A guide to buying property in Spain

For many British buyers, the idea of purchasing property in Spain is an enticing prospect, The allure of sun-drenched shores and a relaxed Mediterranean lifestyle continues to captivate the imagination. Whether you’re seeking a holiday home, an investment opportunity, or a permanent retreat from the hustle and bustle of everyday life, our guide to buying property in Spain will give you all the tools you need to start the purchasing process.

Navigating the process of purchasing real estate in a foreign country can be daunting, especially in the wake of Brexit and the accompanying changes to regulations and requirements. Hamptons International are here to walk you through everything you need to know, from exploring popular regions and property types to understanding the costs involved and navigating the buying process step by step.

The Spanish Property Market

The property market in Spain is a vibrant and dynamic landscape, offering a wealth of opportunities for British buyers looking to invest. When it comes to property prices, Spain presents an attractive proposition for many. The market has historically offered more affordable options compared to other Western European countries.

The Spanish property market has grown year-on-year since 2015, with prices rising steadily. Spain suffered significantly during the Global Financial Crisis and the recent COVID-19 pandemic has also had an impact. However, the market has since recovered, experiencing a growth of around 4.5% in 2023, with ING forecasting a 3% growth in 2024. New build homes have experienced a much sharper increase at 11% in 2023, expected to cool off in 2024.

The average cost per square meter in Spain varies widely depending on where you want to live. Whatever the lifestyle you’re looking for, there is an area in Spain for any budget. The Costa del Sol is one of the most popular regions in Spain, offering a combination of beach and city living. The most expensive properties are in Barcelona, followed closely by Madrid, which can be decreased if you look in the suburbs rather than the city centre. Take a look at our properties for sale in Spain to see what is on offer within your budget.

Spain has no property ownership requirements and operates a golden visa Scheme. This is an authorisation granted by the Spanish government to non-EU citizens who wish to stay in Spain for longer than 90 days out of every 180 days. Since its introduction in 2013, the golden visa has become one of the most attractive options to foreign investors. To gain a golden visa, you must invest at least 500,000 Euros in property, plus taxes. You cannot use financing to qualify for this visa scheme.

When buying a property in Spain, it is important to consider whether you are a resident or non-resident. You are a non-resident if you live in Spain for less than 183 days in a single year. If you are present for more than this, you are considered a resident. This will have an impact on every stage of the buying process.

Costs of buying a property in Spain

On top of the asking price for a property, allow 8-12% to cover main purchase taxes and fees. Visit the Spanish Tax Office for more details on all of these fees. These fees will vary from area to area, and buyers are responsible for majority of the costs, which include the following

• Property transfer tax is 6-10% or existing properties, or VAT at 10% for new properties.
• Notarary costs, title deed tax, and land registration fees are 1-2.5%.
• Legal fees are 1-2%

There are a variety of annual fees when owning a property in Spain.

• IBI property ownership tax is calculated based on the catastral value set by the town hall. The tax rate is then dependent on the Spanish region. A three bedroom apartment pays around €400 a year, while a large villa can pay around €2000
• Refuse collection is a small tax paid yearly, which covers drainage and refuse collection. This cost is around €80 annually for a three bedroom apartment.
• Wealth tax - non resident owners of Spanish property may be obliged to pay wealth tax depending on the value of their property. There is an exemption up to €700,000.

Ongoing taxation - Non-resident property owners are subject to Non-Resident Income Tax on any rental income. The tax rate depends on several factors, including the type of property, amount of income earned, and the country of residence of the property owner.

If you are not planning to rent out the property, non-residents are required to pay Impuesto de la renta de no residentes, declaración ordinaria (IRNR), also known as Imputed tax. Non residents will need to pay this if you don’t live in Spain, have an urban Spanish property, the property is for exclusively personal use, and you don’t have any other Spanish taxable income.

Capital Gains Ta - When you sell Spanish real estate, you owe Capital Gains Tax. For non-residents from the UK, CGT is 24%.

Financing your property purchase in Spain

According to Spain’s General Council of Notaries, in 2023, over 67,000 houses were bought by foreigners, making up 13% of all transactions. Obtaining a Spanish mortgage for non-residents is possible, and there are various options available. It's a good idea to start shopping around for mortgages before starting your property search, to determine your buying power.

