Spain is synonymous with sunshine with the Costas and their sandy beaches satisfying even the most demanding sun-worshipper. But there is so much more - from the rugged beauty of the north coast to the cultural highlights of Gerona and Madrid
For family fun with a bucket and spade on the beach there’s really nowhere better than the Spanish costas. If you want to sit in a bar eating little plates of delicious food, you will love it. If you fancy being bathed in warm sunshine even in January, the occasional round of golf, the grandchildren just a couple of hours flying time away, yep, this is the place.
Choosing where to buy your house in Spain might be your biggest problem. There are ten islands to choose from, the Balearics in the Mediterranean or the Canaries in the Atlantic.
Wherever you decide on, you will have a good choice of property. Spain has a wonderful culture, cuisine and countryside. It has some of the world’s great cities, like Barcelona and Seville, and 5,000 kilometres of its famous costas.
Spanish property law is relatively straightforward, but as everywhere, its special characteristics need to be fully understood.
Every plot of land has characteristics describing it in relation to a town or city (municipality): this defines it from a zoning perspective. The end use of the land is predetermined such as single-family home up to 2 floors, multi-storey building, green area, road, industrial area, etc. Investigating the zoning of the land one has chosen can be done at the local Town Hall. In many cases such as a 5th floor resale, in a building built many years ago in an urban centre, such an investigation regarding municipal zoning would probably be superfluous, as it would be unlikely that such property would exist unofficially, or be contrary to local zoning laws. However it would be still advisable to investigate future surrounding developments planned for the area. Where there is other recent or new development it is important to ascertain the zoning there to see whether this will affect with the purchaser’s plans.
Special consideration is given to land adjacent to the seashore. With such property, check with the Demarcación de Costas (Coastal Authorities) whose offices are located in the provincial capital: they control planning permission for coastal zones. The Town Hall will tell you if the plot in question is located in such a zone. A report from the Demarcación de Costas, will protect the purchaser in the case of disputes as the Coastal Authorities’ decision rules.
The property registry, (Registro de la Propiedad) records the rights and obligations regarding every piece of real estate in the country. All the significant information related to the ownership of real property is chronologically and permanently registered in a database. This is offers protection to anyone who needs to prove such rights, and gives security to the purchaser/owner. Although the public may access to this database, only qualified people, known as Registradores de la Propiedad, may amend its contents.
The basic real estate right recorded in the Property Registry its actual ownership of the property, and the first fact given is the identity of the owner. However, as in any other country, there are possible limitations to the rights an owner may have, such as a mortgage, a right of way, or an embargo declaration by the Tax Authorities, etc. These are all stated in the Registry, but analysing this information could be complex for the non-expert.
When this verification has been undertaken, the property must be purchased from its rightful owner via a purchase agreement. This is called an Escritura de Compraventa (public conveyance deed) and must be signed by the buyer and the seller before a public notary. This document confirms the details mentioned above. When signed by the seller, the purchaser and the notary it is entered in the Property Registry, and the new owner’s title to the property is unquestionable.
It is however common practice to pay deposits in order to reserve the property, prior to the Public Conveyance Deed, such, etc., initially signing only private contracts between seller and buyer. Preparing these contracts should be left to a trusted lawyer. They start the purchase process, which culminates in the Public Conveyance Deed and its subsequent registration. In order to sign these contracts, as well as to sign the Public Conveyance Deed, it is possible to be represented by attorneys, to whom power of attorney as a notary has been granted. Power of attorney signed before a Spanish notary public is just as valid as one signed before a Spanish Consul or Ambassador in any country, or even the one signed before any notary public in any country other than Spain. It is as important to control all the various points a private contract as with the public conveyance deed, and it may be desirable to leave this to an expert.
It is important to be alert to a number of other issues. In Spain, it is not uncommon for the seller to suggest officially declaring a price which is lower than the real one, which may enable the seller to reduce their capital gains tax, which is based on the difference between the amount originally paid for the property, and that received on the current sale. This not only risks violating Tax Laws, but also means that when the purchaser later decides to sell the property, his own declared purchase price is too low, incurring higher capital gains taxes. In effect the original seller has simply passed on his own tax liability to the purchaser. If the Tax Authorities review the value given to the real estate property purchased and find a substantial difference between what is declared as the price and the approximated market value of the property, there could be additional tax claims as well as other penalties.
Check on the existence of any burdens, loans and mortgages affecting the property. All contracts or deeds must state that the property is sold without burdens and encumbrances and free of occupants or tenants of any kind. If this is omitted and the buyer subsequently finds that the property is mortgaged but the seller is no longer responsible this could have very unpleasant consequences to a buyer, after the purchase transaction is completed,. If the property is to be purchased with a burden such as a mortgage which will be assumed by the buyer who will continue paying it, this should be specifically mentioned.
The current expenses affecting the property should have been paid by the seller, up to the time of completing the sale. This means obtaining from the seller the corresponding receipts for at least the last two billing periods. Those include each year’s Land rate taxes (Known as Impuesto de Bienes Inmuebles or I.B.I), Community fees, and where applicable, services such as water, electricity, rubbish collection, telephone, etc.
There are a number of expenses affecting property purchase. The first is a local tax on the increase in value of the land (also known as Plus Valía) – this should not be confused with capital gains tax. It is based on the theoretical increase in value of the land, regardless of whether or not there is construction on it. This tax is due from the seller since the longer a person has owned a property, the higher this tax would be, as all intervening annual revaluation scales would be applied on the land. However, it is quite common for both parties to agree that the purchaser would pay all expenses, including this one. The Town Hall can advise what is the amount due in any specific case, and this should be established before agreeing who will actually pay it.
