Buying A House In Spain
Why Foreigners Should Buy Houses In Spain
Buying a house in Spain is a very beneficial opportunity. With property prices on a steady rise, buyers have a reduced risk of property losses. Furthermore, there is a greater incentive for foreigners to buy property: the Golden Visa program. This program allows foreigners to obtain a residency visa upon the investment in real estate worth at least ā¬500,000. This incentive is an excellent path to obtaining a potential citizenship, granted upon completing 10 years of residency in the country.
We will explore all the intricacies involved when a foreigner attempts to buy a house. Differences in taxes, mortgage interest rates, and down mortgage payment will be brought to light, along with an insight into the various costs foreigners can expect to pay while buying the house. Our goal is to help you understand the property buying procedure in Spain, allowing you to consider buying a house confidently.
Buying A House In Spain Is Effortless Even For Foreigners
The process of buying property in Spain is more or less straightforward. To partake in monetary dealings such as buying houses, foreigners must first obtain an NIE (NĆŗmero de IdentificaciĆ³n de Extranjero), which can be obtained with the help of a Spanish attorney. Upon obtaining an NIE, foreigners can begin scouting for property in Spain and make purchase decisions without a problem.
Costs To Consider When Buying A House In Spain
How much money is required to invest in Spanish property varies on the house’s location and dimensions? Knowledge of additional costs is also vital since there can be many hidden charges. It is beneficial for buyers to have a concrete plan that outlines all the expected costs and provides a realistic timeline for the final purchase of their desired house.
Things To Keep In Mind When Financing A House In Spain
Foreigners looking to buy property in Spain can get financing help from banks to fill most of the initial cost. Since banks are willing to fill in up to 80% of the property value, potential buyers must be able to contribute at least 20% of the property value. Additionally, buyers must remember that the debt incurred upon buying cannot exceed 30 – 35% of their total income.
Fees & Taxes To Expect When Buying A House In Spain
Notary fee
For those unaware of the notary’s role in buying a house, worry not; we are here to explain. The notary is responsible for ensuring that the paperwork submitted by both the buyer and seller is legitimate and in order. The government regulates notary expenses in Spain and range between 600 and 1000 euros since they are determined by the property’s price. Below is an example of what kinds of notary fees to expect from property valued at 100,000 and 250,000 euros, respectively.
| Property value in euros | Notary fee |
| 100,000 | 850 |
| 250,000 | 1000 |
Land Registry Fee
Deeds signed by the notary need to be registered, another cost incurred by the buyer; luckily, the land registry is also regulated by the state and costs between 400 and 700 euros.
Real Estate Agent Fee
Real estate agencies allow potential buyers to select personalized options with little hassle. Real estate agent fees are not regulated by the government and hence have no fixed limit. These fees are usually within the range of 3-7%; however, buyers need not worry since these costs are usually incurred by the seller of the property. To be on the safe side buyers should seek clarity in this regard when dealing with a real estate agent initially.
Taxes On Used Houses
Buyers are taxed differently based on whether the house is brand new or pre-owned. The tax applicable on the purchase of used houses is the Property Transfer Tax (ITP). It ranges between 6-10% based on the community of interest.
| Community | ITP % |
| The Basque Country | 4.0 |
| Navarre | 6.0 |
| Melilla | 6.0 |
| Ceuta | 6.0 |
| Madrid | 6.0 |
| The Canary Islands | 6.5 |
| La Rioja | 7.0 |
| AndalucĆa | 7.0 |
| Asturias | 8.0 |
| The Balearic Islands | 8.0 |
| Murcia | 8.0 |
| AragĆ³n | 8.0 |
| Extremadura | 8.0 |
| Castile and Leon | 8.0 |
| Extremadura | 8.0 |
| Castile-La Mancha | 9.0 |
| Galicia | 10.0 |
| Valencia | 10.0 |
| Catalonia | 10.0 |
| Cantabria | 10.0 |
Taxes On Brand New Houses
Those who wish to buy brand new houses must pay extra taxes, namely VAT (Value Added Tax) and AJD (Documented Legal Acts Tax). The VAT rates are uniform across Spain at 10%, except for the Canary Islands, where the VAT is 6.5%. If, for example, you wish to buy a house in Madrid worth 150,000 euros, you will have to pay an additional 15,000 as part of VAT. The buyer will also have to incur AJD taxes; however, these vary between different communities in Spain, ranging from 0-1.5%.
| Community | VAT % | AJD % |
| The Basque Country | 10 | 0.0 |
| The Canary Islands | 6.5 | 0.4 |
| Navarre | 10 | 0.5 |
| Melilla | 10 | 0.5 |
| Ceuta | 10 | 0.5 |
| Madrid | 10 | 0.75 |
| La Rioja | 10 | 1.0 |
| AndalucĆa | 10 | 1.2 |
| Asturias | 10 | 1.2 |
| The Balearic Islands | 10 | 1.2 |
| AragĆ³n | 10 | 1.5 |
| Cantabria | 10 | 1.5 |
| Castile-La Mancha | 10 | 1.5 |
| Castile and Leon | 10 | 1.5 |
| Catalonia | 10 | 1.5 |
| Valencia | 10 | 1.5 |
| Extremadura | 10 | 1.5 |
| Galicia | 10 | 1.5 |
| Murcia | 10 | 1.5 |
Average House Prices In Spain
When discussing average house prices in Spain, we must remember that prices vary significantly on different factors, even in the same city. These include facilities, location, and neighborhood of your desired property. The most significant differences, however, are found between different cities.
