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Buying property in Spain
Buying a property
in Spain is the dream of many people who are looking for a good
place to live in a sunny location. In order to make a dream like
this come true, however, it is necessary to do some research so
that you can find the best property at the best price. If you
want to purchase property in Spain in an easy and hassle free
way, then take a look at the 10 points below and apply them when
you begin your search for Spanish property.
1. How much money do you wish to spend?
The first question is where is your money coming from? Is it
tucked away in the bank or the building society, a second
mortgage on your home in the UK or will you get it from the sale
of your present home? You need to know that it is in place and
ready to use before you make any decisions. If you are
considering a mortgage in Spain then you need to have all the
evidence necessary to show the bank how you will service the
mortgage as well as telling your real estate agency so that they
can direct you to properties that are mortgage-able. Your budget
depends on what you have raised in your own country or the
amount that you currently have available to put down as a
deposit for the mortgage.
2. Mortgages in Spain
They are much more expensive to set up but the interest rate is
much lower than other European countries so you win in the
long-term. "Foreigners" usually receive 70% of the bank
valuation of the property, which is not necessarily the selling
price. This means that you have to find at least 30% of the
price of the property plus the costs of the mortgage:
approximately 350 euros for the bank valuation, 1% of the
mortgage value for the arrangement fee, 0.3% notary fees for the
mortgage and 0.3% land registry for the mortgage.
3. Costs for Property Purchase
Generally you should allow between 10 and 12% of the purchase
price to cover the costs of the actual purchase. Here is how
this amount breaks down:
Lawyer – the usual charge is 1% of the purchase price of the
property to cover conveyancing, searches and the visit to the
notary to complete the purchase. Lawyers will often offer other
services such as obtaining NIE numbers, changing utility
services to your name, opening bank accounts etc. Take care
though, you do not have to use a lawyer for the extra services
and can often find these at less cost elsewhere. Always ask for
an itemised quote before you agree to them doing this extra work
and check with your estate agent for prices from other
suppliers.
Taxes – Transfer taxes for a resale or a newly built property
are 7%. These are set by the government and non-negotiable. Land
Registry – All property transfers have to be registered and this
will cost about 0.3% of the purchase price. Notary – In order to
be fully legal all contracts for completion of a sale have to be
signed in the presence of a Notary. Costs to the Notary will be
about 0.3% of the purchase price. All these cost are in addition
to the costs of the mortgage stated above.
4. What kind of a property do you want?
Start with two columns, “must have” and “would be nice”. The
“must have” list will include the number of bedrooms, outside
space and other things you need for your family including
proximity to schools, shops or public transport. The “would be
nice” list may include things like en-suite bathroom or extra
bathroom, more terraces, garage. Jacuzzi, swimming pool, tennis
courts etc. Are you prepared to renovate? If so, you would need
to have two separate budgets – one to buy the house and one for
the work. Alternatively, put your renovation and purchase budget
together and buy something that needs little or no work. Make
this a family discussion so that everyone has the opportunity to
put something on the list and nothing is forgotten.
5. What do you want the property for?
If it is a holiday home you will probably want easy access and
so will want the property within a reasonable distance of an
international airport. If it is a permanent home then other
considerations might be more important. If you are buying as an
investment to let, you need to think about the kind of rental,
i.e. Long term or holiday as again the area is important for
your potential guests. You should also keep in mind that if you
are buying a property that needs renovation you should factor in
the costs for a surveyor, architect and builders etc. think
about the period of renovation when there will be no income from
the property.
6. Where do you want the property to be?
Now that you have your budget and your list of essential
requirements, this is the time to start your research. Your
first step is to go on to online and begin searching. Although
you can search by town it is much easier at this stage just to
search by area and budget as this will give you an idea of what
you will get for your money. You will see that the closer to the
coast of the Costa del Sol, the more expensive the property
whether it is a town or country house.
7. What legal requirements are necessary for foreigners?
The most important is an NIE number, this is a national
identification number and is necessary for most things you will
want to do in Spain but essential for buying a house.
If you are coming to live permanently in Spain you need to think
about transport. Residents of Spain are legally obliged to drive
a Spanish registered car with a Spanish driving licence.
