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A Home Buying Guide for Expats in Spain

A Home Buying Guide for Expats in Spain

Data suggests that foreigners in Spain purchased close to 15,000 homes in the first quarter of 2017. In the same year, the country’s housing market recorded a year-on-year growth of 4.47%, the highest in a decade. The Spanish real estate market has been showing signs of revival after the prolonged slump, and both locals and foreigners are purchasing homes with the hope that the market will get stronger. If you, as a foreigner, plan to buy a home in Spain, various aspects require your attention.

 

Can Foreigners Buy Homes in Spain?

Foreigners may purchase real estate in Spain without any restrictions, be it land, residential, or commercial. However, you will need a Número de Identificación de Extranjeros (NIE), which basically functions as an identification number for foreigners. If you live in Spain you may begin the process by visiting your closest police station. If you’re outside of the country, you may apply for an NIE by visiting the Spanish consulate.

 

The Golden Visa Program

Spain currently offers a special Golden Visa program for foreigners who wish to buy real estate in the country. If you plan to invest EUR 500,000 or more in one or more properties in Spain, you end up qualifying for a residency visa. While the Golden Visa is not a work permit, it lets you live in the country indefinitely.

 

Pitfalls and Scams

There have been numerous reports of overseas buyers being taken for a ride by unscrupulous real estate agents and developers who make them buy illegitimate properties. There are instances when buildings are constructed without the required planning permissions in place, only to be demolished by local governing bodies later. There are also cases where the quality of construction is not up to the mark, resulting in expensive repairs.

The British Foreign Office asks buyers to exercise due caution when buying a home in Spain. Among other things, it suggests that you check the credentials of the estate agent and lawyer you work with, and also go through the land registry.

You should ensure that there is no outstanding debt linked to the property you wish to purchase. This is because any debt or mortgage linked to a property is transferred to the new owner upon the sale of the property. Other than a mortgage, debt may also come in the form of unpaid property taxes and payments to a tenant’s association.

 

A Home Buying Guide for Expats in Spain

 

Cost of Buying a Home in Spain

Home buying costs in Spain vary from one region to another, and they are typically borne by the buyer. Real estate agent and lawyer fees are not fixed and, therefore, open to negotiation. Typically, real estate agent fees vary from 3% to 10%. Fortunately, real estate fees are usually paid by sellers. Other costs associated with purchasing a home in Spain include:

  • Property transfer tax of 5% to 10% (for existing properties)
  • IVA or VAT of 10% (for new properties)
  • Land registration fee, title deed tax, and notary costs of 1% to 2.5%
  • Legal fees of 1% to 2%

 

Paying for the Purchase

You may qualify for a mortgage through a Spanish bank as a resident or a non-resident. As a resident, you may qualify for a loan of up to 80% of the property’s value. As a non-residential borrower, you may still qualify for around 60% to 70% of the home’s cost.

If you plan to make the down payment from outside of Spain, you might benefit by turning to a specialist money transfer company instead of a bank. This is because the former are usually more cost effective than the latter. Some of the top companies that let you transfer money to Spain include TransferWise, OFX, WorldFirst, and WorldRemit.

 

Conclusion

Buying a home in Spain is not as complicated as one might imagine, and the market seems to be picking up, making it favorable for investors. As long as you take the required precautions, there is no reason why you should not think about purchasing a home in this country.