Notary’s fees could typically be in a range of 250 – 500 Euros (US $320 to $640) set on a sliding scale. Again this is supposed to be payable by the seller, but is often actually paid by the buyer. The Land Registry expenses .amount is usually similar to that of the notary’s fees, and is always a purchaser’s expense.
The Impuesto de transmisiones patrimoniales y actos jurídicos documentados (abbreviated ITPAJD) or stamp duty is 6% of the purchase price, as declared on the public conveyance deed for purchases between private individuals. When the seller is a company or real estate agent, this tax is replaced by the IVA (Value Added Tax) of 7%, which is also paid by the buyer. Attorneys and agents expenses, if any are payable by the party who contracted the specific service.
Non residents may open accounts in any Spanish bank, usually in any type of currency they desire. This permits transfer and deposit of any amount from outside Spain. It is permissible to transfer any amounts of money from the a Spanish bank account to any other country, but there are regulations, specifically designed to prevent laundering of illegal money. Any non-resident person who imports cash or banker’s drafts to Spain for more than 6,000 Euros must declare this at the Spanish frontier when entering the Country. Without this declaration, there could be problems when depositing the cash or banker’s draft in a bank account, or when these funds are used for a payment. Similarly, anyone, whether resident or non-resident, taking more than €6000 cash or cash bankers drafts out of Spanish territory, must also declare it at the Spanish frontier when leaving Spain. If such undeclared amounts are detected, there could be considerable repercussions.
There are three different climate zones in Spain. Visitors can generally expect a Mediterranean climate, characterised by hot, dry summers and mild, rainy winters. The vast central plateau has a more continental influenced climate with hot, dry summers and cold winters. Rain generally falls mostly in spring and autumn. The mountains surrounding the plateau have a higher rainfall and often experience heavy snowfalls in winter.
North of the Cantabrian mountains, the Basque Country, Cantabria, Asturias and Galicia have a maritime climate, with cool summers and mild winters. The weather is often cloudy with frequent rainfall. On the Mediterranean coast, the climate is moderate with rain in spring and autumn. The area around Murcia has an almost African climate; rainfall is low and the Calima, or heat haze, is common during summer. On the Atlantic coast, the summers are cooler and fairly heavy rainfall occurs during winter. Inland, the summers are hot and the rainfall decreases. The Balearic Islands have a maritime climate, with cool, wet winters and warm, dry summers.
As always, location is key. For those seeking a property in more authentic Spain, there are hill-top white villages with farmers riding donkeys through them, Moorish wonders such as the Alhambra and the coolest of cities Barcelona and Madrid – and prices have already begun to rise in Marbella, hotpots in the Balearics, and the ever-popular Costa Blanca.
There are a number of property hotspots in Spain to consider right now – in fact, some of them never really cooled off, such as recession-proof Mallorca, still attracting the mega-rich and royalty, and ever fashionable Ibiza, drawing the children of the buyers who discovered it in the Sixties. You can get a two-bed apartment in Mallorca from around €150,000, although you’ll pay more in the charming city of Palma, that is reinventing itself as a more user-friendly version of Barcelona.
Of the mainland Costas, the current favourites are the Costa Blanca and Costa del Sol. The southern Costa Blanca has so many advantages for property hunters, including a plethora of golf courses near popular towns like Villamartin and Playa Flamenca, and just about the healthiest climate in Europe. Prices vary between the desirable areas and the overbuilt areas but are generally low – two bedroom apartments near the sea from €50,000 around Torrevieja.
In Cabo Roig, to take another popular resort, you might pay €90,000 for a spacious two-bed apartment with a sun terrace. Inland a little, in the village of Algorfa popular with expats, a comparable property will be nearer €70,000.
The northern Costa Blanca, less affected by development and with more building restrictions in place, draws buyers to towns including Moraira, Javea, Denia, Calpe and Benissa Costa. In upmarket Moraira, expect to pay €400,000 for a quality three-bed villa with a pool in a good location but in Benitachell you might get a four or five bedroom villa for €300,000.
Inland of these resorts, the Orba and Jalon valleys are increasing in popularity for buyers seeking a more tranquil location than the coastal resorts; and also more bang for their buck. In the Orba Valley you can get a three-bed villa with a pool for around €150,000-200,000, or a large restored finca for €450,000.
Going south to the Costa del Sol, glitzy Marbella might said to be well and truly booming, with new developments back in vogue and great demand for holiday rentals. You can get an apartment on a complex for €100,000 but a spacious apartment in a good gated community in a sought-after location would be nearer €300,000. Popular areas include Estepona, San Pedro, Nueva Andalusia, Mijas Costa and Benahavis. The Anglo-friendly resort of Benalmadena is popular with tourists and expats and you can get a two-bed apartment there for less than €100,000.
The nearby Costa Almeria, a stretch of unspoilt coastline between Murcia and Granada, is not as developed as the Costa del Sol, perhaps not as well-known by the British, yet its fans like the fact its villages retain much of their Spanish identity – it’s the “real Spain” still. Mojacar remains a popular spot, less than one hour’s drive from the airport, and a central location for getting around Almeria as well as a traditional holiday destination – ideal for families and couples in its own right. You have plenty of choice of one or two-bed apartments with a budget of €100,000; villas range from just over €200k.