Although you can import your car from the UK this can be
expensive and a RHD car is not the best thing to have on Spanish
roads, far better to sell your car in the UK and buy one in
Spain. The Spanish licence is exchanged for your~UK licence,
there are no test's to take. If you are in receipt of a UK state
pension you will be eligible for free health care in Spain if
not you will need to have private health insurance if you are
not paying into the system by working in Spain.~Once you have
purchased your property you really should make a Spanish Will,
whilst you are not governed by the Spanish Laws for disposal of
your assets there will be untold problems for your descendants
if a Spanish Will is not in place. If you still have
interests in the UK you will need an English Will too, with the
Wills in each country referring to the other. There are many
companies in Spain that will prepare both English and Spanish
Wills together and give you them in both languages.
8. Taxes and Insurance?
There will be annual tax to pay on your property in Spain
whether you live here permanently or have a holiday home. These
charges are MUCH less than in the UK, as an example 50 to 250
euros PA is normal to cover refuse collection and other council
provided services. If you live here permanently you are
responsible for paying taxes on your world wide assets so you
need to ensure that you are not paying in the UK as well. If you
own property in Spain it is necessary to have a Spanish will.
Although you are not subject to Spanish Inheritance law on who
the inheritors are, it makes life easier for your descendants if
you have a Spanish will.
9. What else is important?
Find an estate agent you can trust, that will offer more
services than just selling you a house. Beware of advertisements
offering you free or low-cost inspection trips, you could pay
dearly for them in the end. The Guardia Civil are currently
investigating several estate agencies who have been selling
illegal properties. They estimate that more than 2000 illegal
houses have been built in the last three years. The title deeds
show the plot only and the agencies are not informing clients so
they may not find out for some time that they are living in an
illegal house. Reputable agents provide checklists for their
clients of questions to ask so that they can double check
everything when viewing properties and when talking to lawyers.
Always use an English and Spanish speaking lawyer to handle your
sale, there are many in Spain and although it may cost money, it
is well worth it if only to make all the necessary checks prior
to signing a contract at the notary. Please be aware, there is
no such thing as a private contract in Spain, this is distinct
from the one you use at the start of your official purchase. In
order to correctly and legally purchase a property contracts are
signed in front of a public notary. Never accept contracts given
to you that have not been checked by a lawyer, many illegal
houses are sold that way. What some people receive is a piece of
land without the building being registered on the deed. Don't
forget that owning a property in Spain will still entail
outgoings even if you don't live there. Apart from local council
charges for rates and rubbish there are also standing charges
for utilities and the Spanish Inland Revenue can tax you on the
rent they believe you would receive if you let the property, add
to that your property maintenance and you have to budget for all
of these along with your other other outgoings.
10. Get Title Insurance
In order to have complete security when buying a property in
Spain it is important to get Title Insurance. This type of
insurance protects the buyer against any losses arising out of
title related defects, it is valid for the total time that they
own the property. Some examples of covered risks include: claims
by third parties such as undisclosed heirs, unrecorded tax
liens, errors and omissions in the public registry, alteration
or loss of title documentation, fraud, forgery, and clerical or
typographical errors affecting ones title, thus affecting their
investment or holiday home.
Title Insurance can enable you to purchase a property for a
permanent home, holiday home or investment with absolute peace
of mind.
If you use the above 10 points when buying property in Spain,
you will be well on your way to realizing your dream of owning a
home in Europe’s sunniest location.
Cristina Sanchez
is a specialist in Spanish real estate. She is the Customer
Relations Manager of 1Casa, REALLY Affordable Homes in Alora,
Malaga, Spain
http://www.1casa.com/1, A HIGHLY rated Real estate agency
that helps people buy property in Spain. Telephone 902 021 888,
round the clock, 24/7.
WILL SPAIN BANK ON BRITAIN’S WOES?
Michael Walsh
A ripple of anticipation is spreading among overseas property
aficionados. Whilst the UK housing market goes into meltdown the
advantages of buying in Spain are becoming more apparent by the
day.
UK based Southern Comfit International was surprised to see an
unexpected 20% spike in website traffic. “Marketing had stayed
static so it couldn’t take the credit,“ says Mike McLaughlin MD.
