Despite the UK no longer being part of the EU, Spain continues to be one of the most popular locations for expats seeking to move to Spain or make the most of retirement outside of the UK. With its sun, sand, seaside properties, it’s hard not to see why.
Spain’s rich culture, stunning countryside, and extensive UK community make it all the more appealing, but much like buying a property in the UK, there is a general layer of bureaucracy you’ll need to go through when buying a house in Spain.
With that being said, the process for how to buy property in Spain also comes with some subtle nuances that you need to be aware of in order to make the buying process as simple as possible.
To help you know what to expect when buying a home in Spain, here is a step-by-step guide for how to buy a house in Spain, the costs associated with doing so, how to apply for an international mortgage solution, and important things to watch out for.
Can foreigners buy property in Spain?
Before we continue our guide any further, let’s first clear up one of the most frequently asked questions potential expats have.
The answer to the question can foreigners buy property in Spain is a definitive yes.
The ease at which expats can go about buying property in Spain is one of the key reasons for its continued popularity as a destination. The only restriction as to whether foreigners can buy property in Spain is limited solely to whether or not they have an NIE number.
Applying for an NIE number is a crucial part of the process for buying a home in Spain, one that we’ll touch on in greater detail further on in this guide.
How does the Spanish housing market differ from the UK?
When compared to the housing market in the UK, statistics have shown that the Spanish market is much more prone to fluctuations. The Spanish housing market was hit particularly hard by the 2013 financial crash, causing property prices to fall by up to 30%.
The market has stabilised in recent years, though fluctuations still occur, as seen with the recent pandemic. Yet, despite this, statistics also show that around 80% of Spanish residents are homeowners, with just 20% renting.
What this means for expats is that buying property in Spain is actually a relatively simple process, and the chances of you finding an affordable property in your budget are high, especially if you seek out an international mortgage solution.
One important thing to note, however, is that the legal regulations associated with property in the Spanish market are much lower than in the UK, so you should do your due diligence in seeking out reputable estate agents and notaries to ensure you suffer no financial repercussions.
The cost of buying a property in Spain
Much like when buying property in the UK, the overall cost of buying a house in Spain will differ, sometimes significantly, depending on which of Spain’s 17 autonomous regions you choose to buy a home in.
As with any housing market, there are no set prices for homes in Spain. But if you’re looking to buy property in one of Spain’s major cities, official statistics show that prices have seen a 5% increase, meaning you’ll now likely pay an average of €1,649 per square meter.
However, on top of any buying costs you’ll be required to pay for a property, those buying a house in Spain are also required to pay the following:
- A property transfer tax (ITP) of 6-10% if it is an existing property or VAT at 10% on new properties.
- Notary costs if one is used.
- Title deed tax.
- A land registration fee of 1-2.5%.
- Legal fees of 1-2%, including VAT costs.
- Estate agent costs, typically around 3% of the final sale price of the property.
Do you need a mortgage when buying a house in Spain?
Naturally, you may also have to add the cost of a mortgage on top of this if you choose to apply for one.
However, unlike in the UK, a mortgage is not legally required when buying a home in Spain. It’s perfectly fine to pay for a property as a strict cash buyer.
But that’s not to say you’re unable to apply for a mortgage when buying property in Spain. There are plenty of special mortgage deals available for expats.
When it comes to the cost of a mortgage, you may find that your options are slightly limited compared to Spanish-born residents. The most common mortgage types you can borrow come in the form of lower loan-to-value rate deals, meaning you’ll need a bigger overall deposit than a Spanish resident.
More importantly, however, many mortgage agreements in Spain also require you to have a property before you qualify for one. This makes it advisable to have a clause inserted into the sale contract that you can pull out of the purchase if you’re unable to get a mortgage.
While you may be able to find a mortgage deal up to 80% of the property’s value, it’s far more likely to be limited to 60-70%. Typically, this means that you’ll need a minimum of 20% of the price of the available property to cover your deposit.
It’s also very important to note that, when applying for a mortgage for buying a property in Spain, your current debt cannot exceed 30-35% of your overall income.
On top of this, Spanish mortgages have a minimum period of 5 years and a maximum of 30 years, with an overall maximum of 75 years on repayment.
Important things to know for how to buy property in Spain
As we mentioned at the start of this guide to buying property in Spain, before you begin looking for a property, you’ll need to apply for an NIE number. Applying for and receiving an NIE number is a legal requirement for any foreigner looking to buy property in Spain.
Your NIE will be unique to you, and is the equivalent of a UK National Insurance number. It’s required to appear on all documents that you sign or are issued.
