BUY PROPERTY IN SPAIN

GENERAL INFORMATION ABOUT BUYING A PROPERTY IN SPAIN IN 2024

Are you still dreaming of buying a house in Spain? This guide to purchasing real estate in Spain by Altea Moraira Villas explains how to turn those dreams into reality. We cover various topics, from legal requirements to financing and even pitfalls to avoid. We will primarily focus on the Costa Blanca, as we are one of the leading real estate agents in Altea, on the North Costa Blanca.

BUYING OR RENTING A PROPERTY IN SPAIN?

Before buying, it's always essential to do your own research. It helps to collaborate with a reputable local real estate agent who knows the ins and outs of the market, as the Spanish housing market can sometimes be tricky.

Purchase and rental prices have significantly increased in popular areas such as the Costa Blanca, where more and more investors are finding the opportunities they've been waiting for. If you're considering a short stay, renting out your property might be a good idea. This way, you can enjoy your home when you want to visit and earn some extra income while you're away. The investment opportunities on the Costa Blanca have a lot of potential.

Since the Covid-19 pandemic, there has been more uncertainty among people looking to buy property in Spain, as many believe it's a risky time to buy a house. Now more than ever, you might want to visit to talk to a trusted local agent to answer your questions before making decisions. If you're interested in buying a property in Spain and love the area on the North Costa Blanca, Altea Moraira Villas is the real estate agency in Altea you need to help you; and for the famous Moraira, Moraira Invest Group is the best choice.

PROPERTY OWNERSHIP IN SPAIN

The homeownership rate in Spain is very high: about 80% of residents own their homes, and many do so without a mortgage. Spain has suffered greatly from the global financial crisis, which always affects the real estate market when house prices drop significantly. Covid-19 caused a lot of panic in the real estate market and many investors looking to buy property in Spain are waiting for a crash, which we believe will not happen because the market has become quite stable in recent years, especially on the Costa Blanca.

Since 2016, we have been experiencing steady price increases in Spain, and although the Covid-19 situation affected the real estate market in 2020, official figures show that average prices increased in the second quarter. Property sales have clearly decreased significantly due to the uncertainty among people buying property in Spain, with a decrease of more than 50%. The ultimate economic effects of the Covid-19 pandemic on the Spanish real estate market are not yet fully known, but in our case, on the Costa Blanca, the chances of a severe blow are smaller.

EXPATS BUYING PROPERTY IN SPAIN

Buying a property in Spain has become a bit more complicated than before, but Spain is still a very welcoming country for foreign property buyers; and if you have a trustworthy agent, the process should not be too difficult. This is evidenced by our client testimonials who have worked with our agents in Altea and Moraira.

The process is quite straightforward, and your agent should be able to assist you. Before buying, you will need a tax number, which you can easily obtain by taking your passport to a police station. This process can take a day or a few weeks, depending on the workload. If you want to learn more about NIE Numbers, this is one of the most complete and detailed posts with information you will find: NIE NUMBER SPAIN.

REAL ESTATE MARKET IN SPAIN & PROPERTY PRICES

For now, we can only provide a very general indication of what is happening in the housing market in Spain, as the full impact of the Covid-19 pandemic on property prices is still to be seen and understood. No one has a crystal ball, so don't let anyone fool you.

Based on the third quarter of 2023, figures from the Global Property Guide showed that average house prices in major cities increased by 6%, while houses in the Canary Islands increased by 12%. Prices are rising on the Costa Blanca because the area continues to attract new investors and many luxury new-build homes are being constructed. Overall, despite the Covid-19 situation, the market looks very stable on the Costa Blanca. If you are looking to buy property in Spain and are interested in the area where we are active, feel free to contact us. Our professional agents in Altea will assist you with your needs.

COSTS OF BUYING A PROPERTY IN SPAIN

There are no fixed costs for lawyers and agents, and fees usually vary from area to area when buying property in Spain, and there is plenty of room for negotiation. The majority of costs are usually borne by the buyer:

Transfer tax: 10% (existing properties) / VAT (or IVA) at 10% (new properties)
Notary fees, property deed tax, and registry fees: 0.5-1%
Legal fees: 0.8-1.5% (including VAT)
The agent's commission is usually paid by the seller. Real estate agents typically charge around 3-5%, depending on how the property is listed.

