A Real Estate Agent's Guide on How to Buy Property in Spain in 2024

Buying a property in Spain is a dream many Northern Europeans have, as it gives them the opportunity to escape from the grey, cold, and rainy winters. As an estate agent, I have helped over 100 people in buying their Spanish dream home over the last two years.

These experiences have given me many insights into the questions people have in this important phase of their lives, so I decided to put all of the useful information together to help anybody out there who is at the point of purchasing a property in Spain. In this article I will cover the following topics:

Owning a Home in Spain – The Statistics

Homeownership in Spain is high, with about 80% of Spanish residents owning their property and many without a mortgage. According to Eurostat, the statistical office of the European Union, the homeownership rate in Spain was 76,5% in 2020. This is higher than the EU average, which lies at 69,2%. Because of this, Spain ranks as one of the countries with the highest homeownership rate in Europe.

The reason why Spain has such a high homeownership rate can be found in the fact that there are many properties that have been in the same family for generations and passed over as an inheritance. This also explains why many people own a property without having a mortgage, as mortgages have been paid off already decades ago.

Currently, the many inherited properties in Spain have as a result that many properties are being left empty while not being maintained. This is a direct effect of the property inheritance law, because after the passing of a family member, the property will be distributed among legal heirs according to the rules of intestate succession.

In general, this means that the property will be divided among the spouse and children of the deceased. If there is no spouse or children, the property may go to other relatives, such as parents or siblings.

As you can see, a large number of family members can get involved in this process, and in the case that one of the family members doesn’t want to sell the property, this can’t happen and the property will in most cases be left empty.

This leads to fewer properties available on the market to buy which is why the Spanish government is planning on changing these property inheritance laws. They are aiming on making it easier for families to decide to put a property up for sale which will stimulate the housing market.

Is It Better To Rent Or Buy A Property in Spain?

There is no right answer to whether it is better to rent or buy a property in Spain, it really depends on your own, personal situation. Many of our clients who don’t know the area they decided to move to yet, like the idea of renting first. This gives them the opportunity to do some research and experience what it feels like living there. Even if you have already chosen a town or city you would like to buy in, it can be useful to have a try-out as there might be areas that suit you better than others.

Another aspect that can change the way you get into this process, is whether you have children or not. Many parents are wondering how their children will cope with moving to another country where they speak a different language and have to make new friends. By renting first, you can give your children some time to get used to their new situation without having to cut ties to their home country right away.

However, if you are in a good financial situation, you might be better off buying right away if you’re looking in the right areas. Buying a property in Spain is often a good investment and even if you decide not to live here yourself all year round, you can rent the property out and get a great return on investment. In areas such as the Costa Blanca, Costa del Sol, Barcelona and Madrid, demand for rental properties is high, which makes rental prices increase.

As I mentioned before, there is no right or wrong answer to the question if it is better to rent or buy a property in Spain, it all depends on your personal situation. I would recommend using a reputable estate agency in your area to advise you on what would be best for you.

Buying a Property in Spain as an Expat

We now know that there are many homeowners in Spain, but more and more foreigners find opportunities in buying property in Spain as well. According to the Spanish Property Registry, foreigners accounted for 12.6% of all residential property purchases in Spain in 2020.

British citizens were the largest group of foreign buyers in Spain in 2020, accounting for 11.7% of all foreign purchases. This was followed by Moroccan buyers (8.7%), French buyers (8.3%), and German buyers (7.6%).

The regions of Spain with the highest percentage of foreign buyers were the Balearic Islands (32.5%), the Valencian Community (28.5%), and the Canary Islands (25.6%). The most popular types of properties purchased by foreign buyers in Spain are apartments and flats (58%), followed by detached houses (22%) and townhouses (10%). The average price of a property purchased by a foreigner in Spain was €167,714 in 2020, compared to the national average price of €183,000.

Buying a Property in Spain as an Expat After Covid-19

After COVID-19, many estate agencies expected fewer expats to come out to buy in Spain, as people were expected to not take that many risks anymore. However, the opposite happened!

Since 2019, demand for Spanish property among foreign buyers has remained strong as many people are looking for second homes or a change of lifestyle. There has been a shift in demand from urban areas to rural or coastal areas, as people understandably started preferring more space and access to outdoor activities.

The pandemic has also led to an increase in remote work, which has made it easier for some people to live and work from Spain while keeping their jobs back home. I also noticed that people didn’t want to wait anymore to increase their quality of life, as they realized that you never know what can happen.

