide variety of water sports from Spain’s 4,964 km of coastline, where marinas, yacht clubs and sailing clubs are found all the way along.

With an abundance of mountains, canyons, rivers and walking trails, there is every opportunity to try trekking, hiking, climbing, canoeing, fishing, and mountaineering, and when it comes to cycling, Costa Blanca North is fast becoming the area of choice for many pro cycling team training camps and cyclo-tourists.

For those looking to Ski in the winter, ski resorts of Javalambre and Valdelinares in Teruel, are only two and a half hours away from Costa Blanca North, enabling you to ski for a couple of hours in the day and be back home in the evening.

The excellent climate also proves to be popular with all sport lovers, including those of tennis and horse riding. Finally, Costa Blanca North is one Spain’s fastest growing golfing destinations, an almost unique destination for the chance to play 365 days of the year. The area is home to numerous excellent golf courses built to championship standards and 5-star golf resorts; some of which are hidden gems and others are extremely well-known.

If you are not enthusiastic about sports but enjoy socialising, the Spanish are known to love to party and have several celebrations throughout the year. In addition to the endless number of activities on your doorstep, Spain’s location and climate allow for more quality time in the evenings and a desirable place for family and friends to visit.

Financial benefits

The cost of living in Spain is one of its greatest benefits. Even in Spain’s major cities, such as Barcelona and Madrid, a high-quality lifestyle is relatively low-cost when compared to other major European cities. For investors, seekers of second homes, and those looking to relocate to this vibrant country, properties start at very affordable prices and rise into the premium market, catering to all.

With low interest and tax rates, and a stable economy, Spain is an ideal country to invest or reinvest assets. A strong and stable market ensures the property market remains buoyant and property investments are safe.

Estate agency in Spain

Having had over 16 years of working in estate agency and living in Spain, Chris Hara recommends finding an estate agent with local knowledge and expertise to guide buyers and sellers through the process. Look for agents who list the properties personally, to ensure they know everything to do with that purchase. Chris Hara, at Costa Blanca North, works with his clients beyond the property sale to give recommendations for trustworthy local services and help buyers and investors throughout the whole process.

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An overview of the buying process in Spain

The purchase procedure in Spain is relatively simple for both parties. Here are the stages of buying a property in Spain:

Finding and reserving a property

Once a buyer has found the right property and has agreed a price with the seller, a deposit is paid, of no more than 3,000 EUR to 5,000 EUR, to reserve the property for a specified period. At this point, the buyer instructs an independent lawyer to carry out due diligence and basic legal checks to make sure that the property is free of any debts and/or encumbrance, and to request a review of building permits, licenses, certificates and taxes. This deposit is fully refundable, should your lawyer discover any irregularities about the property.

Signing the private-purchase contract

The private-purchase contract secures the property for the buyer and outlines the terms and conditions of the transaction, including the deadline for purchase. The contract, which includes a specified date for completion, is signed by the buyer and the seller (or their representatives) and the buyer pays 10% of the purchase price on signing (minus the initial reservation deposit).

If the house is being sold with fixtures and fittings and/or furniture, the contract should have an inventory attached, which is signed by both parties.

In the case of a new-build property, the payment terms will be detailed by the developer and will be specified in the contract. This normally involves staged payments throughout construction or one payment on private purchase contract, then the remainder on delivery of keys. All payments made before key delivery in new build developments will be duly accompanied by a Bank Guarantee securing your investment.

Legalities on the house

Meanwhile, your lawyer will carry out a comprehensive checklist on the property to make sure it is 100% legal. These include checks on the property register, tax, planning and utilities, amongst others. 

Completion

Normally, it takes around 8-12 weeks for a sale to reach completion. All property completions in Spain occur in the presence of a Notary in the offices of Notaria Publica where all parties connected to the sale must be present or have a representative present. The notary will check that all information related to the sale, including financial and legal certificates and documents, are accounted for. The buyer does not have to be present on the day if there is an appointed Spanish lawyer with power of attorney to sign on the buyer’s behalf.

Mortgages

Anyone buying a property in Spain, including non-residents, and, depending on the person’s status, can borrow up to 70 per cent of the purchase price of a property. Interest rates are currently very low in Spain, being no more than a single digit in percentage value.

Investors can increase their property budgets, due to these high loan values with low interest rates. Also, buyers can take mortgages out up until the age of 75, allowing plenty of time for retirees to settle in Spain.

Property Transfer Tax and Additional Costs

When a buyer purchases a property, they pay the equivalent of Stamp Duty Land Tax, for the property to go in the buyer’s name after completion with a Notary. This is 10 per cent of the property price.

Notary fees, administration fees and lawyers’ fees tend to cost around two per cent of the price of the property.

Capital Gains Tax

How much a property owner is taxed depends on the residency of that person. A Spanish resident with a main residence in Spain, after a certain age, can expect to pay no Capital Gains Tax on that property. If a property owner has a Capital Gains Tax on their property, this can be rolled over onto another property within two years of selling the property.

Tax rules for EU non-residents

If someone sells a property as an EU non-resident, there is a retention of 3%. The Spanish Fiscal Authorities retain 3% of the declared purchase price – that 3% is offset against any potential Capital Gains liability the seller has on a property. Sellers can recover all or some of that 3% if they can provide the relevant documentation.

Ongoing Tax

If someone has an asset in Spain and is classed as a non-resident, they must pay a small percentage of their wealth tax annually. This will usually be around 0.3 per cent.

Property tax

Property tax in Spain is based on the value of a property and the status of the land it is in.

For example: A 300,000 EUR property would cost no more than 500 EUR a year in property tax.

Golden Visa

Much like in Portugal, people outside of the EU can gain a Golden Visa by buying a property worth 500,000 EUR or more. The Golden Visa grants an investor’s family residency in Spain for up to five years, after which, it is possible to gain a permanent residency. After the UK has left the EU following Brexit, British residents will be eligible for the Golden Visa programme.

Find more information on the Golden Visa in Spain here or get in touch with Fine & Country Spain, who will be happy to answer any of your questions.

Contact us

If you have further questions on the topics covered in our webinar or would like to begin your property search in Spain, contact Fine & Country Spain today.

Find out when our next webinar will take place by contacting your local agent today or keep an eye out on our social media channels, as we will be announcing the details of our next webinar about the buying process in Mauritius on our Facebook, Instagram and Twitter pages soon.

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