He says April’s figures are on course to show a 40 per cent
increase on February’s traffic.
96% INCREASE IN INTEREST
Is this a blip? Apparently not. Statistical reports from
Obelisk, drawing on Google Adwords, show a massive 96% traffic
increase of homes overseas enquiries since September 2007.
Overall 70% of those questioned expect to purchase during 2008.
Key factors underscore the UK mortgage famine: The reduction of
Capital Gains Tax (CGT) in Spain has reduced the high 40% to a
flat rate of 18%. The introduction of Home Ownership Information
Packs (HIP) in the UK has morphed into a costly bureaucratic
nightmare. Another temptation for home buyers, especially the
retired, is the lower cost of living in Mediterranean Europe.
SECOND HOMES A NO-NO IN THE UK
Adding to UK home buyers woes is the breaking news that the
Labour Government ‘is reportedly examining new laws which could
impose a series of restrictions on second-home ownership. In
effect this means that second-home buyers would need to have
their purchase registered as a ’holiday home’, which many local
authorities may decline.
The effect of such a proposal would torpedo the plans of the
UK’s buy-to-let investors. In a single stroke the properties
market in Mediterranean Europe, especially Spain would appear
more appealing to these big-spending entrepreneurs.
Daring to engage readers in the challenging periodicals of
Mediterranean Spain and the UK
Thought provoking media writer and columnist
Michael Walsh McLaughlin. The editors' choice, the writer who
writers respect
quite_write@yahoo.co.uk
ENGLAND 1 SPAIN 0
SPAIN’S OWN GOAL IN REAL ESTATE CONTEST
Michael Walsh
Allegations that Spain
shows inertia in the face of hostile and often inaccurate UK
media reports on ‘Land Grab’ issues seem to be justified.
British newspapers and television media have hotly debated the
issue, but it is invariably misinformed and one-sided.
Chris Clover, CEO of Marbella-based agency Panorama places much
of the blame on the UK media. ‘The British press have a
responsibility to investigate their sources . . . To provide a
balanced perspective; not to let everyone think that every house
will be pushed over by the next bulldozer that comes along.’
An understandable reaction but some say the media is not there
to act as a PR agency for the real estate industry. Others point
out that there is no single information resource that can be
accessed by journalists searching for factual information. Nor
is there any informed response by market leaders; developers, or
properties abroad media to counter headline grabbing distortions.
A WAKE UP CALL
In the UK, whenever the subject of Spanish home ownership comes
into the conversation, everyone is an expert on the ‘Land Grab‘.
They read it in a red-top tabloid or ‘saw it on telly’. It is as
if the cities were being bombed nightly but air defence was
unaware of the problem.
The marketing strategy of Spanish developers is surprisingly
unresponsive to media misinformation, or even aware that the
LRAU issue is dampening the market. Mike McLaughlin of Southern
Comfit International says, ‘Recovery won’t accelerate sharply
until this issue is raised and objectively dealt with in an
informed and measured way by those who have an interest in
recovery. As things stand the remedying of the problem is left
to under resourced agents in the UK and Eire‘.
THE ‘NORTHERN CYPRUS EFFECT’
Others agree that it is an uneven contest and the consequences
are seen across Mediterranean Spain’s incomplete developments
and unsold re-sales.
Eugenio Sanchez-Ramada Garcia-Conde, Noriega Development’s UK-MD
says ‘The G14 is trying to address the issue.” He adds; “They
aren’t too good at reaching the British media.’
G14 is a Spanish private sector lobby group, a coalition of
fourteen of Spain’s biggest property developers. The Noriega MD
says: ‘They are not awake and I see no evidence of other
developers addressing the problems in the market.“
Such inertia may fatally damage Spanish recovery as overseas
buyers flock to other Mediterranean countries where purchasing
and property entitlement are seen to be less problematic.
Spain seems oblivious to the ‘Northern Cyprus Effect’. There,
ownership disputes due to the Turkish occupation kept the house
buying market subdued; a problem now resolved and already
fuelling sales.
