BUYING IN SPAIN
Spain has a surplus of residential properties in many areas in the aftermath of the 2007 property crash. Therefore, finding a place is not a challenging task. The general standard of apartments and houses in Spain is very good and it could be worth taking advantage of the post-crash low prices and grab a bargain. It is absolutely crucial that you use a reputable agent to guide you through the paperwork to avoid nightmare situations which so many others have fallen victim of.
WHERE TO BUY
Unlike in Britain, where house prices have been recovering strongly, Spanish prices have remained low. Of course, if you really want to splash out then Spain still has its luxurious hotspots like West Malaga, Palma, Ibiza; where average prices teeter between £750,000 and £1 million.
On the lower end of the price scale, you can spend between £100,000 and £120,000 in the amorous Alicante and the beautiful Buñol – 25 miles from the iconic Valencia. On the popular south coast, prices are generally high but that doesn’t mean you can’t snag a bargain.
For those looking outside the Spanish mainland, the Canary Islands also offer a number of property opportunities. Tenerife, the largest of the islands, has multiple options available with average asking prices of less than £200,000.
WHAT TO BUY
BUYING VS RENTING
It’s only natural to want your house to feel like a home and ownership brings that advantage. It also becomes an asset to pass on to your children – but do check the local and national inheritance laws before you buy, as you may find it better to buy in a certain way to lessen the inheritance tax burden on your beneficiaries.
With planning permission, you may be able to extend your property to your needs – and whilst property prices in Spain have fallen in recent years, they will eventually increase in value – this is the case certainly in Madrid and Barcelona.
In Spain, you will need at least a 20% deposit, mortgage rates are variable and tend to be low in the current climate. If you buy to let; it may be worth considering appealing to tourists who come in their droves in the popular summer months. However, be sure to have the correct paperwork in place to allow this and remember that you will need to pay income tax whether you are a UK or Spain resident.
Europeans are probably more keen on renting than British expats, but there are some clear advantages to it. Under new Spanish laws, long term leases are fixed at 3 years renewable; and there are rules in place obliging landlords to maintain and repair rental properties. Rental prices are more reasonable compared to the UK; and you can find a good 2/3 bedroom apartment for around 425 -500€ a month, with parking and in a block which may have a shared pool. Houses and villas will cost from 750€ upwards a month. You will be asked for a deposit of one or two months’ rent, which should be returned to you when you leave – providing the property is in the same condition as it was in when you took on the lease. Most rental properties are furnished, but there are some very attractive unfurnished ones to be found, mostly recently built.
SELLING IN SPAIN
The process for selling a home in Spain is similar to buying one. The key is to stick with an agent who you can trust and be clear with on the figures. Small print should always be examined closely. You should have your documentation prepared and at hand; this includes the title deeds, copies of the receipts for local taxes, copies of bills and lists of furniture among other items.
Before the property is registered in the name of the new owner both the seller and the purchaser need to meet with the notary, who will go through all the paperwork and have both parties confirm that all is correct before the paperwork is signed. The notification to the Land Registry is done the same day and a copy of the title deed is sent to them a few days later.
If you are selling a property but are not a resident of Spain, you will have concede 5% of the purchase price to the tax authorities. Plus Valia is another tax which is due to be paid by the seller but this usually amounts to just a few hundred Euros. This is a tax which is levied by the local authorities and will be based on increases in the estimated value of the property. This tax therefore depends upon the area and the state of the property market in that area at that time. It can be part of the sale agreement that the buyer pays this tax, usually if they have negotiated on the price.
It is common for properties in resort areas to stay on the market for several months, even if the property market is considered to be good. Both parties need to have legal representation and once the sale is agreed a lawyer should take over and deal with the rest of the sale. In recent years the property market in Spain has struggled a little and is expected to do so for a little while longer.
Property exchange is not an option and is only used in Spain for those who wish to exchange homes for a short period of time for a holiday.
LIVING IN SPAIN
The education system is simple to comprehend but it is better if there is no language barrier. You can choose from a range of Spanish and International schools; both of which can be of a reasonably high standard depending on where you are situated and how much you want to spend on education. Children begin in primary school and then there are two tiers of secondary school followed by higher education and university admission.
Put your mind at rest because the Spanish healthcare system is ranked among the best in the world. If you’re living and working in Spain you’ll likely have access to Spain’s free state healthcare, paid partly by social security payments, which will be deducted from your wage.
