Home Investment in Spain
Spain is still the number one choice for Britons buying a home overseas, and its appeal shows no signs of waning. Low-cost airlines make it easy, quick and cheap to get to, it has wonderful weather, fantastic beaches, first-class golf courses and an unrivalled choice of properties. It all adds up to Spain being an ideal location for those wanting a buy-to-let property abroad.
There is a dizzying array of choice for property investors, from townhouses, villas and new apartment developments to farmhouses, plots, and village locations. City destinations such as Valencia, Seville and Barcelona are starting to attract significant numbers of UK buyers, as are rural Galicia, Catalonia and Extremadura. But the Canaries, Balearics, Costa del Sol, Costa Blanca, Costa Calida and Costa Almeria remain the prime buying destinations.
There are no restrictions on foreign property ownership in Spain, but the buying process is different so it is advisable to employ the services of an English-speaking lawyer. Once a property has been chosen, the solicitor will check it is registered in the Registro de Propiedad, which states the exact size of the property, who owns it and whether or not there are mortgages outstanding on it.
Deposit is Needed
If the reservation contract is in order, the buyer has to lodge a 10 per cent deposit. As long as both parties are happy to proceed, a sales contract is then signed before an impartial public notary in the form of a public deed. Power of attorney can be given to a solicitor to perform this task.
On a new build, the deposit will be anything between 25 and 40 per cent depending on the developer's purchase terms. The investor should receive an occupancy permit, deed of declaration of new construction and rateable value proof. As building progresses, the buyer will make staged payments, with the final one due when building is complete. Then the deed of sale is signed, witnessed by a notary, the contract is signed and the ownership documents are filed at the land registry office.
Be Aware of Costs
Allow around 10 per cent of the purchase price for costs including stamp duty, property tax and legal fees. Applying for a mortgage is a straightforward process. Loans of up to 80 per cent are generally permitted and, although set-up costs can reach £2,000, interest rates may be lower than those offered by British banks. A Spanish bank will want to see a number of original documents, including a passport, driving licence, the last three months' payslips and latest P60s if employed, or last three years' tax returns, audited accounts and accountant's reference if self-employed.
The estate agent will have a list of the outgoings payable every year to maintain the property, and this is likely to include:
- Water rates.
- Electricity charges.
- Refuse collection charges.
- Real estate tax.
- Community fees.
- Property income and wealth tax.
Anyone who has a property in Spain but does not live there should consider appointing a fiscal representative. A lawyer, tax adviser, friend or neighbour can be nominated, the only stipulation being that the person must be a Spanish resident. The fiscal representative will act as a point of contact for the tax authorities and will receive all the property owner's correspondence relating to their affairs in Spain.
