So, you know that you want to buy a property in Spain, but where do you start?
There is so much information out there and every agent you speak to tells you that their area is perfect for you, as is the property that they want to sell you… It can all be a bit confusing.
In this article I will go through the 5 steps that I would take before even looking at properties. After reading this article you will know how to focus on the right kind of property, in the right area, for the right price and take the first steps towards owning a property that make you happy into the future.
Step number 1 - Calculate your budget.
One of the things that comes as a surprise to most people when they start looking for a property in Spain is the cost associated with purchasing property. The taxes alone can be as much as 12% of the purchase price, and then on top of that the legal fees, notary fees, land registry fees and lots of other small costs all need to be taken into account.
Most agents will tell you that you need to budget between about 12 and 15% of the purchase price to cover the associated costs of purchase, but what they don’t often tell you is that the costs can vary depending on the type of property and the region of Spain in which you're buying.
Spain is made up of 17 autonomous regions all of which set their own taxes on property transfers.
Understanding what the costs are in different areas and what the costs associated with the different types of property are will not only help you to set your budget, but it will also influence the type of property you buy and it may even influence the region in which you buy.
To help you I have created a FREE calculator that automatically calculates all of the costs of any property in Spain. You can download it from the sidebar
To help you I have created a FREE calculator that automatically calculates all of the costs of any property in Spain. You can download it at the end of the article
Step Number 2- Work out your ongoing budget.
Once you work out what your budget is for buying a property, you need to work out how much money you can afford to spend servicing and maintaining that property month by month and year by year.
Whatever type of property you buy you will need to allow for local taxes and they can vary a fair bit from one municipality to another, so again, those taxes may influence the area in which you look for property.
You will also have to allow the standing charges for utilities, even if you are not staying there more that the odd week at a time.
If it's a holiday home you're going to have to think about non-resident tax and you will need to appoint a fiscal representative on the ground in Spain.
You may need to pay for a pool cleaner, a gardener or a key holder.
Many properties in Spain, for example apartments in blocks or properties in urbanisations and golf resorts will have community fees that you need to account for. These can vary quite a lot depending on how many properties there are within the community and what kind of facilities the community has to pay for. You are also going to have to allow for contingencies.
Make sure you calculated your monthly budget and give yourself some breathing space on top of it so that when you look at properties you can check that that property fits within your ongoing budget.
The whole idea of buying a property in Spain is to have somewhere you can go to relax and enjoy yourself. Having unexpected bills to pay or financial burdens hanging around your neck completely defeats that purpose.
For an indepth guide to purchase and running costs, including advice on how to save thousands of Euros and avoid expensive mistakes, take a look at the link below:
Step Number 3 - Work out what kind of property to look for.
Once you have calculated your budget for buying the property and worked out your ongoing monthly budget, it's time for the third important step.
You need to start deciding what type of property you are going to be looking for.
Properties in Spain are very different to what you may be used to in cooler climates, you even find big differences between the Northern and Southern regions of Spain itself.
You will find that the kind of property that is ideal to match your lifestyle in your home country is very different to the kind of property that would match your lifestyle in Spain.
My advice is always to let the lifestyle you want to lead drive the type of property you want to buy. Don’t let the type of property you want to buy end up dictating your lifestyle.
Moving to Spain or buying a property there is almost always a lifestyle led decision and so the property should help enable that lifestyle and not become a barrier to it.
You need to stop thinking in terms of the normal search parameters that you see on property websites, The number of bedrooms, number of bathrooms etc., and instead identify what you want a property to do for you.
There’s an easy way to do this.
Split a page into two columns and in the first write down the simple features that you want from a property. These are the things I just mentioned, the number of bedrooms, number of bathrooms, whether it’s attached or detached or an apartment; the things that you would put in a property website’s search parameters.
Then in the second column write down why you want each of those features.
For example, in the first column you may have written 3 bedrooms, in the second you might write “so that family can visit and so that you can have space for a home office”.
Once you have finished tear the page down the middle and throw the first column away.
It doesn’t matter if the property you look at matches the items in the first column so long as it fulfils the things that you put in the second column.
You can dowload a really simple template just by clicking the button below!
Step Number 4 - Choose a location
The fourth thing to think about is the location.
We all know that location, location, location is the mantra of the estate agent, and for very good reason. Identical buildings could have you living a dream or a nightmare depending on their location.
You may already have an area in mind, it may be somewhere that you go on holiday regularly but, if you are buying to live, consider carefully whether the area is suitable for the lifestyle you want to lead in the long term.
There's that word again; lifestyle.
As with the property you need to make sure that the location matches the life you want to lead and the only way that you can achieve this is to do your own research.
Agents are naturally biased towards the places that they live themselves (or the areas where the commissions are highest) and that’s one of the reasons that properties you see advertised to the foreign market are all clustered in the same areas. But Spain is a vast country and your perfect location may be one that you have never even heard of.
Again, start by identifying what the area will need to offer in order for you to live the lifestyle you want and making a list.
Then I would suggest that you start with the Airports.
Assuming that you want to be able to come and go from your home country to visit your holiday home, or have family and friends visit when you are living there, find out which airports in Spain are served by the local airport in your home country.
The use that list you just made to help you identify locations near to those . I’m going to be give some more advice about some of the tools you can use to help with that in my next blog post so please subscribe to this website if you want to be notified when it is published.
Also, and this relates to both steps three and four, you need to think about the property and location from a long-term perspective. As we saw in step one, the costs of purchasing a property in Spain are petty high. The cost of selling can be too. You will want to move as infrequently as possible, if at all.
The property and location that matches your lifestyle now might not match the lifestyle that you're going to be seeking when you're a bit older, the steep driveway or 20 minute drive to the doctors might not be as easy for you later on in life, and so keep the older you in mind when you're making these decisions.
Step Number 5 - Your Exit Strategy.
As I said at the beginning this is possibly the most important thing you need to think about before you start looking for a property in Spain and is often overlooked by people when they're excited about buying the property.
It may be that you want to spend the rest of your life living in the perfect home that you found following the first four steps above, but circumstances change. You never know what lies in the future and even though you may have no intention of ever selling the property, something might happen that means you are forced to.
Properties in Spain often take many months and sometimes even years to sell even when the market is strong
You need to think about how you would sell the property before you commit to buy it.
The good news is that if you follow the steps in the first four points here then you're well on the road to having an effective exit strategy because you would've already taken the steps to find a property which is attractive to potential buyers, but all the same make sure you keep that exit strategy in mind whenever you're making a decision to purchase.
When looking at property ask how long it's been on the market.
If it's been available for a very long time without finding a buyer then consider why that might be the case. If it's because of an obvious problem that you can control and fix then it shouldn’t be a concern, in fact it might be an opportunity to get a bargain. If it’s not, you might find that if your circumstances change, and you're forced to sell the property, it sits on the market for a very long time unless you take a big hit on the price.
So to summarise, the five most important things that need to think about before you start looking for property in Spain are:
To make sure you have calculated your purchasing budget, then work out what you can comfortable afford to spend on an ongoing basis. Work out what you need from a property in order to achieve the lifestyle you want to lead and research areas so the you find the location that is perfect for you and not for the person selling it.
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