Buying a property |
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Frequently Asked Questions About Buying a Property in Spain Q. What makes Resort Homes so unique? A. There are a number of factors that make us unique:
Q. What is the Rental Potential? A. Our target rental market is predominantly Northern Europeans, through our in house holiday company Resort Holidays, therefore, one thing to consider is that most families will take their annual holiday during the customary school holidays especially in the months of July and August. This is when the maximum rental income can be achieved on your property. However, there are other target markets within this potential client group. Couples, adult groups and singles are not normally restricted to school holidays and the summer months, and one of the attractions of Spain as a holiday destination, is that these holidaymakers may even prefer to take their holiday outside of school holidays, when the weather is still superb, but flights and accommodation is cheaper, hence the months of May, June, September and October become popular for these sun-worshippers. A third category of potential client comes from a range of sources. Golfers flock to the superb courses of the Murcia region throughout the year. Often travelling in groups, these golfers will normally play 5 or 6 courses during their stay, and will want to be close to the facilities, bars and restaurants. The golfing season normally runs from October to May. And let's not under-estimate the increasing numbers of tourists who are seeking to escape the harsh winter climates of northern Europe at every opportunity, whether it's for the odd weekend or for a more extended stay. And with most of the resorts having a full range of sports facilities and luxury spa’s, there is more than enough choice to fulfil even the most demanding of requirements. This explains why Spain is the No1 year-round holiday destination in Europe. (Source: A Place in the Sun 2008) To maximise your property's letting potential, we work with exclusive partnership agreements with most of the large travel companies such as; James Villas and The Cooperative Travel Group, this means that through Resort Holidays we do everything to ensure you receive the maximum rental return on your property. Q. Should I invest off-plan or buy a resale property? A. Buying a property off-plan means that you will be the first person to live in the property, everything will be brand new, fully functioning and you won't need to do a thing when you move in. Some people, however, may feel that what they gain in convenience they lose in character. You may feel that new properties do not have the charm, quirks or uniqueness of an existing re-sale property. In terms of an investment, buying off-plan can still be a very worthwhile investment. Off-plan properties tend to appreciate in value at a higher rate than resale properties, especially in the early phases of the development , which means you will have improved on your initial investment by the time it's built. The plus points with buying a resale property are, you can see exactly what your buying and you can move in immediately. In reality, there isn't an clear-cut answer to this question; It depends totally on your needs, personal requirements and financial situation. The team at Resort Homes will discuss, in depth your requirements, and advise you accordingly. Q. Once I've found a Spanish property I like, how do I go about buying it? A. Resort Homes will help and guide you through the process from start to finish. The process differs slightly for re-sale properties and off-plan properties. The first thing you will need to do is to appoint an English speaking Lawyer and open a Spanish bank account (Resort Homes can make recommendations). You will also need to have researched your mortgage options, if applicable. For re-sale properties, a non-refundable deposit of 10% is required. Your lawyer will draw up an ´option to purchase´ agreement based on the agreed selling price and completion date which both you and the seller are required to sign. Once all the necessary checks have been completed, you will need to sign the official purchase document in the presence of a Notary which will transfer ownership of the property, title deeds and land registration into your name. Your lawyer will explain this process in detail. For off-plan properties a reservation fee of €3,000 is required. Within 30 days you will be required to sign a purchase contract and pay a deposit of around 15% of the purchase price. This can vary depending on the development and we will confirm the payment structure of your chosen development at the beginning of the process before any reservation fee or deposit is paid. Your lawyer will than advise you when further payments are due (if applicable). On the day of completion, the balance of the purchase price is paid and the signing of the deeds takes place in the presence of a Notary. You can give your lawyer power of attorney to do this on your behalf. Q. Can I get a mortgage in Spain? A. You can get either a Euro or Sterling mortgage, although a Euro mortgage is advisable to avoid losing money as a result of exchange rate fluctuations. Halifax and other UK banks offer a special service for British customers wanting to take out a mortgage on a Spanish property. Many of the Spanish banks also specialises in expat mortgages and bank accounts. Spanish banks will usually lend up to 70% of the property value, although some may lend more to non-residents. Their choice of mortgages is more limited than that in the UK but it's a relatively simple process to secure a mortgage, provided you have evidence of income and a letter