If you are currently in a position to invest in a property in Spain or you are merely toying with the idea, it can be exciting but on the other hand overwhelming due to the endless information available. So where does one begin?
Like most people you’ll head straight to the internet and begin to trawl through endless websites offering thousands of properties, resale homes, new developments, country houses, luxury villas, penthouses and farmhouses from one end of the country to the other. As you hop from one page to another, you see so much that you can’t remember which properties you like or where they are located. Then you email a few estate agents, perhaps they inform you that ‘that’ property has just sold …. but there are other properties that are far better. Then you end up overwhelmed with more information as the agents email endless properties to capture your interest.
if you are looking for a much easier and less stressful way of finding and buying your ideal Spanish property. As a property finder my services include sifting through the properties currently available on and offline. My intention is to assist my clients through the entire process of finding and buying their perfect investment property on the Costa de Sol. To start that process you need to be able to make informed choices so I’m going to offer you as much information as possible.
First thing that you need to know is that buying a property in Spain is not a complicated process for EU residents and the recent change in law has now made it easier for Non EU residents to be able to invest in property in Spain and obtain an Investment Residency Visa or otherwise known as a Golden Visa.
Before you begin your property search I advise you to clearly establish the sort of property you are looking to buy, the area and price range. Make a list with your partner of what you both want. Take your time to reflect. Do individual searches and then compare notes. This process will reduce stress and will help to define your brief.
Coast or Country
Defining your search is crucial. Your property finder or agent will be able to guide you whenever you have any doubts.
Over the years many of my client’s briefs have been for the Andalusian ‘campo’ countryside, where they could integrate with the warm, friendly locals and live an authentic Spanish lifestyle. To enjoy the many local fiestas and live where farmers still ride their donkeys and shepherds tend their flocks. Many of these country locations such as Comares, Ojen, Monda, Coín and Alhaurín are only a half an hour drive to the coast. Popularity in rural properties in Andalucía and the picturesque “white villages” over 20 years ago meant an increase in prices however following the financial crisis there are still many interesting investments available. These rural areas offer opportunity to buy a bigger property with more land in a peaceful setting. Old country properties maybe filled with charm and character but there can be issues with documentation so it is absolutely essential that you seek the advice of an independent lawyer.
Coastal properties and lifestyle are diverse on the Costa de Sol. There are new, state of the art, modern villas being constructed along the coastline. Villas and apartments on the many golf courses. Spacious townhouses near to schools for families. Luxury penthouse apartments on the beach or in the city. There is an ideal property to suit all requirements and budgets.
The Property Search
Looking for your ideal property is possibly the most difficult process as there is so much to consider. Here is a list a few places that you can search for a property
- Internet search engines and property portals offer the opportunity to save properties into to your favourites to revisit them later, download or share. However, the properties may not be current or even available. Many properties are sold but often are not removed from various websites.
- Media, magazines, newspapers, etc.
- Estate agents are normally contracted by the seller. A local, trained and experienced agent should be able to offer good advice and guidance. Some of the large companies may liaise with real estate agents abroad. But remember they are interested in selling one of the properties that they have listed and not finding you your ideal property.
- Property exhibitions in your local area. Exhibitors will be there to promote their product and not necessarily have your best interests at heart.
- Property finder. Employing the services of a respectable property finder with local knowledge, who is based in the area where you want to buy will save you time and money. They’ll hold your hand through the entire process, sift through hundreds of properties to find the best ones to match your brief, carry out initial viewings on your behalf and refer other professionals, services, businesses, schools, etc.
Seek the services of a professional to guarantee the best outcome with minimum stress. Buying a property is a big investment so make sure you do it right. Almost everyone that you talk to will know of a property that is for sale or someone who is trying to sell a property. Stay focused on what you want and don’t be taken off beam. These temptations often end up costing a lot more money and cause a lot of problems.
Budgeting for Your Spanish Property
Whilst the current Spanish property prices are very good you need to factor in around 10% for the purchase costs or 12%-15% should you decide to take a mortgage. Then you need to consider the annual running costs which will vary depending on the type of property that you buy. If you intend on making your Spanish property your permanent home you will need to consider other costs ie: removal costs, shipping, health insurance, etc.
After the initial searches you’ll be keen to plan a viewing trip. Perhaps you are interested in buying a property in an area that you are already familiar with. You may choose to visit the area first and get a feel for the place and possibly view a few properties to get an idea.