There has been a slight decrease in property prices in some parts of Spain, but overall the market has remained stable and resilient. The Spanish government has implemented measures to support the property market and attract foreign investment, such as offering residency permits for property buyers and reducing taxes for foreign investors, which is especially helpful for many Brits after Brexit.

Requirements for Expats Buying a Property in Spain

The requirements for expats buying a home in Spain are pretty straightforward. First of all, you need a tax ID (NIE number). You can get this NIE number in Spain at the local extranjeria (this is usually a police station) with your passport. If you are still in your home country, the Spanish embassy in your country can arrange this for you. For Spanish or EU citizens this number can generally be processed on the same day, for third countries such as the UK or USA this can take up to a few weeks.

If you are a national from a so-called third country such as the UK or USA, you need to obtain a visa to be able to reside in the country for more than 90 days per 180 days. The most common visas are the Golden Visa and the Non-Lucrative Visa. In 2023, the Spanish government announced that they are going to introduce another visa, the Digital Nomad Visa. The Digital Nomad Visa is Part of the Golden Visa plan and will make it easier for remote workers from these third countries to live and work from Spain.

Financing a Property in Spain For Expats

These days, foreign banks are less willing to give out mortgages to buy a property in Spain. Because of this, chances are you will have to head out to a Spanish bank to apply for a mortgage. Spanish banks are known for asking for a large sum as a downpayment before giving out a mortgage. On average, Spanish residents would have to put down a minimum of 20% of the purchase price of the home, and for non-residents, this percentage goes up to 30%. So if you would like to finance a home of €300.000, you would have to put down €100.000 to become eligible for a mortgage.

If you are asking yourself whether you should find a property before sorting your financing, the answer is no. It is important to first get pre-approved for a mortgage to understand your situation, and to know how much money you can lend. It would be a shame if you found your dream property and reserved it, to later find out that you can't loan the necessary amount and lose out on the house AND your reservation deposit, right?

It is advisable to talk to a few different banks to see what they can offer you based on your situation, as some banks are more flexible than others. There are also many mortgage brokers in Spain who have good connections with the different banks, so they can provide you with better conditions.

Return On Investment For Buying A Property in Spain

We touched slightly on this topic in the paragraph about renting or buying in Spain: Buying a property in Spain can give a great return on investment, especially for expats. If you decide to not live in Spain all year round but to only use it for a few weeks a year, renting it out could be a great solution. A recent article from In Spain News showed that rental prices in Spain continued to rise in 2023, and experts predict a greater imbalance between supply and demand in the coming year.

One of the basics of economics is that a high demand and low supply, cause prices to increase. This might not be to the advantage of the many people who are looking to obtain a rental property, but for investors thinking about buying it’s only good news. The return on investment of buying a property in Spain is so high because even if you have a mortgage, this will easily be covered by the rental income you can acquire. So we can say that the answer to our question is YES! It is interesting to buy a property in Spain as an expat.

The Property Market in Spain in 2023

The property market in Spain is constantly changing and knowing what the predictions are can help you make a good decision on when to invest. We will cover the current average property prices and the outlook for the future.

Property Prices in Spain

According to data from the Spanish property portal Idealista, these were the average prices per m2 in different areas of Spain:

Madrid	€2909 per m2
Barcelona	€4435 per m2
Valencia	€1883 per m2
Malaga	€1883 per m2
Alicante	€1498 per m2

Expected Development of Property Prices in Spain

Idealista also did research to the development of property prices in the years 2022-2032. They expect 2022 to have been a turning point, with property prices falling before they start climbing up again. In Spain there are typically cycles of 15 years before a new property ‘boom’ happens. In the graph underneath you can find the predicted development of property prices for the coming years.

We have to understand that these figures are predictions, but history has given us proof those cycles usually work this way.

As a conclusion we can say that average housing prices have increased since 1985 but are expected to fall a bit between now and 2028, after which they will rise again until 2037.

How to Find A Good Property For Sale in Spain

Now we know the current market situation, it is time to dive deeper into how you can find a good property for sale in Spain. While choosing a property to buy it is important to verify the trustworthiness of the listing and the seller, so you can limit the potential problems that can come your way in the buying process.

