Buying a house in Spain

How to buy a property in Spain? A step-by-step home buyer's guide on everything you need to know.

If you want guaranteed sunshine, miles of glorious sandy beaches, excellent food, an abundant choice of entertainment, and a wide choice of homes at affordable prices, then you will find Spain hard to beat. Although the vast majority of holiday makers (and residents) come to Spain to recline on a beach, there's much more to the country than the costas and its islands.

Spain has Variety

Spain offers infinite variety with something for everyone, including magnificent beaches for sun worshippers and spectacular unspoiled countryside for magnificent vistas and peaceful strolling. There are also an abundance of mountains and seas for sports fans and a vibrant night-life for the jet set. For those who are comfortable living in cities, there are bustling sophisticated metropolises. For those with gourmet tastes, there are superb wines and fabulous cuisine. There is a wealth of art, culture and serious music for art lovers and numerous festivals and fiestas for inveterate party-goers. And, there is tranquillity for the stressed.

Not for nothing do the Spanish claim to have "Everything Under The Sun!" When buying a home in Spain you aren't simply buying a home but a lifestyle, and as a location for a holiday, retirement or permanent home, Spain has few equals, particularly if you're seeking year-round sunshine.

Why Buy in Spain

There are many excellent reasons for buying a home in Spain, although it's important not to be under any illusions about what you can expect from a home there. To get a firm handle on what you expect, ask yourself exactly why you want to buy a home in Spain. For example, are you seeking a holiday or a retirement home.

The Costa Blanca and Costa del Sol have the highest percentage of retired persons in the world, when both Spaniards and foreigners are included. If you're seeking a second home, will it be mainly used for long weekends or for lengthier stays? Do you plan to rent all or a portion of it to offset mortgage and operations costs? If so, how important is the property income? Are you primarily looking for a sound investment? Do you plan to work or start a business in Spain? These are questions that need answers no matter where you purchase, but especially in Spain because of the variety of choices Spain has to offer.

Often buyers have a variety of reasons for buying a home in Spain. For example, many people buy a holiday home with an idea of living there permanently or semi-permanently after they retire. If this is the case, there are many more factors to take into account than if you were simply buying a holiday home that you will occupy for just a few weeks a year. If, on the other hand, you plan to work or start a business in Spain, you will be faced with a whole different set of criteria. You may be thinking of buying a home in Spain and commuting to another European country to work. Many people are doing just that because Spain has a lot to offer.

Don't Stretch Your Financial Resources

Can you really afford to buy a home in Spain? What of the future? Is your income secure and protected against inflation and currency fluctuations? In the '80s, many foreigners purchased holiday homes in Spain by taking out second mortgages on their family homes abroad and stretching their financial resources to the limits.

Not surprisingly, when the recession struck in the early '90s many people had their homes repossessed or were forced to sell at a huge loss when they were unable to maintain the mortgage payments. Buying a home abroad can be a good, long-term investment, although it's possible to get your fingers burnt in the occasional volatile property market in many countries, including Spain.

The Benefits Outweigh Drawbacks

There are both advantages and disadvantages to buying a home in Spain, although for most people the benefits far outweigh any drawbacks. Among the many advantages are guaranteed sunshine and comfortable Mediterranean temperatures. Some areas of Spain, especially the resort areas, are some of the least polluted areas of the world.

There's good value for your money, and Spain is easy and inexpensive to get to, at least for most western Europeans. There are great rental possibilities and good local tradesmen and services. There are fine foods and wines at reasonable prices and a relatively low cost of living. There's the slow, relaxed pace of life; the friendliness and warmth of the Spanish people; the dramatic, rugged beauty of Spain on your doorstep; and, last but not least, a superb quality of life.

A Few Disadvantages

Naturally, there are also a few disadvantages, not the least of which are the relatively high purchase costs associated with buying property. There could also be unexpected renovation and restoration costs if you don't do your homework. Check with local officials to see if there's a high rate of burglary and housebreaking that are present in some areas. Be prepared for overcrowding in popular tourist areas during the peak summer season and traffic congestion and pollution in many towns and cities. Beware also of a number of admittedly small taxes for non-resident homeowners. The phrase, "In Spain, the rain falls mainly on the plane," can be all too true when occasional draughts cause severe water shortages in some regions, particularly during the summer. Finally, don't overlook the expense of getting to and from Spain if you own a holiday home, and you don't live in a nearby country or a country with good air connections.

Get Familiar with the Area

Unless you know exactly what you're looking for and where, it's advisable to rent a property for a period until you're more familiar with an area. As when making all major financial decisions, it's never advisable to be too hasty. Many people make expensive (even catastrophic) errors when buying homes in Spain, usually because they do insufficient research and are in too much of a hurry, often setting themselves ridiculous deadlines such as buying a home during a long weekend break or a week's holiday. Not surprisingly, most people wouldn't dream of acting so rashly when buying a property in their home country! It isn't uncommon for buyers to regret their decision after some time and wish they had purchased a different property in a different region.