FINANCING A PROPERTY PURCHASE IN SPAIN

Some foreign buyers purchase without a mortgage, but it is possible to obtain financing to buy a house. Spanish banks and international banks offer mortgages; some also offer specific deals for expats from certain countries.

As a foreign buyer, you may find that you can only borrow at a lower loan-to-value (LTV) rate than Spanish residents, meaning you will need a larger down payment. Spanish residents can generally borrow up to 80% of the estimated property value, but non-residents may be limited to 60-70% LTV, depending on the type of mortgage. Mortgage lenders will not finalize a mortgage agreement until you own a property. It is important to include a clause in the property purchase contract that allows you to withdraw if you cannot obtain a mortgage.

NOTE: In Spain, any debt linked to a property is transferred to the new owner when the property is sold. This means it is crucial to ensure there are no debts attached to the property, or if there are, that these fall under the terms of the contract.

FINDING A PROPERTY IN SPAIN

Buying property in Spain is made quite easy for all types of buyers, as there are many websites, portals, and agents promoting their listings online, catering to almost every language and nationality. The most used websites for smaller promotions are portals such as:

Idealista
Kyero
ThinkSpain

If you are seriously looking for property in Spain, we strongly recommend doing some research on agents in the area and finding one you can trust and who will help you throughout the process; because it is not just about the product, but also about the service and after-sales service. Once you have found an agent you can trust, the agency will help you find the product you are looking for, as no one knows the real estate market in specific areas better than local professionals.

REAL ESTATE AGENTS IN SPAIN

Agents can provide a wealth of information about the region, are multilingual, and often deal with foreign buyers. They are a valuable asset in your search for property in Spain. However, regulation is relatively low and there are unscrupulous agents, so be cautious of anyone asking for upfront payment or suggesting cuts.

Always remember that you can choose your own notary, mortgage lender, etc.; you are not required to use a service recommended by the agent. When looking for agents, look closely at which agents score well on Google search results for specific related keywords like 'real estate agents in Altea', and are active on social media, as this usually means the real estate office is investing time and money to be better than the competition and offer quality content.

Also, look for real estate reviews and testimonials on specific business pages, or ask other expats for advice. Most reviews can be found on specific websites like Google Business and Trustpilot.

PURCHASE PROCESS OF A HOUSE IN SPAIN

Once you have found your dream home and your offer is accepted, a reservation agreement is signed, and a deposit (approximately 1% of the purchase price) is paid, after which the property is taken off the market.

Next, a purchase contract (arras) is signed between the buyer and the seller. This contains all the details of the sale and is usually signed with a 10% deposit.

When buying a property in Spain, you need to ensure you have the following key documents in order:

Deed of ownership (escritura)
Registration details from the land registry (registro catastral)
Proof that the property is tax-free
Proof that the municipal tax bill is up to date
Property tax (IBI) payment proof for the past five years
Advance inheritance tax
Proof of payment of all utilities (electricity, water, etc.)

It is essential to have an independent lawyer specializing in real estate to represent your interests during the process, check that the property is free of debts and legal issues, and guide you in obtaining an NIE number (foreigner identification number).

NIE NUMBER & BANK ACCOUNT

The NIE number (Número de Identificación de Extranjero) is a unique identification number for foreigners in Spain. You need it for legal and tax transactions, including buying property. You can apply for your NIE number at a police station with an immigration service or at a Spanish embassy or consulate in your home country.

You will also need a Spanish bank account for payment of the deposit, taxes, and other costs associated with buying your property. You can open a bank account at a Spanish bank by providing your passport, NIE number, and proof of residence.

ARE YOU READY?

Buying property in Spain can be a rewarding experience, provided you are well-prepared and work with trusted professionals. The Costa Blanca real estate market offers many opportunities, and with the right guidance, you can find your dream home in Spain and enjoy all the beauty this wonderful country has to offer.