Buying real estate in Spain is not particularly complicated
Spain is a wonderful country. It has both sea and sun, plenty of delicious fruits and seafood, and is home to famous historical and architectural monuments. As for buying real estate in Spain, it is a kind of passport to the eurozone, which, you must agree, is a very tempting prospect. Real estate is a reason to obtain a multivisa for staying in the country for 180 days, 90 days per half-year. It also offers the possibility of obtaining a residence permit if the owner opens a business in Spain or invests funds in some project on its territory.
The real estate transaction is not particularly complicated, and the mortgage conditions are almost sweet. A mortgage in Spain can be obtained for 60-70% of the property value, with a loan term of up to 30 years at 2-3% per annum. Early repayment costs 1% of the repaid amount. It is important that only non-residents whose confirmed income exceeds 3,500 euros per month will have no problems obtaining a mortgage.
Despite all the optimism written above, it must be admitted that before buying real estate in Spain, you need to think carefully. The reason is the catastrophic state of the economy and the equally dire state of the real estate market.
Previously, active demand for Spanish property was driven by the British, Irish, Russians, and others. Construction was very active; entire cities of residential complexes were built. There were enormous numbers of people wanting to settle there. In addition, demand was fueled by “cheap” loans. Also during this period, many speculative investors appeared. A “bubble” was created, which burst with the onset of the crisis. The number of people wanting to purchase real estate decreased markedly, many construction projects were frozen, and some developers had to leave the market for good.
But Spain’s internal problems still bother foreigners in general and our compatriots in particular little. According to experts, Spain ranks second in the number of inquiries from Russians, second only to Bulgaria. Traditional regions are popular: Costa Brava (Barcelona), Costa Blanca, Costa del Sol, Tenerife. Mallorca and Marbella on the Costa del Sol coast are favorite places and the most prestigious destinations for summer holidays in Spain. Russians are equally interested in apartments in multi-story residential complexes in Spain and luxurious villas on the coast. And there is a huge number of offers on the Spanish real estate market.
As experts note, in recent years buyers have been interested in new residential complexes that surpassed secondary market offerings in quality and abundance of infrastructure facilities. Such offers are concentrated along the entire Mediterranean coast of the country. The cheapest apartments can now be bought for just over 100,000. Although on average, according to experts, the price category has remained the same: apartments cost between 150,000 and 300,000 euros, and villas from 300,000 euros and above. The most popular are apartments with 1-2 bedrooms within 500 meters of the sea.
According to the Spanish Ministry of Housing, property prices fell by 4.7% over the year. Many experts believe the decline was more significant. But not all housing lost value. Some companies continue construction and sales; others are doing very poorly – they cannot repay loans and nothing is selling.
As for the prospects for the Spanish real estate market, almost all experts surveyed by Metrinfo.ru are pessimistic. “We forecast further declines in property prices in Spain,” says Elena Yurgeneva (Knight Frank). Evgeny Skomorovsky (Century 21 West) holds the same opinion. And Igor Indriksons (IntermarkSavills) believes that buying property in Spain for personal use is profitable now and in the future, as prices are low and continue to fall. However, when it comes to profitable investment, the expert gives a clear “no.” “In the next 10 years, investors will have nothing to do on the Spanish market,” he is confident.
Spanish legislation allows both residents and non-residents to purchase real estate. The owner is the one recorded in the official document – the Escritura Pública. The transaction procedure is simple. The buyer (an individual) obtains a foreigner identification number (N.I.E.) from the local police and opens a bank account from which the money for the purchase will be transferred. Then a deposit of 6,000 euros is paid and the property is reserved. After that, a contract of intent to purchase the property is drawn up, stating its price. When signing the contract, the buyer pays 10% of the property’s value (the deposit is included in the 10%).
The Escritura – equivalent to our deed of sale – is prepared within a month by a Spanish notary and signed by the seller and buyer in their presence. Upon signing the document, the remaining amount is paid. After that, the buyer becomes the full owner of the property and receives the keys. The final procedure is the registration of the property in the territorial Property Register and obtaining the Escritura. However, if the property was purchased with a loan, the buyer is given a copy of the document, and the original is sent to the bank.
The costs of purchasing a home are usually 7.5-10% of its value, including 400 euros for registration in the territorial property register and notary costs of 800-1,000 euros.
Real estate in another country means additional expenses. First of all – taxes. Value added tax on the purchase of new housing is 7% of its price. The property transfer tax (I.T.P.) is paid when acquiring second-hand real estate at a rate of 6%-7% (depending on the region). Upon sale, withholding from non-residents for income tax will be 3% of the purchase and sale agreement amount.
Ownership of real estate entails the obligation to maintain it. In Spain, the property tax is 1-2% of the cadastral value of the property. If the apartment is in a residential complex, then cleaning the grounds and the pool will cost another 150 euros per year, and 70 euros must be added for garbage removal. In addition, utility bills must be paid.
For guidance, approximate maintenance costs for an apartment of 100 square meters with two bedrooms, two bathrooms, a living room, a kitchen, and a terrace for a family of three to four people amount to 600-700 euros per year.