A personal experience I have had was a buyer who put down a reservation and paid the 10% deposit, and after finding out that the property was owned by 4 different people and the sale couldn't go through. This is why it is important to do your research upfront to minimize the chance of things like this happening. Examples of ways to find a good properties for sale in Spain are:

Real Estate Agents

Real estate agents know the local property market extremely well and because of this, they can be a valuable resource for finding properties for sale in Spain. Your estate agent will sit down with you to get to know your criteria, so you won't waste a lot of time on visiting properties that don't meet your requirements. They also have access to a wide range of properties for sale in the area and can advise you on all the various aspects of the properties. It's important to work with a reputable and licensed real estate agent who is knowledgeable about the local market. As estate agents ourselves, it would be strange not to recommend using one, but especially in Spain it is important to have somebody that knows the area and language to help you through the process and look out for you.

Property Portals

If you would prefer to take the search into your own hand, you could start looking on property portals such as Idealista, Fotocasa, and Kyero. These portals allow people to search for properties for sale in Spain based on various criteria such as location, price, and property type and often have a large selection of properties. They work with useful tools for finding properties that meet your needs, however, you won't have the personal support a real estate agent can give you.

Property Auctions

Property auctions can be a way to find properties for sale in Spain at a lower price. Auctions are typically held by banks or government agencies to sell repossessed properties. It's important to do thorough research and understand the terms and conditions of the auction before participating.

Classified ads in local newspapers or online platforms such as Milanuncios or Facebook Marketplace can also be a way to find properties for sale in Spain. However, it's important to always double-check the legitimacy of the seller before getting into the process with a seller on these platforms.

Word of Mouth

Word of mouth can also be a way to find properties for sale in Spain. Friends, family members, and acquaintances who have purchased a property in Spain may have recommendations for real estate agents or properties that are for sale.

The Process Of Buying A Property in Spain

The process of buying a property in Spain can be long, but with the right support, you will be more than fine. These are the phases you will find yourself in when buying property in Spain:

Research

The first phase of buying a property in Spain is research. This includes determining your budget, deciding on the location and type of property you want to buy, and researching the local real estate market.

Property Search

Once you have an idea of what you're looking for, the next phase is to search for properties that meet your criteria. This can be done through various channels, such as real estate agents, property portals, and classified ads.

Property Viewings

Once you have identified properties that you are interested in, the next phase is to arrange viewings. During the viewing, you can assess the property's condition, features, and location to determine if it meets your needs.

Negotiation

If you find a property that you would like to purchase, the next phase is to negotiate the terms of the sale. This includes the purchase price, payment schedule, and any other relevant conditions.

Legal Process

Once the terms of the sale have been agreed upon, the next phase is to complete the legal process of buying the property. This includes hiring a lawyer, obtaining a NIE (foreigner identification number), and signing a sales agreement.

Payment

Once the legal process is complete, the next phase is to make payment for the property. This typically involves paying a deposit and then making the final payment at the notary once all legal requirements have been fulfilled.

Property Transfer

The final phase of buying a property in Spain is the transfer of ownership. This includes registering the property with the Land Registry and paying any associated taxes and fees. It's important to note that the specific steps and timelines involved in buying a property in Spain can vary depending on the location and type of property, as well as other factors such as the presence of a mortgage.

As an estate agency, it would only be logical to assume that we recommend you to use an estate agent in the process of buying a property in Spain. We do have our reasons for this! A reputable estate agent has access to a wide range of property listings, can arrange property viewings, and can negotiate on your behalf to ensure you get the best possible price for the property. They can also provide legal assistance and after-sales support, helping to ensure a smooth and successful purchase process.

Buying a Plot of Land in Spain

When buying a plot of land in Spain, the process will be more or less the same as when you buy an existing property. However, there are some differences to take into consideration when you compare it to buying a resale home.

When buying a plot of land, due diligence is especially important. You must ensure that the plot has all the necessary permits and permissions, such as planning permission and building permits. With a house, these permits are already in place. Another difference is the fact that you will need to construct a home on the plot you have bought, so you would need to hire an architect and builder to design and construct your home. Because of this, it is important to consider the total costs of the project, as it includes multiple services to get your home built.

The construction process of home can take several months or even years, depending on the complexity of the project, and also banks can be more hesitant to give out mortgages and interests may be higher. It is important to work together with an experienced lawyer as there may be additional steps required, such as obtaining permits and licenses. Buying a plot of land in Spain can offer greater flexibility and customization than buying a house. However, it can also be more complex and require more time and effort.

The Costs Of Buying A Property in Spain

Now we know that buying a property in Spain has many advantages, it is time to take a closer look at the costs involved. In addition to the purchase price of the property, there are several other costs that you should budget for when buying a property in Spain.