Hamptons partners with Key Currency, who are experts in getting you the best currency exchange rate. Get in touch today for an introduction.

Non-resident mortgages are offered to individuals who are not citizens or residents of Spain, meaning they spend less than 183 days in Spain within one year. Spanish mortgage lenders tend to favour residents of Spain, however this does not mean obtaining a mortgage is impossible as a non-resident, but will require some extra conditions.

Residents can generally borrow up to 80% of a property’s value, but non-residents are limited to 50-70%, depending on the mortgage. Generally, Spanish residents can access loans of up to 40 years, and non-residents are typically offered a length of 15 to 20 years.

Spain offers two main types of mortgage, fixed and variable, which are the main types available to non-residents. Variable rates allow you to take advantage of lower rates, but also leave borrowers with the risk of higher monthly payments in the future. A fixed rate allows individuals to plan their budget around a consistent repayment amount, which can provide peace of mind. Interest rates are predicted to peak in 2023, ranging between 3.5 and 4.5%. Rates are due to stabilise or decline in 2024.

Process of buying a property in Spain

Step 1 - Finding a property

Finding a property in Spain can be easy for British residents, and Hamptons International are here to help you every step of the way. Take a look at our variety of properties in Spain, whatever or wherever you’re looking, we have the property for you. Across all the areas in Spain, there is a wide choice of property, from flats, to villas, even to land if you’re looking to build your dream home.

When searching, you could also engage with a Spanish estate agent directly. It is important to choose a registered agent you trust, as property is not always sold exclusively. Get in touch with us to be linked with one of our partners.

Step 2 - Viewing Property

It is possible to buy a property before arriving in Spain, however this is risky. It is advised that you spend some weeks in Spain while viewing properties and not to cut corners.

When you’re seriously interested in a property, ask to see the Nota Simple. The Nota Simple is an important legal document containing an officially verified description of the property being sold. It covers

• Details of ownership, length of ownership and how it was obtained by the seller
• General description of the property
• Any debts on the property that must be settled before ownership is transferred
• Boundaries and size of land and buildings
• The use of the property (residential, agricultural, etc)
• Any other rights held on property by others (rights of way, roads, water, etc)
• Any community costs for which the owner is liable

The Nota Simple can be obtained from the local property title registry office or at the Spanish website Registradores. You will need the seller’s full name (individual or company), and ideally an NIE or passport number. Alternatively, you can use the property registration data, either the Finca number or the unique identification number IDUFIR.

Upon receipt of a Nota Simple, you may find that there are discrepancies between what the report says and what you can see when viewing a property. These errors should be flagged and rectified before the sale is completed.

Step 3 - Obtaining an NIE

An important thing that you need as an expat is the Spanish tax ID number for foreigners, a Número de Identificación de Extranjeros – NIE. The NIE is mandatory for all foreigners living in Spain and it is necessary for dealing with any legal, financial, professional or social affairs in Spain, whether you are a resident or non-resident. The NIE numbers do not expire, so you will never have to renew it in the future.

A lawyer can apply for this number for you, you can obtain it in person in Spain or at a Spanish Consulate abroad. If you would prefer to apply in Spain, bring your documents to an immigration office or to a police station ideally closest to where you intend to buy property. There will be a €10 tax for the NIE, and the number can be collected at a scheduled date and time. More details about this process are outlined at the Ministry of Foreign Affairs.

If you would prefer to apply from the UK, first identify your nearest Spanish consulate or embassy. In the UK, the three consulates are located in London, Manchester and Edinburgh. Prepare your documents and proof of eligibility, and make an appointment to obtain an NIE number.

Step 4 - Hiring a Solicitor

Although it is not a legal requirement to have a solicitor to complete the sale, it is highly recommended for them to undertake the due dilligence, and is required by many mortgage lenders. Choosing a lawyer who is experienced in Spanish property laws is vital for a seamless sale. Any lawyer practising in Spain will be registered with the local bar association Colegio de Abogados.

A notary is an individual who will often only get involved at the end of the transaction. They are a neutral public official, a qualified lawyer, who makes sure the property transaction is correct and all taxes are paid. They can give advice and their fees are fixed by law.

If you need a translator for your purchase, a list of English speaking lawyers in Spain can be obtained from the . British Foreign, Commonwealth & Development Office.