from your bank. Most mortgage products are repaid on an interest and capital basis, with a maximum length of 20 years. Resort Homes will help and guide you through this process. You will also need an NIE (see next page) to buy or sell a house in Spain, even if you are a non-resident. Q. If you buy off-plan, is there any guarantee that the developer won't disappear or go bankrupt before completion? A. By buying off a development through Resort Homes, we guarantee that you will deal only with developers who have the relevant licenses to build. When signing a private purchase contract - the point at which you pay the deposit - the developer will produce evidence of a bank guarantee or an insurance policy to protect your investment. If the developer then runs into problems, such as bankruptcy, your lawyer will ensure that all the money you have paid so far is refunded, plus interest. Q. How much extra should I budget for on top of the purchase price? A. Allow 10% of the purchase price to cover costs. These are:
Q. What are the guarantees of an off-plan property? A. By law new property comes with a 10 year structural guarantee. Also, the purchase price is fixed as soon as you pay the deposit. Q. Do I need to travel to Spain to sign the paperwork? A. No, you can give your Spanish lawyer Power of Attorney, which means that they can act on your behalf during each stage of the buying process. Q. What are community fees? A. If there are communal areas - gardens, pathways, swimming pools, security etc. - then you will have to pay a small sum at regular intervals for their upkeep. Resort Homes can advise you of the community fees applicable to each Resort. Q. Is there a council tax or rates in Spain? A. Yes, we have what is known as IBI tax (Impuesto de Bienes Inmuebles) , this is the equivalent of council tax or rates. It is based on the rateable value of your property and the bills are issued annually. Q. What are the costs of water, electricity and gas compared to back home? A. Generally the costs for these utilities are much cheaper than in the UK and Ireland. Consumption of course impacts on the costs, but generally the costs are much less. Q. What is a NIE number? (Número de Identificación de Extranjeros) A. This is an identification number for use by foreigners in Spain. You are required to have a number if you have dealings within Spain, even if you are not full time or tax resident. You can get a number from your local Police Station in Spain at the foreigners' department. We can help you to obtain the NIE number. Q. What is LIBOR? A. LIBOR is the London Inter Bank Offer Rate. A very widely used reference rate, it is calculated by averaging the rates at which a panel of London banks are quoting to lend money to other banks. LIBOR is published each day by the British Bankers Association in various currencies and for various maturity periods. Q. Can I live and work in Spain? A. EU citizens can live and work in Spain without needing any visas or work permits. As soon as you arrive in Spain you will need to apply for a tax ID number (NIE) from your local police station. You can live in Spain for up to six months a year without having to pay taxes there and without being a Spanish resident. Over that period you are officially a Spanish resident for tax purposes. Q. I've read a lot about 'Land Grab' in Spain - how does this affect me? A. The issue of 'land grab' is only applicable in the Valencia region, unfortunately it has been highly publicised over the last couple of years and has created unnecessary concern for people wanting to buy in Spain. The 'land grab' law (officially, the LRAU) was introduced in the Valencia region only in 1994 as a way of stopping speculators from snapping up huge swathes of rural land with the intention of developing it later. The town hall simply had to say they needed that land for 'public or social benefit' and they had the right to reclaim up to 70% of the land free or pay a tiny percentage of the market value. It was enough to put speculators off. But then some developers in certain areas spotted a loophole in this law and realised they could apply the same force to owners of isolated rural properties, claiming the land was needed to build new roads or water systems. A new version of this law - the LAU - is waiting to come into force this year. The law means these individual owners must either pay or hand over part of their land to help subsidise these developments and it makes no concessions for whether owners of the properties are foreign or not. Those who do not live permanently in the property have not been there to receive the allotted 15 days' notice in which they must present their objection. Problems arose in some specific areas including some parts of Javéa and Orihuela when some private developers, in league with planners at the local government, have exploited a loophole in the law where they could demand compulsory purchase for a discounted price or even charge the owner for 'urbanisation'. No properties in an already urbanised area are at risk - which includes almost all apartments, townhouses and most villas. But anyone considering buying any property in the Valencia region is advised to seek proper legal advice from an independent English-speaking lawyer who knows the local area and its laws. This is particularly vital if you are considering buying outside of an urbanised zone on rural land in the Valencia region. For more information on buying a property in Spain, Please, call Karolina or Julia on: +34 968 175 117, +34 679 005 228 or +34 618 163 719, or contact us by email: karolina@resorthomes.co.uk or julia@resorthomes.co.uk |
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