Buying a property in Spain can be the ultimate fun-in-the-sun dream come true. Tens of thousands of foreigners buy holiday homes, second properties, and retirement homes in Spain every year. It’s one of Europe’s hottest property markets for sun-loving expats seeking the good life. But before you consider buying a property in Spain, we’ve prepared a first-time buyer’s guide to help you avoid the pitfalls.
How Easy Is It To Buy a Property in Spain?
Buying a house in Spain is a popular choice given Spain is one of Europe’s most favored holiday and retirement destinations. The great news is that property ownership is unrestricted to foreigners, so you can buy anywhere in mainland Spain.
Whether you’re buying residential or commercial properties, investment by foreigners is encouraged by the government, which beckons the question:
Is Buying a Property in Spain a Good Idea?
If a new life under the sun and spoilt for choice from over 600 blue flag beaches enjoying one of Europe’s lowest costs of living sounds like your idea of fun, then the short answer is: yes. However, with all good things in life, there are some requirements you need to be aware of and ensure you’ve done your research.
The process of buying a property in Spain requires due diligence. First-time buyers often make the mistake of thinking buying a home in Spain is the same as any other EU country or similar to their home country. While Spain is an EU member state, it has its own process - that when followed - can make your buying experience hassle-free.
To help you navigate the buying process, we’ve put together the 5 most common pitfalls of buying a property in Spain.
5 Common Pitfalls of Buying a Property in Spain
1. Having an NIE/TIE Number and Spanish Bank Account
Buying a house in Spain requires certain formal documents and registrations - because without them - the buying process can’t proceed to the next stage. To ensure a smooth buying experience, ensure you have your:
• NIE number (Número de Identificación del extranjero) which translates as an identification number for foreigners. Your NIE is your all-purpose identification and tax number in Spain, unique and exclusive to you.
In Spain, it’s essential to have an NIE number to perform any transaction: buying a property, car, connecting utilities, and paying your (property) taxes. Your NIE is essential before signing the title deed and your legal conveyancing. If you don’t have an NIE, here’s how to apply for an NIE.
Note: British citizens after Brexit will need to apply for a TIE (Tarjeta de Identidad de Extranjero) - introduced in July 2020. The TIE is a photo card that explicitly mentions your rights under the Brexit withdrawal agreement and the application for a TIE is similar to the NIE.
• You’ll need a Spanish bank account for your mortgage and to cover the necessary fees.
Pro Tip: Your NIE registration should be done as early as possible. Without it, you won’t be able to open to bank account and finalize your property purchase in Spain.
2. Cost Transparency: Consider Hidden Costs
Buying a property in Spain doesn’t just mean you’ll pay the advertised (or asking) price of the property as listed. The costs inherent in the purchase of the property (such as ITP or VAT, notarial expenses, registry expenses) are not included.
Be sure to research taxes and fees that need to be included in your budget. It’s important to note that taxes and fees vary from region to region. Additionally, you should have a clear idea of your mortgage fees and the varying interest rates between lenders, as well as any additional fees that may apply.
It’s important to consider that most banks in Spain will require you to purchase insurance with your mortgage- a cost you’ll need to factor into your budget. Shopping around for insurance will help you get the best deal. Alternatively, there are insurance brokers who can do this for you.
3. Understanding Your Contractual Obligations
You’re not alone if you’ve ever thought: “is it risky to buy property in Spain?” While the short answer is no - as with any purchase - it can be if you are not familiar with all your contractual obligations.
Fortunately, property lawyers do all the work for you and are highly recommended to use to ensure all land titles are accurate with no outstanding debts owed on the property. Never skip this step or underestimate what you’ve been told. Ensure a lawyer performs this essential requirement and provides it to you in writing. This segues to the next essential requirement:
4. Conducting Thorough Research (Due Diligence)
Buying a property in Spain requires detailed research to ensure there are no unexpected costs or additional steps that may lengthen your buying process. Here are a few important questions you need to ask:
• Was the property legally built and is it registered?
• Is the seller the actual owner (on the title deed)?
• Is the property subject to any pending inheritance issues?
• Is the title transfer subject to any restrictions due to the property being an officially protected property?
• Does it require renovation?
• Are there any restrictions on modifications?
• Must you present a SWOT analysis if you wish to apply for additional planning permissions?
• Does the property come with building licenses for modifications?
• Have any previous modifications been legally built and permits to prove they are approved?
• Is the property debt-free?
• If the property is in urbanization, is the current owner up to date with all the community fees?
• Is there a difference in the market price (what you paid) and the assessed tax value (the value the Spanish tax authorities think your property is worth) for the property tax you’ll need to pay?
• Are the land borders and measurements accurate?
• If the property is sold with furniture, has an inventory been recorded and added to the contract?
A good property lawyer can perform these searches for you and obtain the answers to these essential questions. Many property lawyers are well-rehearsed in dealing with foreign ownership applications and speak English.
5. Seeking Professional Help
Buying a property in Spain without professional guidance is certainly possible, but like anything in life, not using experienced professionals increases your vulnerability to risks and mistakes.
At Spain Homes, we’ve been helping expats find their dream homes for years; simplifying the process and making their buying experience risk-free.
Our VIP white-glove service standards ensure you only view houses that match your lifestyle needs. This saves you valuable time ensuring you’re only looking at properties that include your must-have features. “Happy customers” start by first asking what you’re looking for and the areas you like, then we present to you a shortlist of properties that match your bespoke needs.
We’re also local experts of the area, this means we know the communities and their histories and can recommend the places you should consider, and the places you should avoid.
Our experience selling to many happy expat families means we enjoy great relationships with trustworthy property lawyers who make the buying process friction-free. We work closely with them to ensure all properties are ready for sale with no hidden surprises.
Also, you do not need to feel an obligation to visit properties physically. Technology has affected all areas of life including the real estate business and property purchasing customs. Spain Homes ® has launched a secure and swift way of buying a property over the phone;TeleProperty ®. Thanks to this service, property buyers from all over the world can buy properties by using their phones and computers, without leaving their countries and even their homes. If you cannot travel but want to buy your dream home in Spain today, you can visit our TeleProperty page for more information.
If you’d like to start an initial obligation-free conversation about buying a property in Spain, our friendly team of professionals is more than happy to help. We speak more than 20 languages and are available on WhatsApp or you can make an appointment here.