Staff Reporter
Over the past decade, Spain has become an attractive destination for expats looking to invest in real estate.
From bustling city lifestyle to tranquil seaside retreats, the breathtaking cities in Spain are highly preferred by property investors as well.
While buying a new property abroad is a huge excitement for property buyers, there are certain things to know about buying a home in Spain as an expat. Navigating the property market in a foreign country can be complex. It is important to understand the key steps and legal requirements beforehand to avoid potential pitfalls. Additionally, working with experienced professionals, such as real estate agents and lawyers, can make the process smoother and ensure you make informed decisions.
This real estate guide for expats in Spain includes the main considerations you should take into account when buying a property in Spain.
Know Your Payment Plan Options
Spanish real estate market is dominated by prestigious and trusted project developers, and buyers get the benefit of having several financing options. While a mortgage for up to approximately 70% of the property’s value is still an option, there are other ways to make the payment, such as flexible payment plans.
However, this flexible payment option is only valid for off-plan or under-construction projects. For second-hand properties, the seller usually wants to whole payment made at once.
For under-construction projects, when the buyer decides on a property, the first phase of payment will be the deposit. It is paid to show that the buyer is serious about the purchase, and wants to reserve the property before another buyer comes. The deposit amount varies depending on the property value but mostly ranges between €6.000 to €20.000.
The second payment for the property investment in Spain is usually made at the sales contract signature. This amount also changes depending on the sales terms, but usually varies from 20% to 40% of the sales value.
The rest of the payment should be done until the title deed delivery but its frequency may vary depending on the project developer. Some developers want the rest of the payment all at once, and for some projects, it is paid in several installments until the delivery date.
While buying a new home in Spain, working with a professional agency might also get you certain advantageous hot offers. Your agent will stay in close contact with all the developers in your preferred area, ensuring you receive the best options with the most convenient payment plans.
Calculate Additional Expenses
One of the crucial things while buying property in Spain for foreigners is being aware of the additional expenses that might occur.
For brand new properties; VAT, stamp duty, real estate valuation, disbursement fee, title deed registration and notary fees, lawyer and agency fees are the main expenses you should take into account.
However, when buying second home properties, VAT is not added to expenses. It is only required for newly built properties. Meanwhile, there is a tax that is paid only for second-hand homes which is known as ITP (Property Transfer Tax).
Some of these payments will be made to the local authorities, while others paid directly to government entities. Because of this difference, certain costs might differ from one autonomous community to another in Spain.
Depending on the purchase details, the costs differ from one buyer to another. Professional guidance is highly recommended to prevent any surprise costs in the middle of the transactions.
Getting a NIE Number is a must
The Número de Identificación de Extranjero (NIE) is essential for all financial transactions in Spain, including buying property. This number is assigned to foreigners and serves as an all-purpose foreign ID number in Spain.
It is often used for property purchases, utility payments, tax payments, bank transactions, and more. It takes certain steps to buy a house in Spain and getting a NIE number is one of the few important steps to complete before starting the title deed transfer. In short, an NIE is a non-negotiable requirement for property buyers and investors in Spain.
Is Crypto Payment Possible for Buying Homes in Spain?
Yes, it is possible to buy real estate with crypto in Spain. In fact, the first real estate sale with cryptocurrency in Spain was made in 2022 by Spain Homes ®. However, some of the developers might not accept cryptocurrencies as a payment method. Since the legal process for buying property in Spain will be different for crypto purchases, it is always advisable to work with a real estate agency. Your experienced agents will guide you on how to handle financial procedures with their in-depth knowledge and experience.
Under-Construction Property is a Good Idea: Here’s Why
The Spanish property market is a vibrant marketplace and every buyer is often torn between buying second-hand or brand-new. When it comes to investing in real estate in Spain, choosing one of them can be a challenging decision. However, each option comes with pros and cons for different types of buyers with different purchasing motivations.
For example, off-plan properties generally come with significantly lower price tags compared to ready-to-move-in or second-hand properties. Early-stage prices and flexible payment options may benefit investors who are looking for high-quality but more affordable properties in Spain.
Buying at the early construction stages also benefits investors who aim to gain long-term yield instead of buyers who plan on moving in right away. Off-plan or under-construction properties offer significant value increase potential until completion.
For properties that are in the construction phase, investors can benefit from pre-launch discounts, upgrades, or other campaigns. Developers are also more likely to offer special deals during the pre-sale phase, ensuring buyers get maximum value for their money.
In general, off-plan projects are located in emerging neighborhoods or newly developing regions. These areas are poised for growth, offering buyers the chance to capitalize on rising property values as infrastructure and amenities improve.
One of the most exciting aspects of buying an off-plan property is the ability to customize. When buying an off-plan property, buyers have a wide range of choices in terms of unit size, layout, floor level, and orientation. This flexibility ensures that buyers can select a property that perfectly suits their preferences and needs.
The new projects stand out with their modern design and advanced infrastructure as well. Modern off-plan properties use the latest construction techniques and materials for better energy efficiency. With features like advanced windows, insulation, and HVAC systems, they offer lower utility bills than older homes.
However, if you are moving to Spain from abroad and planning on living in Spain as an expat immediately, ready-to-move properties would be a better choice.
Navigating the Spanish Property Market: Your Key to a Rewarding Real Estate Investment
Buying real estate in Spain is a wonderful opportunity to enjoy a new lifestyle or secure a profitable investment. It is essential to understand the process beforehand to avoid any pitfalls and unwanted complications that might occur in the process. It is highly recommended to work with a team of professionals like Spain Homes ® to turn complicated purchase steps into an exciting journey.
