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Buying property in Spain: a guide for expats

Dreaming of a villa on the Costa del Sol or a sleek apartment in Barcelona? Our guide to buying a property in Spain explains how to do it.

This guide to purchasing a property in Spain contains advice on the following:

• Homeownership in Spain
• Should you buy or rent property in Spain?
• Can expats buy property in Spain?
• The Spanish property market and property prices
• Costs of buying a property in Spain
• Financing a property purchase in Spain
• Finding a property in Spain
• The process of buying a property in Spain
• Moving into your Spanish property
• Buying land to build a new property in Spain
• Buying a new-build home in Spain
• Selling a property in Spain

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Homeownership in Spain

Homeownership levels in Spain are high, with around 80% of residents owning their own property, and many doing so without a mortgage.

Spain suffered significantly during the global financial crisis and the ensuing property market crash. House prices dropped by as much as 30%, but in the last few years, the market has become more stable.

Prices in Spain have been rising steadily since 2016, and although the COVID-19 outbreak has affected the market in 2020, official figures show average prices grew during the second quarter of the year. Sale prices increased by 2.1% year-on-year, with new-build prices rising by 4.2% and second-hand homes increasing by 1.8%.

Understandably, the number of house sales has fallen significantly. Government statistics show that international buyers purchase around 18,000–25,000 homes in Spain for each quarter of the year. In the second quarter of 2020, however, that figure fell below 10,000.

The full economic effects of COVID-19 on the Spanish property market are still to be seen. Property experts predict that house price values could fall by 5–10% in the short term.

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Should you buy or rent property in Spain?

The Spanish property market has many quirks, and it pays to do your research before buying. Factors to be aware of when buying Spanish property include property scams, high capital gains tax, and fluctuations in the property market.

The added uncertainty caused by COVID-19 means that now could be a risky time to buy in Spain. The country’s rental market is also in flux.

Before the pandemic, regional governments were looking to introduce stronger rules around people buying holiday lets, after rent prices increased significantly in areas popular with investors.

Each of Spain’s 17 regions has the power to set rules around foreign buyers purchasing properties to let out. The most stringent rules are in the Balearic Islands, where only Spanish residents can apply for buy-to-let licenses, and Madrid, where new measures include only allowing stays of up to five days.

If you’re considering a shorter stay, renting in Spain could be a more suitable option once you factor in Spain’s high levels of capital gains tax, which could offset any benefits of buying in the short-term.

Avoid the most common mistakes of expat homebuyers

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Can expats buy property in Spain?

Buying a holiday let might be more complex than before, but Spain is a very welcoming country for foreign buyers that limits the possibilities for common homebuying blunders.

The rules for buying a property in Spain as an expat are relatively straightforward. Before buying, you’ll require a financial number, which can be obtained by visiting a police station with your passport. This is typically processed on the same day for Spanish or EU citizens, but may take a few weeks for others.

Spain also offers a Golden Visa program for foreign property owners. Under the scheme, if you invest more than £500,000 in Spanish properties, you’ll get a residency visa. Golden Visas are primarily for retirees and holiday home buyers but are particularly popular with investors from outside the European Union.

In the first half of 2019, Spain approved 848 Golden Visas, with Chinese (272) and Russian (187) investors making up the majority of successful applicants. In total, this meant 4,941 people received a Golden Visa since the scheme’s launch in 2013.

The Spanish property market and property prices

The full impact of COVID-19 on Spanish property prices is yet to be fully understood, so it’s only possible to give a general indication of what’s happening to the market.

Pre-pandemic analysis from the Global Property Guide showed average property costs per square meter for 14 of Spain’s 17 autonomous regions.

The figures, based on the third quarter of 2019, showed average house prices in major cities rose by 5% to reach €1,649 per square meter, while properties on the Balearic and Canary Islands saw an 11% increase to reach €1,604 per square meter.

The most expensive places to buy in Spain are San Sebastian, Barcelona, and Madrid. Prices in all three areas ranged from €3,000 to €3,600 per sqm.

