Buying a property Overseas is a big decision but it doesn't have to be a difficult process. Take things slowly, ask lots of questions, read around the subject and make sure you take legal and financial advice. The following steps apply to anyone who is considering a property investment in Spain whether it's for a retirement home, holiday home or investment property.
Before you even think about looking at brochures, visiting property exhibitions
or searching the Internet, take the time to rehearse exactly what it is
you’re looking for. This may sound basic, but the reasons for your
purchase will affect all the subsequent decisions that you have to make.
Some people buy property purely as an investment; others want to relocate,
some want a second home on the sun. top
If you’re looking for
investment
property, for example, it’s important to choose a property of
the type and location that will give you a maximum return. As a general
rule, properties by the coast attract higher rental incomes. If you want
a
property to retire to, consider
buying somewhere further inland to get more for your money and think about
how far you’re prepared to travel for shops and other amenities. If
you plan to make a permanent move and take up employment in Spain you may
be more interested in properties that are close to the major population
centres. top
There are always hidden and additional costs when you buy property
Overseas. As a general rule, allow 10% - slightly more for new and
off-plan properties - on top of your purchase price, to cover various taxes
and legal fees. You can get a mortgage in the UK or in Spain and, for the
latter, it is normal for banks to advance a loan of up to 80% of the declared
value of the property. For more information on mortgages and advice on avoiding
a potential pitfall,
click here. top
Once you have a clear idea of what you want to buy and where, spend some
time on detailed research. Magazines, Sunday supplements books, guides and
the Internet are all useful sources of information and it’s a good
idea to visit a few property exhibitions such as ‘Homes Overseas’
and ‘Viva España’. top
Never buy any property without making a personal visit at least twice. While
you’re there, spend some time in the immediate area, get to know people,
ask questions and find out what the local amenities are like. See how the
environment changes throughout the day. Are there busy times where traffic
becomes a problem? Is there a noisy bar or club nearby? Where’s the
nearest hospital? top
Spanish property law is complicated so make sure you have a good local lawyer
to look after you interests. Lawyers will usually charge you 1% of the sale
price of the property but it’s an excellent investment for peace of
mind. Be aware that under Spanish law only the person named on the title
deed has the right to sell the property and that some investors have been
tricked into paying large sums of money to people who were merely tenants
of the property.
For more information about the legal issues surrounding property investment
in Spain,
click here. top
Once you’ve chosen a suitable property, the price and conditions will
need to be agreed. It is quite acceptable to make an offer subject to mortgage
approval and, for properties that are still being built, you’ll want
to agree a schedule of stage payments rather than pay the whole amount up
front. If you haven’t already appointed a lawyer, you must do this
now or run the risk of entering into an agreement that cannot be enforced
under law. Further advice on the role of the lawyer in property
purchases can be found here. top
The property market Overseas is buoyant and properties can sell extremely
quickly. Assuming you’ve done your research and have appointed a lawyer;
be prepared to make a fast decision and back this up with a deposit (usually
around €3,000) to secure the deal. The deposit can be made in cash
or by credit card. Avoid the temptation to pay by cheque as this can take
up to 10 days to clear – ample opportunity for a rival investor to
step in with a cash deposit. top
With the offer accepted and the deposit paid, the next step is to exchange
private contracts, ‘Contrato privado de compraventa’, which
states the agreed price and what is to be included in the sale. This usually
happens within two weeks from the offer being accepted and its where your
lawyer really starts to earn his money by conducting property searches and
making sure that there are no outstanding debts attached to the property,
for which you may be liable. This is confirmed in a document called a
Nota
Simple. In most cases you will now be required to pay a non-refundable
deposit of around 10%. top
Final completion takes place when the title deeds are signed before a notary
and you pay the balance of the purchase price. The signed deed is lodged
with the land registry and your lawyer will take care of the remaining formalities
such as payment of the relevant transfer taxes. top
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Exchange Rate
1.517 €/£. Last updated at 16:29 on the 24 January 2007