Step 5 - Arranging Property Surveys

It’s possible to buy a house in Spain without undertaking a property survey, but this isn’t advised. A professional’s opinion can help put your mind at ease and avoid expense down the line if there are significant defects.

A property survey will investigate the conditions of all permanent structures and will highlight any important problems that could affect the property value. Ensure that your surveyor and lawyer check the size and use of the property against the recorded description on the Nota Simple.

Step 6 - Making an Offer

Once you’ve found a property in Spain, you’ll need to make an offer through the seller’s estate agent. As in any country, the offer is open to negotiation, and should depend on the property’s history, the time on the market, and the level of interest in the property. Once an agreement is reached, a notary can summarise the offer in writing. Ensure any conditions are included, such as dependent on mortgage or work being done, or property sale, or survey if this is the case. It is recommended you have your mortgage agreed in principle before offering.

Step 6 - Completing the Purchase

Once the offer is accepted, you and the seller will sign a preliminary contract and the buyer will pay a deposit, usually 10% of the purchase price. This will guarantee the purchase and take the home off the market. If the seller backs out of the deal after this point, they are required to pay the buyer twice the amount of deposit they paid. If the buyer backs out of the purchase, they will lose their deposit.

The private purchase contract is usually signed between two weeks and a month following the down payment. The contract will include details of the agreements reached between the parties and the conditions of the sale.

The process ends when the public deed of purchase is signed by the purchaser and the vendor. The deed of purchase is signed before a notary, who then updates the title deed. In the signing process, the clients are accompanied by their lawyer in the notary office. If you cannot attend the notary office in person, a power of attorney will need to be provided in advance.

Moving into your new Spanish property

Congratulations! You’ve completed on your new Spanish home. Unfortunately, the paperwork does not quite end there. To pay utilities in Spain, you will need to set up a bank account first.

Insurance

Although not mandatory, it is recommended to have home insurance to protect your property and belongings from potential risks and damage. It is also a condition from some mortgage lenders to have insurance to secure a loan.

There are broadly two types of home insurance in Spain. Firstly, contents insurance, which protects all moveable assets such as valuables and furniture. Secondly, building insurance, which includes the fixed property including walls, floors, ceilings and internal fixtures. Combined insurance is the most popular type of insurance, often just called home insurance, which includes both contents and building insurance. Often liability coverage will be included in home insurance, which covers your costs if a third party Is injured in your property.

To apply for home insurance, you will typically need to provide an address, your NIE number, and bank details. You can use a Spanish insurance company, or there are some firms that offer expat insurance for second homes. These companies can insure against specific risks related to second homes, including lost rental income.

Utilities

The process of setting up a new utility provider can be time consuming, so if your property is already connected to a provider, it can be an appealing choice to stick with them. If you do want to change providers, do this as far in advance before move in day to minimise any possible outages. Just as in the UK, the Spanish utility market is liberalised, which means you can shop around for the best deal.

Gas is less common in Spain, and most houses use electricity instead, only certain regions have access to mains gas. There are a variety of providers to use for electricity in Spain. To choose one, search for your local provider, ask neighbours or contact providers directly.

Buying property in Spain after Brexit

Buying a property in Spain post Brexit has resulted in a myriad of new regulations and considerations. Since the UK’s departure from the European Union, British nationals no longer enjoy the freedom of movement across the EU, which impacts the ease in which they can purchase and enjoy properties in Spain.

One of the most significant changes is the limitations on how long Britons can stay in their Spanish homes without a visa. Where the stay was once unrestricted, now stays are limited to 90 days within any 180 day period. This has caused many Brits to buy a second home in Spain, rather than a new primary residence. Moreover, the process of buying a property itself now involves more bureaucracy. British buyers must navigate through additional paperwork, potentially requiring visas or residence permits, depending on the purpose and intended length of stay.

Financially, there are implications too. The cost of purchasing a property in Spain might now include higher transaction fees, and the potential for a less favourable exchange rate post-Brexit could affect the overall budget. Additionally, tax implications for British homeowners in Spain have changed; being non-EU residents may mean different tax treatment on property purchases and income derived from them.

Despite these changes, the dream of owning a Spanish home is far from over for British nationals. It simply requires a more strategic approach, taking into account the new rules and regulations. The country’s enduring appeal as a holiday destination, coupled with its relatively affordable property prices and strong rental market, continues to attract British investors.

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