Madrid was the most expensive place to buy land in Spain, with prices of €338 per square meter. The Canary Islands (€245), Catalunya (€184), Andalucia (€171), and Valencia (€158) made the top five. Castilla y Leon is the cheapest place to buy, with average land prices of €66 per square meter.

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Costs of buying a property in Spain

Fees for buying a property in Spain vary from area to area, and many are negotiable – for example, there are no fixed fees for lawyers or estate agents. Buyers must pay the majority of the costs, which are generally as follows:

• Property transfer tax: 6–10% (existing properties) / VAT (or IVA) at 10% (new properties)
• Notary costs, title deed tax, and land registration fee: 1–2.5%
• Legal fees: 1–2% (including VAT)

The seller usually pays the estate agent fees in Spain. Estate agents usually charge their fees as a percentage, typically around 3% of the final sale price.

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Financing a property purchase in Spain

Some overseas buyers purchase without a mortgage, but it is possible to obtain finance to buy a home. Spanish banks and international banks offer mortgages; some also offer specific deals for expats from certain countries. It’s a good idea to do your research before settling on a lender – one option is to explore your options on a comparison site such as Rastreator.

As an overseas buyer, you may find you can only borrow at a lower loan-to-value (LTV) rate than Spanish residents, meaning you’ll need a bigger deposit. Spanish residents can generally borrow up to 80% of the property’s assessed value, but non-residents might be limited to 60–70% LTV, depending on the mortgage type.

Mortgage lenders will not complete a mortgage agreement until you own a property. It’s important to include a clause in the property’s purchase contract allowing you to pull out if you cannot acquire a mortgage.

Find out more in our guide to Spanish mortgages

In Spain, any debt tied to a property is transferred to the new owner when the property is sold. This means it is critically important to ensure that there are no debts attached to the property, or that if there are, they are covered by the terms of the contract.

Finding a property in Spain

As it is easy for foreigners to buy property in Spain, there are many websites and estate agents catering to almost every language and nationality.

Many British real estate websites also list Spanish properties, with some online portals listing thousands of options. However, these mostly focus on holiday homes. As a result, you may prefer to use a Spanish site instead.

It is possible to buy a home before you arrive and move in directly. However, this naturally comes with risks. You should view the property you are considering and don’t cut corners on the process, even if this means spending some weeks in a hotel when you arrive.

• thinkSPAIN
• Servihabitat
• idealista.com
• Kyero

Estate agents in Spain

Estate agents can provide a wealth of information about the region, are bilingual, and often deal with overseas buyers; they are a useful asset in your Spanish property search. However, regulation is relatively low and unscrupulous estate agents do exist, so be wary of anyone who asks for payments upfront or suggests cutting corners.

Always remember that you can choose your own notary, mortgage provider, and so forth; you do not need to use a service suggested by the estate agent.

You can find more real estate agencies and property companies in our Spanish directory.

The process of buying a property in Spain

The process of buying a property in Spain usually runs as follows. First, the buyer makes an offer. If this is accepted, then the buyer and seller sign a preliminary contract (contrato privado de compravento) and the buyer pays a deposit, typically 10% of the purchase price.

The buyer then arranges any mortgage they require, although they should have already discussed their needs with the mortgage provider. The contract of sale (escritura de compravento) is usually signed in front of a notary, at which point the full sale price, taxes, and other costs become due.

Viewing property in Spain and making an offer

Once you’ve found a property you like, you’ll usually need to make an offer through the seller’s estate agent.

As in other countries, prices are open to negotiation; the property’s asking price is an indication rather than a demand. Unless the price is particularly attractive or you’re competing with other buyers, it makes sense to start negotiations below the asking price, but not so low as to offend the seller.

Basic negotiations on price are often done verbally. Once you reach an outline agreement, you should have your offer summarized in writing by your notary.

Hiring a solicitor or notary

The services of a notary are not legally necessary to complete the sale. Having a lawyer to complete the due diligence is highly advised and is required by many mortgage lenders.

The buyer is responsible for registering the property. Your notary may provide this service for a fee, and/or may notify the registry office that the sale has taken place, without completing full registration.

