Property in Spain Information Centre
BUYERS' GUIDE 2010
With 23,000 carefully researched words spread over 15 chapters, this is probably the most comprehensive online guide to buying a property in Spain...but the publishers advise all buyers to use the details as a checklist on the actions and safeguards to be taken and to use this knowledge in discussion with your own Spanish solicitor and financial advisor.
This guide is to assist you in realising your goals, budget and buying timetable and to secure a property bargain from Spanish banks offering repossessions and must sell homes from developers. Many buyers print out the Property in Spain Buyers' Guide to compile their own hard copy reference to help provide a hassle-free purchase and early enjoyment of property ownership in Sunny Spain...
01-INTRODUCTION: BACKGROUND BRIEFING
If you are thinking of buying in Spain, you will not be alone as successive surveys shows it remains the number property buying destination in the world and the most popular holiday destination.
Whilst in the early years most properties were bought as holiday homes, in recent years around two-thirds have been for retirement, but as younger people are becoming increasingly affluent, the demand for holiday homes is again becoming more important. In the Spanish property market, Russian, Eastern European and Briish people are the main buyers, attracted by the bargain prices caused by the world recession of 2008/09.
In some areas on the Costas, at the end of 2007, prices fell by as much as 3%, a further 7% in 2008 and 10% in 2009. Spanish banks offer repossessions at discounts of 20-50% depending on the amount of the outstanding mortgage. Prices are expected start to level out in 2010, creating an even bigger buyers' market as British and other northern Europeans realise Spain has become ultra competitive with some of the so-called emerging property markets in terms of price. There is better accessibility as Spain benefits from most flights per day from the UK, Eire and other cold zone countries.
Brits thinking about retirement soon are planning to quit the UK, due to the parlous state of the economy and rising cost of taxation and living. They think Spain's better climate, lower costs of living and lowest property prices for a decade offer the prospect of a happier and more sustainable retirement lifestyle.
It will be necessary for buyers to decide whether to obtain official residence (residencia) in Spain or not. Residence has important implications for tax and inheritance (although you are due to pay tax in Spain if you spend more than 183 days there in any calendar year, irrespective of whether you obtain official residence or not), as well as car ownership, driving licences etc. You must take tax and legal advice on this.
We would also recommend membership of FIPE (the Fundación Instituto de Proprietarios Extranjeros) which publishes a regular bulletin containing much interesting news and information, including residence and tax. Their address is given in the next section.
One general point is worth making here: many foreigners – including those who have not obtained residence – complain about the lack of telephone lines, postal services etc. But the subsidies from the state and regional governments to the local municipalities for these services is entirely dependent on the number of residents registering there - so by not registering these foreigners are contributing to the very problem of which they complain.
There are costs as well as benefits of obtaining residence, but if foreigners expect the benefits from their host country and the services from their local municipality, it is only fair that they should play their role in registering as a resident.
We have prepared this guide because the Spanish market is very different from that in the UK: two examples will help to illustrate this:
- (a) In Spain, contracts are validated by a Notary Public, when they become “public deeds” – this process only creates a valid act in law; contrary to what some people think, it does not substitute for carrying out the necessary pre-contract enquiries either yourself or via your solicitor and;
- (b) When you agree to buy a new property being built by a developer, the property will not become yours until it is completed and the necessary certificates issued. In the meantime, you will be expected to make advance payments, which should be protected by a bond or insurance guarantee.
In spite of these differences, it is quite unbelievable that during the 1980’s over half the foreigners buying property in Spain did not use a solicitor, and the figure is still around 20% - it is not surprising therefore that some people have problems, sometimes many years later!
You would not dream of buying a house in the UK without using a solicitor – and in Spain the differences make it even more necessary. This guide is intended to help you become familiar with the terminology and buying process requirements, but it cannot substitute for proper legal, taxation or inheritance advice.
We try to keep this guide up-to-date, but we cannot be held responsible for any errors or omissions, nor decisions based upon information supplied directly or indirectly.