| City | Price per square meter outside the city center (euros) | Price per square meter in the city center (euros) |
| Murcia | 1,275.00 | 861.11 |
| Santa Cruz de Tenerife | 1,540.00 | 1,933.33 |
| Alicante | 1,716.54 | 2,150.00 |
| Valencia | 1,519.60 | 2,738.89 |
| Seville | 1,916.67 | 2,900.00 |
| Granada | 1,800.00 | 3,166.67 |
| Bilbao | 2,779.60 | 3,409.33 |
| Malaga | 2,308.33 | 3,533.33 |
| Palma de Mallorca | 2,512.50 | 4,433.33 |
| Barcelona | 2,714.50 | 4,346.09 |
| Las Palmas de Gran | 1,840.00 | 4,400.00 |
| Madrid | 3.410.10 | 4,777.28 |
| San Sebastian | 3.633.33 | 6,000.00 |
Finding Property To Buy In Spain
Any foreigner finding it daunting to begin finding houses to buy, fear not. There are two primary paths that people can take, real estate agencies and online property websites. Word of mouth information of buying opportunities from friends and colleagues is another method that can be used in combination with the aforementioned two.
Real Estate Agents In Spain
The first is through reputable real estate agents that can help buyers understand their particular needs and show them relevant options that meet their criteria. They also take care of any hassle related to setting up the visit to the site of interest. Some extensively used agencies include Inmoifach, Seular-Inmobiliaria, and Houseclick.
Online Property Website
Another viable option for foreigners is utilizing the service of property websites. These allow sellers to post ads for their property online and deal with buyers directly. The benefit for buyers is the ability to investigate the property for themselves, allowing them to make an informed decision. Popular property websites include Fotocasa, Idealista, and Enalquiler.
Mortgaging Property In Spain
Suppose foreigners find it financially easier to mortgage a house instead of buying one up front. In that case, must be aware of the differences in mortgage practices between residents and non-residents.
Interest Rates
A key difference to recognize is the higher interest rates that apply when foreigners attempt to mortgage a house. For Spanish nationals, mortgage interest rates are as low as 1%. However, the same is not true for foreigners, as interest is as high as 2-2.5% for non-residents.
Money Lending
Foreigners must also understand that although the upper limit of contribution by Spanish banks is 80% of the property value, most banks will not contribute more than 60% of the property sale value, primarily due to the high risk involved in securing regular payments. A special exemption exists for foreigners selling repossessed property directly from the bank. In this case, the banks provide up to 100% of the initial financing. These conditions apply to foreigners currently not paying taxes to the Spanish government. Registered taxpayers will have the same mortgage conditions as any other Spanish citizen.
Spanish Mortgage Websites
Foreigners should maximize the tools available in their disposable in their hunt to find their dream home. One such tool is an online mortgage calculator. They process information, such as loan amount, loan duration, property value and interest rates, to figure out what your personal mortgage plan will look like. Easily accessible mortgage calculators that cater to the Spanish market are offered by Simon-Conn and Fluent Finance Abroad.
Steps To Buying A House In Spain
- The first and most important step is understanding your personal needs and listing what you may require in your new house. Then try to match your desired criteria with your current financial situation. This fusion allows buyers to understand their real possibilities.
- Once buyers know what is possible, it is time to start searching for viable options. Real estate agencies and property advertisement websites are the go-to for this task. Buyers must remember to always expand their options, visit different websites, and contact agencies to explore their dealing options. It is also beneficial for foreigners to get help from friends or colleagues who may be privy to any options.
- After buyers have identified potential sites, it comes time to visit and scout each one. There are several things you should look out for; let’s go over them one by one. Always take someone else with you, a friend or relative; it is more beneficial if they have prior experience. Secondly, pay close attention to what the realtor or seller says while describing the house; some valuable information is hidden in the details. Remember to take your time while viewing the property since there is no hurry. The most important thing is to end the viewing with little doubt in your mind about the property in question.
- Once you have narrowed your options, it’s time to make offers. All parties involved in the buying and selling of the house will try to maximize their financial gain, so buyers must remember to make a realistic offering against the seller’s demand. It helps to explore the prices of similar properties in the vicinity.
- When an agreement has been reached with the seller over an adequate price, you must begin to finalize the mortgage if it applies. Buyers should then calculate and make a list of all expenses that need to be addressed, including taxes and other payments (realtor fee, notary fee, etc.). Since all the paperwork about the deal needs to be in Spanish, as the buyer, you should be vigilant and hire a translator to ensure all the papers are in order.
- After all the paperwork has been arranged, and both parties are ready to uphold their side of the deal, it is time to make the final visit to the notary. You will finally complete the deal and sign the property purchase contract paperwork. Buyers will also process any mortgage into the land registry while registering as the new property owner.
Conclusion
Spain is a compelling destination for foreigners looking to relocate and those wanting to look for houses to invest in. With the golden visa program, amazing geography, and elevated lifestyle, Spain is among the most bewildering places to live.