Daring to engage readers in the challenging periodicals of
Mediterranean Spain and the UK
Thought provoking media writer and columnist
Michael Walsh McLaughlin. The editors' choice, the writer who
writers respect
quite_write@yahoo.co.uk
The Great British Land Grab
Reversed
OH, SPANISH GUISE
Mike Walsh
With ill-disguised smugness the British media constantly remind
us it has all gone sour for ex-pats and holiday home owners in
Spain; land grab, can’t sell, plummeting prices. As with all
good lies there is some truth in the stories and so British
buyers evaporate. Seemingly a double whammy for a market already
being credit crunch scrunched.
The highly competitive national media, which tends to be less
responsible than local newspapers, know that bad news sells
better than balanced or good news. It is not obliged to put its
rose tinted spectacles on when covering this or any other
subject.
WHY THE SPANISH SILENCE?
The million euro question being asked is, why are the Spaniards
so unresponsive to this threat? When questioned Eugenio Sanchez-Ramada
Garcia-Conde, Noriega Development’s UK-MD says ‘The G14 is
trying to address the issue.” He then states the glaringly
obvious by adding; “They are not too good at reaching the
British media..”
G14 is a Spanish private sector lobby group, a coalition of
fourteen of Spain’s biggest property developers. Noriega’s MD
says: ‘They are not awake and I see no evidence of other
developers addressing the problems in the market.“
HAS THE CAT GOT THEIR TONGUES THEN?
Not so long ago Spain was regarded as a backward country; a
cheap holiday and retirement idyll for prosperous Brits who, by
weight of numbers, colonised the Costa coastlines; extending
Gibraltar to Valencia.. But over the past two decades there has
been a remarkable reversal of national fortunes which is
accelerating.
Today, thanks to emergent democracy, national pride and industry,
and of course recipients of EEC largesse, Spain has turned the
tables on the less vibrant UK. There, economic growth is likely
to slump towards 1 per cent and probable recession
Officially inflation is predicted to reach 3.7%. Most regard
this as pie in the sky, with the true rate being nearer to 15%.
Bank of England interest rates are set at 5% and no one is
predicting further reductions for at least two years.
By contrast economic growth in the euro zone, during the first
three months of 2008, was better than expected. Gross domestic
product (GDP) rose by 0.7% from the previous quarter in the 15
nations using the euro, compared with the 0.5% growth analysts
expected.
Euro zone GDP was up by 2.2% compared with the same quarter in
2007. Separately, Eurostat confirmed that euro zone inflation in
April slowed to 3.3% year-on-year from March's record figure of
3.6%.
WILL THE COSTAS RETURN TO SPAIN?
Spain’s property experts have noticed a change in property
buying profiles. Three years ago an Alicante-based real estate
agency was one of the first to notice changing trends. The
British/Spanish purchasing ratio was 8/10 but even then had
reversed.
One of the largest agencies on the Costa del Sol survived and
indeed prospered as disappearing Brits were replaced by the
increasingly affluent Spanish. A cutting edge sales operative
for a Torrevieja-based property developer says: “The Spanish are
still showing an interest, particularly now they know they can
get a bargain“.
Many argue that responding to UK media distortions is not in the
interests of Spanish buyers. The more guileful far-sighted
Spaniards know that discouraging further British ‘colonisation’
will leave the holiday door open for their co-nationals as they
catch a ride on their comparatively better economy. Don’t be
surprised if a sharp decrease in the British population of
Mediterranean Spain gathers momentum.
IT IS GOOD NEWS FOR BRITS?
Could the British community become the minority again and whilst
becoming part of a less abrasive cultural mix, morph into better
Europeans? It might not be such a bad idea from both points of
view.
Undoubtedly what is good for the Spanish goose is equally good
for the British gander. For those Brits who can still afford to
buy in Spain there are incredible deals to be had; far better
than in their own country, and in a less problematic environment.
Spain remains the ultimate copper-bottomed investment, with
bells on. The difference is there’s more bells on it now.
There’s still oro en las Colinas, or to put it another way, gold
in them hills.
Daring to engage readers in the challenging periodicals of
Mediterranean Spain and the UK
Michael Walsh McLaughlin. Free Spirited Team Player
The Editors' Choice
quite_write@yahoo.co.uk
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