To acquire a Spanish NIE, you’ll need to get in contact with a Spanish police station and send them your passport details. For Spanish residents and EU members, the process for acquiring an NIE can take as little as a day, but for anyone else, it could take several weeks.
This is why it’s vital that you apply for an NIE as soon as possible so you can begin your property search while your application is processed. But while the process can take a while, speaking with your estate agent of choice can help speed up the process.
We also recommend that you open a Spanish bank account if possible. Not only will this make payments easier, but it’ll also reduce any commission costs you may have to pay.
Alternatively, if you plan on investing a significant amount of money into Spanish property, you may be able to apply for Spain’s Golden Visa program. To qualify for this program, you’ll need to be investing £500,000 or more in Spanish property.
If you do qualify for the Golden Visa program, you’ll be granted a residency visa, allowing you to reside in Spain while you search for your new property.
Legal differences when buying property in Spain
Legal requirements on property sales also differ in Spain compared to the UK. For example, while there are no fixed fees for lawyers or estate agents, it’s the seller that usually ends up paying the estate agent fees rather than the buyer.
Property surveys are also not a legal requirement when buying a property in Spain. This makes it very important for you to hire a surveyor yourself to examine any property you’re interested in for major defects before you sign a purchase document.
There are two types of survey reports you can apply for:
- A valuation report – this is a surface-level survey that will give you an independent assessment of the property’s market value, to give you an indication of whether you’re paying more than you need to.
- A building survey – this is a much deeper survey that examines the structural condition of a property to outline any serious issues.
Despite the cost, it’s advisable to do both so you avoid any pitfalls after purchase and will save you money in the long run.
The process for how to buy a property in Spain
As we mentioned previously, your property buying process should begin with an application for your NIE. Once this is underway, you can begin viewing properties. There are plenty of sites out there that are dedicated to helping expats buy property, all catering to different languages and nationalities.
It’s possible to find UK real estate websites selling properties in Spain, but these tend to be specifically holiday homes. Therefore, it’s recommended you search for property on an expat-friendly real estate site.
Once you have a few properties in mind, you should look to get in touch with estate agents in those areas who are bilingual. They’ll be able to explain any nuances to the property buying process in the area and make it easier to arrange viewings.
If at all possible, it’s highly advisable that you view any properties you’re interested in, in person, so you can be sure it’s the property you want, that you like the area it’s located in, and you don’t miss any glaring superficial defects.
As this process may take some time, this is the point at which you should also begin applying for a mortgage, like the internal mortgage solutions we offer.
Once you’ve settled on a property, you can make an offer to the seller’s estate agent. If the seller accepts the negotiated price, you and the seller will sign a preliminary contract, also known as a reservation agreement, ensuring the property won’t be sold for a certain period of time. You’ll then need to pay a minimum deposit of 10% of the agreed-upon sale price.
After this, you’ll have some time to sort the final stages of your mortgage if you applied for one, at which point you should have your notary read through the contract of sale to ensure everything is above board.
If you’re satisfied with everything and have your finances ready, you’ll then sign the contract of sale, at which point you’ll be required to pay the full sale price, any associated taxes, and other costs that may become due at this point.
Final things to consider when buying property in Spain
While the simplicity of buying property in Spain is one of its main appeals, the reduced regulations leave the market open to various potential property scams and pitfalls you need to be aware of.
First, you want to be sure that any property that you’re interested had its planning permission confirmed. There have been multiple cases of expats buying a home in Spain only to discover the seller had no planning permission, resulting in the house being demolished.
To be sure that a property has planning permission, you can check with the land registrar (Registro de la Propriedad). It’s also very important that buildings be up to the legal construction standards, which is why hiring the services of a surveyor is so important.
You should also be incredibly cautious if you plan to purchase a property that is yet to be built. Again, check the land registrar for planning permission, and don’t sign any documentation that you don’t understand.
Further precautions should also be taken when it comes to property debt. In Spain, any property debt is transferred to a new owner upon sale, so you want to be sure that any property you’re purchasing is debt-free or have it thoroughly covered in the terms of the contract.
Lastly, while hiring a notary or solicitor is not technically a legal requirement to complete a sale, it is highly advised that you do so to ensure due diligence is done when examining and explaining contracts. They’re also required for most mortgage lenders as well.
To be sure your chosen solicitor and notary are above board, you can double-check their Spanish lawyer registration number with their bar.
With this knowledge at your disposal, you should find the process of buying property in Spain a simple task. If you are after a mortgage solution to make the buying process easier, remember that we work with mortgage brokers who offer reputable international mortgage solutions.
Here at Blacktower, we have numerous other guides for those looking to move overseas. If you have another country in mind, then we suggest you head over to our location pages to see what other guides we offer.
This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.