Buying a home/property in Spain;
Buying a home has never been more confusing and that’s just in your home country. Imagine the difficulties purchasing a new property in a foreign country. Where you may not know all the laws or even know the language that well. But that’s all okay, as this guide will hopefully help you be brought along the straight and narrow, when it comes to purchasing a home abroad, especially in Spain.
In this guide we will take you through all the laws and processes that come with purchasing a new home in Spain. This guide will also give you advise on the smaller finer. Details such as the visas associated and other costs.
Spain is one of the most popular holiday destinations for many Europeans. Spain is also very popular with people from South and North America. This is because Spain has a very strong history with many South American countries. Not only is it a popular holiday destination, it is also a very popular destinations for people to move to from other countries. Many elderly retire here and many come here to kick-start businesses. So it would probably be perfect for you too.
So, what’s our fist piece of advice?
Here at DSH Invest we believe that you should feel fully invested into moving to Spain otherwise, you may regret the decision a few years down the line. There are many reasons why you might regret your decision, such as missing family and this is why we feel you should be fully committed on moving. You can always find ways around missing family such as taking trips back home or inviting them to stay with you at your home. Also don’t forget the power of technology, as now we are more connected than ever before with the range of social medias, which can make you feel right at home.
We also suggest that you have a ‘plan’. We don’t mean a solid plan written down that you have to complete. Our suggestion is to have a basic overview of what you are going to do whilst in Spain, such as activities you can do or business related activities. We do not suggest settling down in a place and staying settled in your town. You will have the freedom of a new country to explore, so why not live it.
The legal stuff!
Moving on from our advise, we need to talk about all the legalities of moving to Spain. There are countless amounts of legalities you need to know about when moving, such as the taxes involved, mortgages and deposits. We suggest that you get legal representation such as a lawyer who specializes in Spanish law or Spanish property. They will assist you will the whole process of buying a new home in Spain. Your lawyer should be independent from us, but we will recommend some for you, this is to execute the best possible service from us to you. Spanish law and housing is very different from other countries such as the UK and Ireland so, having a lawyer that specializes in Spanish law is very important.
Visa’s and Residency
For the meantime all EU nationals can travel freely into Spain. This includes UK nationals, though this could change for all UK nationals in the near future thanks to Brexit. If this was to change people from the UK would most likely need to apply through ETIAS. This is a project being set up by the EU to protect their borders. It allows people to enter the EU without needed a valid visa with each country they travel to. With this project all nationals from the UK, US and some other countries will need to say why they are wanting to travel into the EU. Otherwise a visa will more than likely be needed for UK nationals. If you are coming from within the EU then you can move freely.
If you are coming from any other country that is not in the EU, you will need a visa. There is an alternative way for non-EU nationals to gain residency. It is called the ‘Golden Visa’. Check out our article.
To get to the stage of putting down a deposit on a house, you will first need to make an offer to the owners of the house. You would usually do this with the help of the estate agents, so we at DSH Invest will help you with this. If your offer is accepted then an agreement and a contract will need to be reached. This agreement will involve deposits, this is to make sure the property will be yours. For properties of little cost usually under the price of 200,000 euros, you will only need to make one deposit.
Other properties over this amount, the owner may need to you make more than 1 deposit. This is to guarantee you the property. It also allows you to gather up more money for a deposit as the deposits may be smaller. Overall we would recommend a deposit of around 10% of the sales price, but sadly this cannot always happen and we understand that.
To help with purchasing properties, we have mortgages, these are very helpful but can also cost a tidy penny. Without a mortgage, you may not be able to purchase a property. So what actually is a mortgage?
For anyone who doesn’t understand a mortgage, it is basically money being borrowed by the hopeful new owner of a property. The money is being borrowed from the bank. It is used to pay for the property if the person does not have all the money to buy the property outright. So the bank buys the property outright for you. You then need to pay the bank back in installments over a vast amount of years. This means the property is owned by the bank but it is also ‘yours’ and until all payments are payed, you do not fully own the property.
If you fail to pay an installment of your mortgage, the bank has the right to evict you from that property and you will be left without a home. That’s one of the scary parts. All installments to the bank are paid with an interest rate applied and usually last for between 20-25 years. Scary stuff.
The Bank part! (Mortgages)
Mortgages may be scary but they are a very needed part of society. Without mortgages home owners we have now, would not be home owners. We want you to be the next home owner within our portfolio.
So with that all out of the way. You will need to find the best and most appropriate Mortgage plan for you. Most banks who offer mortgages either offer a fixed plan or a mixed plan. A fixed plan is a plan that will not change over the amount of years you have the mortgage for. A mixed plan allows your plan to change after 3 years to suit your needs, generally people on a fixed plan would be looking at jobs that offer the possibility of a promotion and to make mire money. Other than this, it allows people to drop the amount they are paying back after the three years to suit them better.
If you are struggling to pay your repayments, the best advice is to talk to your bank and work out a better agreement. The repayments may be more but in the end they could be very worth it.
When you purchase a new home in Spain there are a lot of additional costs on top of the cost of the property. In total there is potentially upto 5 taxes you will have to pay. The biggest tax to pay is to the regional government. This is the transfer tax (ITP) on resale properties, and is upto 8% of the resale cost, which is very substantial for a new buyer.
There is also the mortgage tax. Almost all new buyers need a mortgage and to set one up there is also a tax of between 0.5-2% of the whole price of the mortgage, which again could potentially be an expensive cost. Other taxes include the land registry tax which is usually between 1-2%.
There is one other tax you need to be wary of. This is the IVA tax and it is quite similar to the ITP talked about above. This tax applies to any properties that are sold straight from the developer instead of going through an agent. This tax is also more expensive at between 8-10%. It also goes to the Spanish National Government instead of the Regional Government.
Overall taxes are the one thing you should not be worried about, you should know all about them so you are not surprised when money is taken from you for a random source.
Who else can help?
There are many people who can assist you on your journey of moving to Spain. Us at DSH Invest are more than happy to help and lead you in the right direction every step of the way. We will give you advice on where to turn to as we are not experts on the full Spanish Law.
Lawyers will be of great assistance to you throughout the whole process. They will make sure that the deal you are signing up to is both valid by law and appropriate for you. With lawyers, you should never feel hard done by and the whole buying process should be almost stress free.
If you are wanting to move to Spain, we recommend you know the language, especially the basics. Yes there is a very large foreign population here but always remember it is Spain after all. If you need any assistance with the language when purchasing a home, a translator would not go a miss. We recommend a translator while you sharpen up on your Spanish. As soon as you get to Spain, you soon will become fluent and no translator would be needed.
What if it all goes wrong?
So the one question no one wants to ask. What if it all goes wrong? It’s true it does happen, not often but sometimes moving is just not right for some people. That is why our first piece of advice is making sure you are committed to the move. There are other reasons it may not work out such as financial problems and residency problems. The main problem is financial problems.
Sometimes financial status catches up to home owners. Here owners can get into disputes which also come at a cost. Some people can not afford this and legal aid can help you out with costs of disputes.
You can also get lawyers who specialize in the areas of property disputes. They will help you out as the lawyers you had before might not specialize in this field.