To Consider on Buying Property in Spain
USEFUL POINTERS FOR THOSE THINKING OF PURCHASING SPANISH PROPERTY
property is a major 'investment', whether in your own country or
overseas. Noted below are some of the more common issues that are
encountered when purchasing property in Spain. These notes are only
for general guidance and, in particular, professional advice should
always be sought with regard to legal, financial and taxation matters.
Is a property in Spain always a good investment?
As is likely
to be the case in your own country, the simple answer is NO. However,
if you take the right advice and use your own common sense, many
of the key principals you would consider with local property purchase
will also apply to any property you look at in Spain, including:
- accessibility (airports, car, public transport, conditions of
- both at the property and within the immediate area (pool, beach,
golf, tennis etc)
- range of amenities which would appeal to cross section of users
and within easy travelling distance
developments - nature, style, quality of adjacent developments
restrictions - high rise, zoned land use, future developments
- immediate and potential outlook/inlook, surrounding garden/space,
You can judge
for yourself many of the above considerations and balance these
against the proposed cost of the site/property, resale track record/capital
growth, rental experience from discussing them with both your agent,
developer and potential neighbours.
What part of Spain would best suit my budget/requirements?
view is that the Costa del Sol tends to have the most expensive
properties (£150k upwards) and although cheaper properties can be
purchased, the points noted above should be fully considered. The
Costa Blanca is currently experiencing significant property development
and would have a broad range of prices with the more scenic Marina
Alta (Northern Costa Blanca) where there are strict planning controls/restrictions
in certain areas to prevent over development eg Moraira, Javea,
Denia, where properties can range from £80k to £500k+. In the Southern
Costa Blanca, properties can tend to be much cheaper as there appears
to be less restrictions on more intensive developments, or where
the area is still relatively underdeveloped with limited infrastructure
(eg Costa Calida).
much will depend on what you want from your property and set against
what you wish/can spend.
How do I decide what is best for me?
discussions with the various property agents should give you a `feel'
for what is available from their property portfolios/representations.
Once you have considered which property agent offers what you believe
you are seeking, an inspection visit to the various areas/developments
is the best way to ascertain if the initial discussions are accurate.
Whilst a number of agents/developers offer `free inspection trips',
take care, as these tours can limit what you might see.
the agents you use will also impact the degree of `hard sell' and
their `encouragement' for you to pay a deposit on your inspection
tour and thereby reserve a particular site/property. Again use your
own common sense in committing yourself to a purchase if you have
unanswered questions/doubts, then make your decision in the cold
light of day. However, if you are definite about what you have seen,
have had all the key issues clarified, then delay may result in
others purchasing your preferred property/site!
How does the weather vary between the seasons and regions?
does have seasonal variations, although not as pronounced as in
the UK/RoI. Summer months will be hot and dry, with perhaps the
Costa del Sol and the Northern Costa Blanca may be slightly more
humid than Southern Costa Blanca (but not uncomfortably humid).
During the late Autumn, Winter and early Spring, the evenings can
be cooler, although the days can still be in the low 20s (celsius)
and there is more rain in both the Costa del Sol and Northern Costa
Blanca, as a result of the more mountainous terrain and evidenced
by the greener, more cultivated landscape and thereby offering attractive
Is a deposit paid on a site/property in Spain refundable?
A deposit in
Spain should be part of a signed legal contract which should state
the price of the site/property at the time of signing and the finishing
date for the project. On signature, the purchaser is guaranteed
that no other buyer can take that site/property for the period specified
on the contract, and also that the site/property will remain at
the stated price. Consequently no `gazumping' can occur after the
contract has been signed, however, neither can the deposit be returned
(normally circa £2000). Where contracts are presented in Spanish,
you should seek a translated version to your own language.
At what stage do I appoint legal advisers?
yourself you should certainly make enquiries as to potential legal
advisers, your property agent should be able to offer advice or
your own local lawyer may have associations with appropriate Spanish
lawyers. At the initial meeting you should seek some idea of their
costs associated with your property and as may be the case back
home, costs will vary depending on the time and complexity associated
with the purchase. In addition, to your own lawyers costs, there
will also be Notary costs, which tend to be based on the value of
the transaction, not time!
