For investors, the Spanish real estate market represents a real opportunity. Are you convinced? You should still take note of the particularities before investing in real estate in Spain.
Indeed, they are not the same as in the UK, not only with respect to market price but also taxation. Let’s take stock of this topic.
Real estate market in Spain: falling prices
The 2008 economic crisis severely affected the Spanish real estate market, and it has not recovered since. Consequently, today, prices remain very accessible to expats.
They are between 2,600 and 3,000 €/m2. There is a price disparity depending on the regions and cities, but in any case, you can easily treat yourself to a large house for 3,000 €/m2. You will even be able to afford to purchase real estate in a fairly popular area.
What about fees, taxes and expenses?
You may have the budget to purchase a house or apartment in Spain, but there are other considerations.
In fact, you need to take into account the expenses that accompany this purchase. They can vary from 8% to 13% of the cost depending on the property type and location.
In Madrid, transferring ownership, which is done at the buyer’s expense, amounts to 6% of the property price. This increases to 11% for the Balearic Islands.
With regards to the tax on legal documentation, you must also pay between 0.5% and 1.5% of the property price. Notarial fees, meanwhile, can range from €300 to €2,000 for a typical property.
You will need to hire a lawyer or specialised advisor.
Did you know? English notaries and Spanish notaries do not have the same role in the context of a real estate transaction, especially for the sale of real estate.
In Spain, the administrative and legal verifications are the responsibility of the buyer and as you do not have in-depth knowledge of the subject, you will have to retain the services of a lawyer or specialised advisor.
For real estate financing
To invest in real estate in Spain, you can obtain a fairly low mortgage rate with a UK bank or financial institution.
However, if you inform your banker that you are planning to make a purchase in Spain, you are going to run into some issues. They may even refuse your loan application.
To avoid this, select a bank domiciled in England that has a Spanish subsidiary. This solution will greatly simplify the transaction. Applying for a loan from a bank in Spain is also a possible consideration.
Selecting the investment location and property type
You can invest in one of the two largest Spanish cities, the capital, Madrid or Barcelona. As they receive many tourists every year, they are very modern and cosmopolitan.
If you have a rental investment project, these are the two primary cities to consider. You can also turn to the areas of the Costa del Sol, Malaga and Marbella.
Seasonal rental properties in the Valencia region as well as in the border area near San Sebastian are also very popular with holidaymakers.
For a classic rental, it would be better to focus on cities like Cadiz, Cordoba or even Seville.
If purchasing this property is going to be followed by a move to Spain, it is preferable to opt for a house rather than an apartment.
A house will gain a little more value over time, and you will be able to generate a greater surplus in the event of resale.
If you have not found a house that suits your needs, you can still turn to an apartment. Prices for this type of property are quite stable, and you can rent it out afterwards if you are no longer occupying it.
For a profitable real estate investment, do not hesitate to contact us today to discuss your project. Our team of tax and legal affairs professionals will assist you throughout the process. We offer services in French, English and Spanish.