Property Transfer Tax (ITP)

If you are buying a pre-owned property, you will pay a so-called transfer tax (Impuesto de Transmisiones Patrimoniales/IPT in Spanish). This tax percentage depends on the area you’re buying in but will typically range between 8% and 11%. In some regions, first-time buyers may be eligible for a reduced rate or exemption from ITP.

Value Added Tax (VAT)

VAT is a tax that is applied to new-build properties in Spain. The current rate of VAT is 10% of the purchase price of the property. In some cases, the developer may include the VAT in the purchase price, but it is important to confirm this with your lawyer or real estate agent.

Notary and Land Registry Fees

Notary and registry fees are expenses related to the legal process of buying a property in Spain. These fees are typically paid by the buyer and can vary depending on the purchase price of the property. Notary fees are based on a sliding scale, while registry fees are a fixed amount.

The Land Registry, also known as Registro de la Propiedad, is responsible for recording the ownership of the property in your name once the purchase has been completed. You will be required to pay fees for this service, which typically range between 0.5% and 1% of the purchase price, and may vary depending on whether a mortgage is involved.

Legal Fees

Legal fees are associated with hiring a lawyer to represent the buyer in the purchase process. These fees can vary depending on the complexity of the transaction and the services provided by the lawyer. Some lawyers prefer to charge a fixed amount, whereas others will charge a percentage of the purchase price. It's advisable to obtain quotes from multiple lawyers and compare their fees and services before making a decision.

Mortgage Fees

If you require a mortgage to purchase the property, there may be additional fees associated with the mortgage, such as valuation fees, mortgage arrangement fees, and mortgage registration fees.

Property Inspection Fees

Before buying a property in Spain, it's advisable to have a property inspection done to identify any potential issues with the property. The cost of a property inspection can vary depending on the size and location of the property.

Utility Connection Fees

If the property is not already connected to utilities such as water, electricity, or gas, there may be additional fees associated with connecting to these services.

Overall, the costs of buying a property in Spain can vary depending on many factors, including the location of the property, the purchase price, and the services required. Buyers should carefully consider all of the expenses involved and budget accordingly to avoid any surprises during the purchase process.

What Not to Forget After Buying A Property in Spain

Get An Insurance

Just as back home, in Spain it is also important to insure your property against any damages or losses. A building insurance policy covers the structure of the property against any natural disasters, such as fire. This type of insurance is often a requirement for mortgage providers. If you have invested in a property in Spain and decided on renting it out, many rental agencies will oblige you to have this type of insurance as well.

Another type of insurance that is important is contents insurance. This type covers your belongings in your home. It isn’t legally necessary to have this insurance, but wise to have especially if you have any belongings in your home and/or rent your property out furnished.

Setting Up Utilities

To live in your new home it is important to be connected to utilities. You can easily get a contract with your local water, gas, and electricity provider, and with a resale home you would only have to change over the name. However, there might be services such as internet that would depend on your personal preference. Most urban areas of Spain will be connected to fibre internet these days, but it might be worth it to check with your estate agent upfront to see what the possibilities for your house are.

Community Fee

If you have bought a townhouse or apartment which is part of a community, you are likely to have to pay a community fee. The community fee is generally a quarterly payment that the community uses for the maintenance of certain facilities in the community, such as a swimming pool, lifts, a concierge, and maintenance of the exterior of the building. The amount of community fee varies largely by location and

Selling a Property in Spain

Chances are that when you have bought a property in Spain, one day you will find yourself in a place where you would want to sell it. Or maybe you are an investor looking to flip a home and resell it with equity. In this case it is important to be aware of the Capital Gains Tax (CGT) or in Spanish, Plusvalia.

Sellers pay Capital Gains Tax on the difference in price in what they bought the property for compared to what they sell it for. The tax will be calculated in a percentage over this amount:

First €6000	19%
€6000 - €50.000	21%
€50.000 or more	23%

This means that if you have bought a property for €250.000 euros, and later sell it for €325.000, you will pay 23% tax over €75.000 which is €17.250. It is important to keep this in mind while getting to a price to sell your home for.

Conclusion

As you can see, there is a lot to take into consideration when buying a property in Spain. However, with the right help of an established estate agent and lawyer there won’t be much that can go wrong. If you’re thinking about buying a property for sale in Spain, don’t hesitate to contact us. We have over 25 years of experience as a real estate agency and have the answers to all of your questions.