The Spanish healthcare service is regularly rated among the world’s best, guaranteeing universal coverage and no upfront expenditure from patients apart from paying a proportion of prescription charges. Spain spends about 10 percent of its GDP on healthcare, and is ranked 6th in the EU for the number of doctors with around four doctors per 1,000 people.
It is no myth that unemployment has been a thorn in the side of Spain’s appeal for a while. If you are an ex-pat looking for jobs in Spain, it may seem that there are only a handful of suitable jobs and an awful lot of job-seekers. But it is possible to find a job in Spain if you know where to look for work, particularly for those with specialist skills.
In Spain, lots of people find work through informal routes such as word-of-mouth, networking and speculative applications, especially in small to medium-sized companies. As such, you shouldn’t restrict your job search to agencies and adverts: be proactive, seek out opportunities and network. Be more creative and think outside-the-box, and you’ll find the work you are seeking.
When it comes to socialising and eating, you might need to set your body clock a little later. Lunch is the main meal of the day and is normally eaten between 2.00 and 4.00 pm, and supper is usually eaten between 9.30 and 11.00 pm, much later than in the UK. Of course, at home you can stick to the hours you are used to, but when venturing out for a meal you will need to adjust. Our advice is just embrace it and be excited by the differences!
One of the best ways to meet people and find out about your new area is to consider finding a local café or bar that you like. Once you are seen to be a regular customer, café owners will be willing to give advice, or offer a helping hand. These kind of places are also good for socialising, and gradually you will meet people and get to know other locals, all of which helps with settling in.
FINANCING YOUR PROPERTY
You could choose the equity release option. If you are already in possession of the property and have equity in it, it could be simple to raise money by mortgaging it. This is inexpensive and quick.
On the other hand, you may want to secure a mortgage for a property you are purchasing, from a local Spanish bank. Lots of banks have multi-lingual staff and are accustomed to dealing with non-residents.
Banking in Spain is very personal and you can directly email and phone the staff of the local offices. There are no automated voice recordings with the banks here. You deal with people and not machines!
Generally mortgages from Spanish banks for non-residents have terms of up to 30 years. However, the actual term depends on your age (or the average age of all of the people taking the mortgage) because most banks want the mortgage to be repaid before the borrower reaches 65. Exceptions can be made to this age limit, but it all depends on your personal situation.
OPENING A BANK ACCOUNT
- Applicants must be aged 18 or over
- Photographic proof of identity
- Proof of occupation or status
- Confirmation of address
In terms of fees and services, non-resident accounts are virtually the same as resident ones. The only differences being that the bank may not be willing to issue you a credit card or provide you overdraft protection. Should the bank charge significantly higher fees for being a non-resident, we would recommend taking your business elsewhere.
if you make the initial deposit in a foreign currency, be sure to specifically ask that the currency be converted into Euros immediately to avoid any potential problems later. The bank should charge you no more than their typical foreign exchange commissions for this operation.
The tax year runs from 1 January to 31 December.
You will be liable to pay taxes on your income and assets and will need to file a tax return if you are living and working in Spain. If you are resident in Spain you will be subject to Spanish taxation on your worldwide income. If you are a non-resident in Spain you will pay Spanish tax on Spanish income only, including potential income on Spanish property even if you don’t rent out your property. Other taxes include those on property, goods and services (VAT) and investment interest.
Spain is divided into 12 autonomous regions, and taxes are split between state and regional governments, with each autonomous region deciding on its own tax rates and liabilities.
COST OF LIVING
The average salary in Spain hasn’t improved over the years while the cost of living has shot up. This unhealthy combination means it can be challenging to find a way to live comfortably as a resident or an ex-pat. However, Spain’s largest urban centres are still far less expensive than popular European destinations such as Paris, Geneva and London.
Spain gives you a gorgeously calm quality of life with prioritisation on enjoyment rather than endurement. The country is relatively large and varies enormously (culturally, climatically and economically) from region to region. Common to most of Spain is, however, a benign overall climate, a welcoming society, decent infrastructure and political stability.
Get The Guide
What are you waiting for? A good idea is only a good idea unless you execute it. We have compiled a comprehensive yet concise guide to property and living in Spain. Packed with all of the information you need and produced by industry experts; consider this your official handbook and guide to your potential move to Spain.
In this guide you will understand how to:
- Save money on Spanish property
- Make money on Spanish property
- Find the perfect place to move and make your dream a realty
- Avoid mistakes (Do’s and Don’ts)
- Manage the legal side of things