Do your Research

Before deciding to buy a home in Spain, it's advisable to do extensive research on buying. Two good resources are, Buying a Home in Spain and Living and Working in Spain, both written by the author of this article and published by Survival Books. It also helps to study specialist property magazines and to visit overseas property exhibitions. Bear in mind that the cost of investing in a few books or magazines is tiny compared to the expense of making a big mistake.
                                                                                                The article above was written by David Hampshire

Property and homes in spain

Purchase

Buying property in Spain has many potential pitfalls and is subject to different legal procedures than in UK. Below is a list of do's and don'ts to assist buying a house or flat in Spain.

DO

• Use the services of a reputable local lawyer. Only a lawyer will know all the checks that should be made before parting with money.
• Remember that you will have to use the services of a Public Notary. The Notary is not acting for you, and will not give advice. He/she is an official of the state whose job is to ensure that all transactions are in the proper form.
• Remember that the parties to a sale and purchase have to appear in person before the Notary at the same time. If they do not want to appear in person, they can give power of attorney (in the Spanish form) to their lawyer (or anyone else) to represent them.
• Obtain an estimate of legal fees and disbursements including the fees of the Notary and the Property Registry and for the power of attorney, and confirm who is responsible for payment of the Notary's fees and any capital gains tax which may arise from the sale.
• Use an estate agent. They will be able to show you a selection of properties in the area of your choice, and have an idea of the value of the property of your choice.
• Unless you speak fluent Spanish, always have documents translated for you into English by someone you can trust. It is worth the expense of having lengthy documents translated, e.g. title deeds, so that you understand fully what the original documents say and mean.
• Ask your lawyer to confirm to you into writing that there is no mortgage or other charge or encumbrance registered on the property you are intending to buy, that it is registered in the name of the seller, and that there are no outstanding local taxes or capital gains tax ('plusvalía'). Make sure that all the community payments are up to date. In Spain, blocks of flats and houses form communities and pay a monthly amount which covers communal expenses, e.g. water bills, electricity in communal areas and sometimes central heating. If you buy a property which has these payments outstanding, you will be liable for them as the new owner.

DON'T

• Think you can buy a property without taking professional advice. If you do you could end up with neither property nor money.
• Part with any money unless you are absolutely sure what you are getting for it and have received professional confirmation that everything is in order.
• Rush into what appears to be a bargain where you are offered considerable savings if you act quickly.

The Foreign and Commonwealth Office cannot give legal advice on buying a property in Spain but each consular post can supply a list of local English-speaking lawyers. Further information is available from:

Institute of Foreign Property Owners (Instituto de Propietarios Extranjeros) Conde de Altea 33, 03590 Altea (Calpe) Tel: 95 584 32 12

Association of Spanish Property Owners West Heath House 32 North End Road London NW11 7PT

Rentals

Rented accommodation is regulated under the 1.1.95 Rent Law, In general terms the law prescribes that rents, contract duration and renewal periods can be agrees between the landlord and tenant. The latter has a guarantee of renewal, if sought, for an initial period of five years. Rents are usually updated on a yearly basis during the initial five years on the basis of the Consumer Price Index. If the tenant wishes to terminate the contract at the end of the initial period or at one of its yearly renewals they must give one month's clear notice. Failure to give proper notice may mean the tenant will be liable to pay compensation to the landlord.

There is provision for the tenant to pay a deposit of one month's rent for unfurnished accommodation or two for furnished accommodation. This is lodged with the local autonomous community as a guarantee to both tenant and landlord. Additional guarantees may also be negotiated.

Timeshare

Timeshare ownership carries many risks and dangers. Prospective purchasers are advised to study any offer carefully. They should never sign anything unless there is written provision for a 'cooling-off' period (during which time they can change their mind without incurring a penalty).

Buying property in the Valencian autonomous community

Buyers of property in the Valencian Autonomous Community should be aware that under the Valencian Government’s Ley Reguladora de la Actividad Urbanística of 1994, all land may be converted for property development, unless it has been deemed no urbanizable on historical, cultural or ecological grounds.

This means that even suelo rústico (rural land) may be re-designated as fit for property development if the town hall approves a developer’s plan for such change of use. Land classed as urbanizable is also, by definition, appropriate for development. It is therefore important, when buying property, to check future development plans at the town hall. This is also advisable even where land is already deemed to be urbano, since only by checking the status of the property can one become aware of the implications of likely future developments.

Prospective purchasers should take professional advice from a lawyer who can help with the necessary investigation.

Owners of property where a change of classification is approved should receive a notice from the town hall that they have 15 days in which to comment on the proposed new use. They may argue to preserve the status quo or in some way to protect their existing rights, but as matters now stand the probability is that the change of use will be permitted, perhaps with some modification. The town hall’s decision will be subject to approval by the Valencian Government.

If planning is approved, current owners will be obliged to contribute to the new development. This may involve having some of their land expropriated (against exchange or compensation which will depend on the existing classification of the land). Owners will also have to make a financial contribution for the construction of roads, drains, lighting and other urban development costs.

It is important that British citizens who become involved in such cases should observe the 15-day limit for appeal (alegaciones) and seek professional legal advice in negotiation with the developer (urbanizador).

Although the law has been referred to the Constitutional Court by the High Court in Valencia, it remains in force until any contrary or modifying judgement may be made by the Constitutional Court. The Court is not expected to make a decision until 2004.