Any lawyer practicing in Spain should be registered with the local bar association (Colegio de Abogados). They will have a registration number that you can ask for and then verify with the bar association. Naturally, registration does not guarantee honesty or competence, but it is a good minimum standard to insist on.

You can find a list of all the bar associations at the national website for Spanish lawyers, Abogacía Española.

Arranging a survey

It’s possible to buy a property in Spain without having a house survey, but this isn’t advised. A house survey helps you ensure there are no significant defects with the property that could come back to haunt you further down the line.

For existing properties, there are generally two main types of survey available. A valuation report is a surface-level survey that gives you an independent guide to the property’s market value.

A building survey goes deeper, looking at the structural condition of the property and outlining any serious issues. Building surveys are more expensive than valuation reports, but they also provide a more comprehensive guide to the property’s condition.

Translators for your Spanish house purchase

Many governments provide lists of lawyers and translators who speak both Spanish and another language. The British Embassy’s list of English speaking lawyers and translators is a useful resource.

The Spanish government provides a list of accredited translators.

Moving into your Spanish property

Insurance

It’s highly recommended that you take out home insurance when buying a home in Spain.

A building insurance policy (which covers the structure of the property against natural disasters, fire, and other damage) is often a requirement for mortgage providers.

Contents insurance (which covers your belongings in the home) isn’t legally necessary. It could be a wise investment, however, especially if you plan to rent out your property or you spent a lot of time away from home.

Find out more in our guide to insurance in Spain

Utilities and telecommunications

Setting up utilities is one of the more tedious tasks when buying a home in Spain. You may find that the previous owner already had policies in place that you can take over.

Waste disposal is managed at a municipal level, with annual fees for rubbish collection. With other utilities, such as gas, electricity, and water, you’ll be able to compare deals before settling on a provider.

Read more in our guide to setting up utilities in Spain

For some elements of the move, it might be worth hiring a contractor. You can usually find these online or via searches on platforms such as TaskRabbit. Make sure you check what qualifications your contractor needs, as some electrical, plumbing, or gas jobs need to be carried out by a professional.

Buying land to build a new property in Spain

For a long time, Spain has been popular with overseas buyers looking for holiday homes. On occasion, the large numbers of inexperienced foreign buyers have provided an opportunity for unscrupulous developers and estate agents to sell properties that are not legitimate.

In some cases, planning permission has not been acquired before building, and properties are eventually torn down by the local government. In others, the quality of the property has not been up to scratch or as indicated, resulting in costly repairs.

The British Foreign Office has issued notices warning expat buyers to be cautious and not take unnecessary risks. They recommend, at minimum, checking:

• The credentials of the lawyers or estate agents involved
• The land registry (Registro de la Propriedad)
• That there is appropriate planning permission
• That the property has no outstanding debts
• That the property is structurally sound (either a surveyor or an architect can do this).

Most of this information can be provided by the land registry and accessed by making a request by e-mail, phone, fax, or in person. You can find the appropriate land registry office by visiting the national website: www.registradores.org (Spanish only).

Buying a new-build home in Spain

The worst property scams in Spain, as elsewhere, involve unfinished or unbuilt properties. While malicious intent is rare, caution is advisable when buying a property that does not yet exist. At minimum, you should:

• Check the company exists and ensure the project is registered with the land registry.
• Check that planning permission has been granted by enquiring at the local city hall.
• Not sign a contract you don’t understand.
• Enlist an independent party for any translations.
• Demand proof that any sums paid (e.g., a deposit) are being held or spent appropriately.
• Get proof that you’ll get a refund of your money if the property is not built.

As a non-resident, you may also buy land and have a property built yourself. In this case, good legal advice is even more important as you will need to ensure that contracts with builders are appropriate and watertight.

Selling a property in Spain

Capital gains tax (CGT) can be a big barrier to selling a property in Spain. CGT is paid on the profit of selling your home, and the level varies between 19% and 23%, as follows:

• First €6,000: 19%
• €6,000–€50,000: 21%
• €50,000 or more: 23%

If you pay €200,000 for a property and sell it for €350,000, you pay CGT on €150,000. Due to the tiered system, this adds up to €33,260.