Will exchange rates have any impact?
If you live
within the UK, you may be aware that as yet, the £sterling is not
part of the Euro and consequently your purchase costs will be affected
by exchange rate movements between the Euro and the £sterling. Currently,
and for over the past year the Euro (and hence the Spanish peseta
) has been `weak' against the £sterling, with the Spanish peseta
ranging from 245 to 290 pesetas/£, and resulting in many UK residents
purchasing property in Spain (and elsewhere within Euro-land). Your
exposure to future exchange rate movements can be minimised by taking
out forward contracts to cover the future payments for your Spanish
property and the foreign exchange office of your bank can advise
you on such transactions.
If you live
within the Republic of Ireland, as the punt is within the Euro,
the exchange rate between the punt and the peseta has been fixed
at 211.26 pesetas/I£1. Being part of the Euro should make
it easier and cheaper to transfer funds between RoI and Spain.
Can I obtain a mortgage on my Spanish property?
institutions may be reluctant to offer mortgages on overseas property
as there tend to be difficulties associated with repossession of
property across international borders. Depending on the availability
of other 'local` collateral and your own standing with these financial
institutions, loans may be available to finance the purchase.
readily available in Spain, although they may restrict the mortgage
to 60 -70% of the value for non residents. Mortgages are normally
straightforward, although as in the UK/RoI, you should deal with
reputable financial institutions. In the case of UK owners, you
should also be aware that the mortgage/repayments will be in pesetas/euros
and consequently exposed to exchange rate fluctuations with £sterling,
until such time as it is part of the Euro.
What level of rental income can I expect?
your location, there can be excellent scope to achieve rental income
throughout the year. For properties close to beaches, rentals can
be higher during the peak holiday season (July/August), although
perhaps of less interest in the off season, whereas properties adjacent
to golf clubs/tennis/horse riding complexes can achieve higher occupancy/rentals
over the year.
will also vary depending on the facilities and the overall location
and if you anticipate wishing to rent out the property, make sure
that you check the local rental market with rental agents (are they
seeking more properties for their books, what rates do they achieve,
occupancy levels etc) before committing yourself to a site/property.
The rental market can also be assessed by reviewing some of the
holiday villa magazines (Private Villas, Holiday Villas, web sites
on the internet) and which are published in the UK and available
at large newsagents.
What are the tax implications and whom do I pay taxes to?
That will depend
on you tax status ie whether UK or RoI resident or planning to reside
in Spain. Both the UK and RoI have double taxation agreements with
Spain. It is always advisable to check your specific tax planning
options with professional tax advisers before committing yourself
to a specific course of action eg changing your residency status,
generating rental income.
What is the position re health cover, is there a Spanish NHS?
Again this will
depend on whether you are just visiting Spain or intending to live
there permanently. If you are just visiting then you should complete
an E111 form (obtainable from the Post Office) and take this form
with you on your trips. The E111 form entitles you to similar healthcare
benefits to those currently available in the UK/RoI. In addition,
if you have private healthcare and/or holiday insurance, the benefits
available will be outlined in your policy documents.
If you intend
living in Spain, you should be aware that private health insurance
is more common and at lower cost than the UK/RoI, primarily due
to the healthier climate and diet. The Spanish health care system
enjoys an excellent reputation, although the is a greater tendency
to expect a relative to stay with the admitted patients and provide
basic assistance during the period of admission. If you are under
65 years of age, you will need to take out private health care insurance,
whilst those over 65 years are entitled to free heath care.
Should you be
interested in acquiring your 'heavenly home' please contact Anthea
Campbell at 028 9145 5178 for further information - other
than the cost of a phone call it costs nothing to enquire!
NB THE ABOVE INFORMATION IS GENERAL INFORMATION ONLY AND
YOUR OWN CIRCUMSTANCES WILL INFLUENCE SPECIFIC ADVICE
Cielo Villas - 12 Coniston Road
- Bangor - Northern Ireland - BT20 4QQ Tel: 028 91 455178 Fax: 028
91 455178 Mobile: 0802 928661