The lure of the Mediterranean Sea and the comfortable relationship the British buyer has with the Spanish culture mean these areas are very popular indeed for the second home/holiday home buyers who want to escape the long English winters.
Spain is twice the size of the UK but with only two thirds of the population; it’s spacious. It has
something for everyone; great beaches, beautiful countryside and stunning architecture in its cities and towns. Spain is a cheap place to be, costing very little to eat and drink well here.
Spain was hit hard by the financial crisis but just like it’s Iberian cousin, Spain is bouncing back. Between the final quarter of 2008 and Q1 of 2017, property prices fell by an average of 43% but recovery has been evident since 2016 with prices rising consistently. Whilst many areas in Spain have yet to return to pre-crash levels, 10-year-record-breaking numbers of Spanish mortgages were granted in 2017 suggesting Spain is back on buyers’ radars.
As of mid-2018, Prices in Spain are still hugely discounted. Confidence is returning to the market from tourists and buyers alike meaning those that see themselves as Spanish property owners have a window of opportunity to snap up the remaining bargains.
In 2017, the total number of home sales in Spain increased by 14.6% from the previous year, with house sales expected to rise by between 10% and 15% to reach about 550,000 transactions this year. This rise in transactions was mainly driven by foreign investors buying homes on the coast and in cities like Barcelona and on the Costa del Sol.
In 2017, average apartment rents in Spain rose by 8.8% and nationwide rents have risen by 18% in the last four years. Nine of the ten municipalities recorded the highest increase in rents in the past four years. Yields in Spain continue to recover with smaller apartments being attractive investments.
Here are some key facts:
- House prices Rose 3.32% in 2017, projected 6.1% in 2018
- FDI 6th Globally, 13.1%
- Economy Growing – rose by 3.1% in 2017
- Interest rates Low: 1.2%
- Lending in 2017 saw the largest amount of mortgages since 2008
- Regular Flights: Yes (and cheap)
- Open all year round: Yes
- Ex- Pat communities: Yes. Large ex-pat communities throughout Spain
- Attractions: Great beaches, cultural cities and value for money (cheap)
- Climate Average of 320 sunny days a year (Costa del Sol)
- Primary languages: Spanish/ English
- Purchase costs: 10%-15% Generally covers taxes and fees
- Taxes: Low 7%-10%
Why buy in Spain?
Now is the perfect time to buy as demand is returning with prices still at an affordable level and mortgages at good rates. Spain is a wonderful place to live or visit and flights are cheap. It is the world’s third most popular tourism destination behind France and the USA.
Holiday Homes/ Lifestyle
Spain is an excellent location for British holiday-home buyers. Flights are regular and cheap and there are lots of ideal towns and resorts within an hour of all major Spanish airports. You also don’t need to be a resident in order to purchase a property in Spain. The financial crisis hit hard in Spain so property prices are still low. Banks are also divesting themselves of repossessed properties of all types (both finished and unfinished).
Spain encourages real estate purchases from foreigners. You’ll need to visit a local police station with your passport to obtain a financial number before entering into any transaction. For EU citizens this can often be done same-day but for those buying from outside the EU this can take longer.
It is worth ensuring you have good bilingual legal advice when purchasing a property anywhere and Spain is no different. Under Spanish law, debts associated with the property are transferred on sale so it is important to ensure the property is unencumbered and all debts are dealt with before completing on any purchase.
The IMF has pushed for sweeping banking reforms in Spain meaning that there are only 25% of the mortgage lenders available to foreigners that there once were. Lending criteria is tighter than it has been in the past so be sure to discuss your mortgage with a specialist before making any commitment.
Brits are returning to Spain, re-joining those Ex-Pat communities that boomed in the 1990s. Relocators can become a temporary resident straight away and can apply to be a permanent resident after 5 years. Temporary residency does not require you to live in the country however permanent residency and citizenship are different. To become a permanent resident of Spain you must live in Spain.
Spain has capital gains tax of 21-27%. There are also other taxes and fees to take in to account such as Property Transfer Tax, 10% VAT (new builds) and legal fees. With that said, popular resorts are seeing growth in rent demand, increased yields and fewer void periods suggesting, if the numbers stack up, Spain could be an excellent investment location despite one or two hoops that have to first be navigated.
The Spanish Golden Visa scheme, launched in 2013, grants Citizenship in return for a €500,000 real estate investment. Investors will also receive residency for their family. Unlike Portugal, permanent residency is required for Spanish Citizenship.
Citizenship can also be applied for without investment after 10 years of residency.