You may be able to claim a reduction on CGT to account for inflation, if you are purchasing another property in Spain, or if you are over 65 and have lived in the property as your main residence for more than three years.

Otherwise, unlike in other countries, CGT applies no matter how long you’ve lived in the property. Your residential status does not affect the application of tax, as CGT should be paid on property owned in Spain even if you are no longer a resident.

Useful resources

• English-speaking lawyers and translators in Spain
• Abogacia – national website for Spanish lawyers
• How to rent a house in Spain

Spain Buyers & Directory-Great Export Import

Portrait of a real estate buyer in Spain: who invests in square meters of the kingdom?

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In 2021, the Spanish property market felt confident. The number of transactions grew – both with local and foreign buyers. But the effects of the pandemic are still being felt. Let’s talk about the main trends.

Number of sales: Pandemic boosted demand, for how long?

Between 2007 and 2013, the Spanish property market experienced the effects of the global financial crisis. The number of deals fell rapidly and hit bottom in 2013 (less than 300,000 sales). Restoration began in 2014.

According to Spanish Property Insight ¹ , growth lasted five years, after which the market again faced a number of obstacles. Among the main ones: the increase in the cost of housing, the shortcomings of the legislative framework regarding property rights, political instability.

In 2019, a year before the start of the pandemic, the number of transactions with local housing decreased again. In 2021, taking into account the postponed coronavirus crisis and demand lockdowns, the number of sales began to grow.

According to the Spanish Notary Association, there were 676,000 real estate purchase transactions in 2021, up 38% from 2020 and 18% more than in 2019.

The largest increase was in the segment of private houses (+38% compared to the previous year). But the number of transactions with apartments increased by only 13%.

The pandemic seems to have helped revitalize the Spanish market and encouraged families to improve their living conditions and lifestyle. If the increase in sales is due to the effect of pent-up demand due to the pandemic, then this trend will not last long. Buyers are again facing rising prices, plus an unstable macro-political situation has been added. On the other hand, uncertainty can encourage people to make long-term, low-risk real estate investments.

Change in the number of sales from 2007 to 2021

Popular regions: demand for housing increased in all provinces

Last year, sales growth occurred in almost all regions of interest to foreigners. The only location where fewer deals were made in 2021 than in pre-crisis 2019 was the Canary Islands. And in Andalusia, the number of transactions increased by 23%.

Change in the number of real estate transactions by region, 2019-2021

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Overseas demand: the number of transactions almost reached sub-prime levels

According to a study by Spanish Property Insight ² , foreigners purchased 60.9 thousand residential properties last year, which is almost 30% more than in 2020, when the market dipped due to Covid-19 and numerous restrictive measures. And yet demand is 3% lower than in 2019. These figures indicate that the external market has not fully recovered from the impact of the pandemic.

Total number of transactions in the market, taking into account the demand of local and foreign buyers, 2006-2021

The share of foreigners in the Spanish real estate market fell to 10.8%, the lowest since 2012.

Read also: Foreign investors return to the Spanish real estate market

Buyer geography: Britons, Germans and French are in the lead

The British were the most active group of buyers of Spanish property in 2021, despite the effects of Brexit and the pandemic. At the end of the year, their demand grew by 8%, but still does not reach the level of 2019of the year. But the number of transactions with the Germans for the year increased by 58% and exceeded the pre-crisis figures.

The number of transactions in the Spanish market in 2021 with clients from different countries

The dynamics of foreign demand was extremely heterogeneous. For example, the number of transactions with buyers from Switzerland jumped by more than 100%. However, despite this impressive growth, Swiss market share has always been low and this is unlikely to change.

Distribution of the share of foreign buyers in 2021 by country

Demand from Russians peaked in 2014, when Russian buyers accounted for 8% of transactions with foreigners ³ . Russia was second only to Great Britain (17%) and France (10%).

