A Guide to Buying Property in Spain

Written by Martha Lott

3rd May 2023 (Last updated on 30th Nov 2023) 10 minute read

Overview of the Property Market in Spain

Spain’s property market is one of the most accessible and stable in Europe. House prices have risen steadily since the second quarter of 2020.

Most residents and expats opt to buy, with 80% of Spain property's being owned - many without mortgages. The process for buying a property in Spain after Brexit is very much the same as it was before. There are quirks unique to the Spanish property market regarding deposits and mortgages.

Like any country, the price of a house in Spain will differ depending on the region you’re buying in. For an overview, the average price for a home in Spain was €350,000 (2,000 square feet) at the beginning of 2023. House prices are up 7.4% compared to 2022, though this increase is likely to stop as interest rates continue to rise.

Property Prices in Spain

Several regions of Spain are desirable areas for Brits moving to Spain. Big factors behind regional appeal include climate, culture, quality of life and affordability. Expensive cities and tourist hotspots tend to be pricier. The following data was acquired from Spainhouses.net:

Can I Buy Property in Spain as an Expat?

Though the UK is no longer an EU country, British expats can still buy and live in property in Spain.

Brits continue to be the largest foreign nationals investing in Spanish property. UK expats account for around 13% of foreign-owned homes in the country. The result is a strong British expat community. The largest concentration of expats can be found in cities like Madrid, Barcelona, Alicante and Malaga.

There are no restrictions on non-EU citizens compared to EU buyers. Processing paperwork like visas and NIE numbers can lengthen the buying process.

Golden Visa Programme

One reason Spain continues to be a hotspot for British buyers is that it has a very generous Golden Visa programme. Foreign buyers who contribute a minimum of €500,000 in Spanish property will be granted a residency visa.

A Golden Visa also allows all applicants to submit residency visas for family members. There’s the added bonus that all visa-holders will be able to travel throughout the EU Schengen area. The government fees associated with Golden Visa applications are affordably low.

Golden Visa residencies will need renewing every 1-2 years, with low renewal costs. After 5 five years you can then apply for permanent residency. The option of Spanish citizenship opens up after 10 years.

Property Taxes in Spain

The taxes associated with purchasing property in Spain differ depending on the region. Ensure you check with the Spanish tax authorities to know all costs at the municipal level. Regardless of location, these are the necessary taxes you’ll be expected to pay as a buyer:

• Property tax: 6-10% for existing properties
• VAT (IVA): 10% for new properties
• Title deed tax, registration fees and notary costs: 1-2.5%
• Legal fees (including stamp duty): 1-2%
• Property transfer tax* (Impuesto de Transmisiones Patrimoniales): 7%

*Only applicable if the seller is a private individual and not a business

Process of Buying a House in Spain

There are certain steps which you’ll have to do or we recommend to finalise a property purchase.

1. Get an NIE (Número de Identificación del)

An NIE number is needed for foreigners to conduct financial business in Spain. You can submit an NIE registration at the consular office with these documents:

• An original and a copy of a filled-out EX-15 application form.
• Your passport plus a copy of the passport’s biographical data page.
• A completed Form 790, code 12 along with completion of the corresponding fee.

2. Hire a solicitor and notary

Having a notary on hand is not legally required but is highly advised. They can write up contracts for your property whilst checking you’re complying with local laws.

Solicitors are needed for a variety of checks, like checking the seller is the legal owner of the property. Many Spanish property lawyers are bilingual. This can help streamline both negotiations and paperwork with potential sellers. They’ll also be able to educate you on conveyancing and property law in the Spanish region you’re buying in.

You’ll need to hire a UK conveyancing solicitor as well if you’re considering selling up and moving to Spain. We’ve helped residents become expats in Spain with our own conveyancing service. One customer, Charles, called the process of working with our partners ‘A doddle!’.

3. Reach out to a mortgage broker

UK expats can still apply for a mortgage in Spain, though there is a slight drawback. Expats receive a lower loan-to-value (LTV) rate than Spanish residents, meaning you’ll need a bigger deposit to secure a property. Spaniards can usually borrow up to 80% of a property’s price, non-residents receive a maximum of 60-70%.

Mortgages in Spain start at a minimum of 5 years and extend up to 30 years. All applicants need to complete their mortgage by the time they’re 75. It’s worth remembering that non-resident mortgages have higher interest rates. Expect to get somewhere between 2-2.5% compared to 1% for Spanish nationals. This is still dramatically lower than mortgage rates in Britain.

Mortgages are not finalised in Spain until after a contract of sale is signed. However, you’ll need a preliminary idea of what mortgage you’d receive. Certain estate agents won’t progress your application without already having a mortgage proposal to hand.

We also recommend opening up a Spanish bank account for your mortgage and bills. Otherwise, you may encounter unwanted costs for converting currency from an international bank.

4. Estate agents

Unless you are buying from a private seller, you’ll be purchasing a property through an estate agent. If you are, you’ll first want to ensure that all business is above board. Consult your solicitor or notary if ever unsure. That said, a good estate agent can be of great use in sourcing a property. They can also assist during negotiations between you and the seller.