A property ‘inspection trip’ is normally a short break subsidised by the agent, who will guide you around whilst trying to sell you a property. These inspection trips were very popular a few years ago. You may come across them still but be careful to read the small print, often the ‘FREE’ flights and accommodation are only free if you buy a property from that agent.
Working with my clients
First I thoroughly discuss with my client’s their brief, normally via several video calls to help us all establish a face to face connection.
Informed with their property and lifestyle requirements I can begin an initial search. I send a sample of properties to see if I understand their concepts. Once I’ve received their feedback I can then continue with a more extensive property search. We discuss further the pros and cons of the properties and location. When they have narrowed down their list then I advise them that it’s a good time to organise a viewing trip. Clients normally make their own travel and accommodation arrangements and I offer them advice should they require. I arrange and accompany my clients to all of the property viewings.
During the property viewing trip
Even if you haven’t found that ideal property during your initial visit but you are in a position to purchase a property and you have definitely decided on the area, then it is advisable to set up a bank account and obtain your NIE number (Identification Number for Expatriates) as this can take anywhere between 1 day and 6 weeks to obtain, it can hinder the purchase process if not in place. The NIE can be organised through your lawyer or a ‘gestor’. You will need an NIE to purchase a property, arrange a mortgage and for many other transactions. I advise my clients that now would be a good time to leave everything set up and in place ready for when the time comes to purchase a property. If you are seeking a mortgage this would be a good opportunity to discuss possibilities with the bank. Also it would be ideal to arrange a meeting with an independent lawyer(s) to see if you would be happy to contract their services.
Hopefully at this stage you will have seen a property that you would like to purchase. With resale properties there is the possibility to place an offer unlike a new development or ‘off plan’ purchase. Your property finder would negotiate on your behalf or you or your lawyer could place an offer through the agent.
Once a price has been agreed then a standard reservation agreement will be signed specifying the property, price and a holding deposit (normally between 3,000€ and 10,000€) will be paid. The holding deposit will be deducted from the final price. At this stage should the client regret the decision and decide not to proceed they will lose the deposit. The reservation contract will take the property off the market for 15-30 days whilst the lawyer carries out the preliminary searches on the property. Once satisfied with the searches there are two options available depending on the client’s situation. 1) if everything is in place it would be possible to proceed straight to completion and the signing of the sale contract within 4-6 weeks. 2) if more time is required to obtain a mortgage or arrange transfer of funds, have a property survey carried out, etc. then the lawyer will draw up a Preliminary Sales Contract (Contrato privado de compraventa) or a Deposit Contract (contrato de arras). This is a private, legally binding agreement which reserves the right to purchase the property at the agreed price within a set time and penalise the buyer or seller should either one break the agreement.
- The contact stipulates the exact details of the property to be sold; location, current owner, basic features and known encumbrances. If furniture is included, it will also have a detailed inventory, ideally with photos.
- It will stipulate final price, method of payment and the maximum time for completing the sale.
- It will include the amount that has been paid as a deposit specifying that this amount will be deducted from the final price at the signing of the title deeds. The deposit is usually between 10% and 20% of the final price. Ideally to be held in an escrow account, but whoever is holding it, the money should not be transferred to the vendor until the day of sale. Although the parties can agree not to include these conditions, the law establishes certain penalties for either party who breaches them.
- Should the buyer breach the agreement, he or she will lose the amount already paid.
- If the seller is in breach they must return the deposit DOUBLED.
Signing of the Sale Contract (Escritura)
This is the formal handover of ownership, money (bank guaranteed cheques) and keys of the property will take place before the notary, a publicly appointed official whose job it is to prepare deeds, witness the signing of private contracts and title deeds and ensure that all documents are legal. The notary is normally chosen by the buyer (or buyer’s lawyer). Buyers need to be present for this signing or have arranged Power of Attorney. In the case of a mortgage then a representative of the bank/mortgage company also needs to be present for the signing of the mortgage contract.
With off-plan sales normally stage payments are stipulated in the contract and are paid throughout different phases of the build until completion. Then the private contract needs to be formalised into a public title deed.
Registration of new ownership
After the signing of the Sale Contract the final legal process is to register the new property ownership with the Land Registry. The presentation of these documents is normally carried out by the buyer’s lawyer or the notary within 15 days of the signing of the Sale Contract.