Changes in the share of Russian real estate buyers in Spain, 2011-2021

In 2014, Russians made 3,121 real estate transactions in Spain. In 2015, the number of sales fell by 43%, and in 2016 by another 14%. Then the interest of Russians in Spanish real estate began to recover, in 2019th number of transactions again exceeded 2 thousand. However, the pandemic stopped this growth.

In 2022, due to the aggravated political situation and the depreciation of the ruble, the number of sales to Russians is at risk of falling again. Emigration from Russia may grow and stimulate demand for Spanish property. However, Western sanctions and capital controls will hinder transactions.

See also: Best cities to live in Spain – Prian.ru rating

com), 3) The rise and fall of Russian demand for property in Spain (spanishpropertyinsight.com)

Photo: Unsplash (Zhifei Zhou)

Citation conditions for materials Prian.ru

Real estate articles :: Spain :: Answers to buyers’ questions :: Buying in Spain

So, you have looked at several suitable properties (perhaps with the help of our specialists :), compared them, evaluated all the advantages and cons, and made their final choice. Now you can proceed directly to the process of buying real estate.

• Purchasing object cleanliness check
• Obtaining a NIE (Alien Identification Number)
• Opening an account in a Spanish bank

Before entering into a transaction, it is necessary to make sure that the purchased object is legally clean. This check is usually carried out by an employee of our Spanish realtors, or you can resort to the help of an independent lawyer. The required information is checked by the Property Rights Registry, the tax office, the homeowners’ association, and the local municipality to ensure that there are no urban planning plans to build, for example, motorways or an airport near the property you are purchasing.
Obtaining a NIE and opening an account with a Spanish banking institution is mandatory, because as the owner of Spanish real estate you have to pay certain taxes, bear the costs of maintaining your property, and you will have to do this through a Spanish bank. These procedures are simple, and with the help of our Spanish specialists, you will go through them without much hassle.

Entering into a deal. Preliminary contract

The signing of the preliminary contract in Spain is part of the transaction for the purchase and sale of real estate. As a preliminary, they can use a reservation agreement or an agreement of intent, but most often in transactions with foreign buyers they sign an agreement on a deposit CONTRATO DE ARRAS. The contract is mutually beneficial for both the seller and the buyer, since it is this type of contract that confirms the seriousness of the intentions of all participants in the transaction. If the buyer is responsible for non-fulfillment of the contract of sale, he loses the deposit. If the seller, then he is obliged to pay the other party double the amount of the deposit. To secure the execution of the main contract, the buyer pays an amount of 10-15% of the value of the property.

The Arras model contract clauses contain information regarding the subject of the sale, identification of the seller and the buyer, the cost and form of payment, the distribution of costs for the transaction and the terms for signing the main notarized contract of sale. By this time, it is necessary to prepare the agreed amount to pay for the purchase, transfer it to your account in a Spanish bank or, in the case of using borrowed funds, resolve the issue of bank financing, and do this before signing the deposit agreement. It usually takes from 1-2 months to 1-2 years from the moment of signing the preliminary contract to the signing of the notarial bill of sale (when buying real estate under construction).

Transfer of payment
The buyer can transfer the required amount from any bank account, including from Russia, the owner of which is himself. The payer must be an individual, transfer from the account of the organization is not possible. In any transactions over 3 thousand euros, cash settlements are prohibited in accordance with the Master Plan for Tax Control adopted in 2012.

Signing the bill of sale at the notary

On the appointed day, the parties (the seller and the buyer) sign the contract for the sale of real estate in the presence of a notary. It contains the following provisions:

It should be noted that if the buyer does not speak Spanish, a sworn translator must be present at the signing, whose personal data is entered into the contract. The duties of a notary include checking the seller’s rights to sell at the time of signing the bill of sale. To do this, an electronic request is made to the Property Register.
After receiving a confirming response from the Register, the seller, buyer, notary and translator put their signatures on the contract, the buyer gives the seller checks for payment of real estate. The seller, in turn, hands over to the buyer the keys, real estate plans, instructions for using the equipment, and, without fail, receipts of paid property taxes and a certificate of habitability – one of the most important documents of real estate.

Registration of bill of sale

After signing, the notarized contract must be registered in the Property Registry.