Estate agent fees are not set in Spain and are instead negotiable. Regulations are not as stringent as in the UK, so make sure you’re not being fleeced. Around 3% of the property price is a good estimate. You have complete autonomy over who you use as a notary, mortgage provider or solicitor. Thus, you can take recommendations from your estate agent but are not obliged to agree.

Make sure before proceeding to check with the Spanish land registry (Registro de la Propiedad). Firstly, check that the seller/estate agent has the appropriate planning permission. You should also check there are no outstanding debts attached to the property. This is because the buyer inherits all attached debts under Spanish law. Your solicitor can help with these examinations.

5. Arrange a survey

A property survey is not mandatory but is recommended when finding a potential property. You’ll have two types of survey to pick between - a valuation survey and a building survey.

These act similarly to RICS Level 2 and 3 surveys in the UK. A valuation survey offers a surface-level examination to check for obvious defects and to estimate the property price. A building survey will delve deeper, checking structural integrity as well as elements like sewerage and the roof. A building survey will cost more but will give a much clearer image of the property’s condition.

6. Negotiate a price

Once you’ve found a property and examined it properly, you’ll need to agree on a price with the seller. This can be done verbally to begin with, after which you’ll want a notary to write up a written agreement. This written agreement will then become a preliminary contract.

In Spain a stated property price is a rough estimate set by the seller, meaning most will be open to negotiating. Don’t start too low or you may upset the seller, but ensure you stay within your price range and barter for a better deal.

7. Sign a preliminary contract and pay your deposit

When you’ve made all the checks you want, you can make an offer. Once accepted, your notary will need to write up a preliminary contract. When signed, the buyer usually pays their deposit for the property - traditionally 10%. Unlike in the UK where a deposit is paid to a trustee or notary, payment is made directly to the seller in Spain.

From here, you’ll need your solicitor to process all the necessary checks. This will include writing up and submitting a public deed of housing (title deed) to the land registry.

A title deed will include details such as:

• Existing outstanding charges attached to the property.
• The receipt for the last property tax and rubbish collection tax bill.
• A certificate confirming all payments are up to date and in line with regulations.
• The distribution of expenses between the buyer and seller.
• Confirmation of the payment of notarial fees.
  

8. Take out home insurance

It’s a good idea to protect your new property immediately. A home insurance policy covers you against fire, floods, natural disasters and other damages. Many mortgage providers won’t grant you a mortgage without an insurance policy in place. Certain brokers will offer their in-house insurance as part of a package.

9. Complete the purchase and finalise your mortgage

After all the checks are complete, you’re ready to sign a contract of sale (escritura de compravento). This is done in front of your assigned notary, after which the sale price and taxes are due.

In Spain, your mortgage cannot be approved until a contract of sale is signed. Thus, you’ll need to insert a clause into the contract that allows you to pull out if your mortgage falls through.

10. Hire an international removals company

With a property secured, you can begin your move to Spain by booking a removals company. You’ll need to decide on how you want your goods delivered to your new address. Our guides on road freight, air freight and shipping costs to Spain can help narrow down the best method for you.

Buying Land in Spain

A popular alternative to buying a home in Spain is purchasing land and then building your own. This is a completely workable way of getting the exact house you want, though you need to be wary. Many inexperienced foreign buyers have been conned in the past by shady sellers and fake estate agents.

A common mistake is not checking if the seller possesses the correct planning permission to start construction. If they don't, you might find your new home being quickly torn down by local authorities.

If you’re working with the shell of an existing property, you’ll also need to check that it’s structurally sound. If it needs repairs, you might drain your available funds. Finally, check with the land registry that there are no building restrictions on the land.

Commonhold Law

Those buying a property within a multi-occupancy development will be subject to Spanish Commonhold law.

This means that every owner onsite has become part of the localised Community of Owners. Each resident then shares co-property over the common elements of the building. Examples of such spaces include stairs, lifts, swimming pools, drains and electrical wiring. As a result, you and other occupants have a responsibility to maintain these areas. You'll also have to contribute to expenses made for communal areas on a pro-rata basis.

What to Watch Out For

Foreign buyers encounter faux estate agents and property scams throughout Spain, so it’s important you do your homework. Before committing funds or resources, you can minimise risk by checking the following:

• If there is an existing mortgage, check the outstanding amount isn’t the same as the sale price. If so, a down payment can’t be made to the seller as the whole purchase price is instead owed to the bank.
• Confirm at the land registry that the property and/or land matches the details you’ve been given. Also, check that the seller is the registered owner.
• Have your solicitor confirm that the seller isn’t a company that’s near bankruptcy.
• Check that no legal proceedings have commenced against the seller for violating property law.
• Once you’ve paid a deposit, make sure the time between paying it and the final sale deed being issued isn’t too long.

Finding an International Removal Company

Once you’ve bought a property and applied for a visa, you’ll be ready to plan your move.

At Compare My Move, you’ll be connected with only verified removal firms that can guarantee a great quality of service. Fill out our international removals form and you’ll be matched with up to 6 of the best businesses to help you move.