Buyers Guide to Property Investments in Spain

Select a Country

The first decision you must make is where the property should be. Part of this process will depend on how you intend to use it; solely for personal use or to generate rental income?

Ask yourself the question – is this a place I would be happy to visit over and over again? If not you should question whether others will ask the same question when the time comes to sell your property or to rent it out. A negative answer will surely affect the price or rental income.

What is there to do?

So many people forget this very important aspect; all countries have some form of winter season – does everything close down or are there facilities for indoor leisure? Gymnasiums, indoor heated pools, saunas, Turkish baths. Is there a centre in the town with bars, restaurants and all year round activity? Is there a marina, beaches, theatres? Are there golf courses and social clubs?

What is the weather like?

Many of the emerging Eastern European markets such as Hungary, Bulgaria, Poland & Romania have great Summers but the long winters can we wretched. This will have a negative impact on outdoor activities and rental potential; unless of course you are aiming at skiing and winter sports as your primary activity!

Check out the Costs

In most European countries there is VAT payable on property purchase and a system of property registration which often involves a Notary, the Land Registry and some form of annual taxation. Before committing yourself please ensure that you have allowed for these additional costs and, above all, use a lawyer. It is usual to allow around 10% of the purchase price to cover these costs but this will vary depending on location.

In many countries, and in particular in Spain, many Spanish people have in the past purchased land and later built a villa on it, often without planning permission. These houses sometimes sound cheap when offered for sale but there is no title deed which means that you cannot get a mortgage. This may not be a problem if you are paying cash but will be a real problem to a potential purchaser who needs bank finance to complete the purchase!

Find a Lawyer

No matter which country you are planning to buy in it is advisable to use a local lawyer who speaks your language. This will avoid all of the pitfalls often experienced by those people who are always trying to ‘save a bit of money’ and the end result will more than justify the cost – normally 1 – 1.5% of the purchase price. The Property Shop International can recommend lawyers with whom we have several years of experience and who speak your language.

Napoleonic Law

If you are planning to buy in Spain it is worth remembering that Napoleonic law still exists and we strongly recommend that you to make a Spanish will. This will cover only your assets in Spain and costs approximately 250€. Property in Spain is subject to Spanish laws which take precedence over wills made in your country of domicile. Talk to your lawyer about the differences between what you can will in your own country as opposed to here.

Inheritance Tax

Your lawyer or tax consultant will be able to guide you on inheritance tax and how to minimize it. If you are buying a retirement home and are in your golden years, it is advisable to get this information before you decide in whose name or names the property is to be registered.

Other Considerations

When buying property for the first time in any country you will need to open a local bank account, register for water, electricity and other services and, depending on the country, you may need a National Identity Card. You may also need to apply for mortgage funding, depending on your circumstances.

The Property Shop International can advise you on all of these issues. Our aim is to make the entire buying process as easy as possible from your first inspection trip to actually moving in.

Summary

This is not a do-it-yourself guide. The general information given here is designed to make you aware of the potential pitfalls, so that you can avoid them. Buying a property abroad is such an exciting experience, and in Spain we all enjoy more personal freedoms, which is one of the reasons España is such a great place to live!

Whilst enjoying this freedom we have to be more responsible for our own decisions. We at The Property Shop International have been through the buying process many times and whilst we do not claim to be legal experts the lawyers on our panel are.

By being aware of the potential pitfalls, by using one of our lawyers and the other professionals known to us for many years, you will protect your interests and thus make the purchase of your home in Spain an enjoyable, risk and stress free experience.

All of the unfortunate property related stories you may have heard could have been avoided if buyers followed the above guidelines.

Should you have any questions or require more information please don't hesitate to ask. If you have enjoyed reading this guide and have found it useful please let us know. Write to: peter@thepropertyshopinternational.com

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International Property Investments