Housing: In Spain is it better to buy or rent?

29 May 2018 0 Comments Category: blog

It’s very common for expats to try renting in a foreign country for a year at least before buying a house. It is the perfect way to find a true balance in their new way of life; of getting to know the area, the city and how the bills are managed. In Spain, if you’re looking to buy a house, you will need to be thinking long term, because the buying market moves slowly so if you’re planning to sell it can take you a long time.

Rental Market

A great percentage of expats that come to Spanish lands have visited for short periods of time and lot of them know that finding the right property in big cities like Barcelona, Madrid or Valencia can be harder than they expected.

You can expect to pay a bit more than other Spanish cities, consider an average of 800€ to 1.200€ a month for a two or three-bedroom flat. You have to keep in mind that if you’re planning to live in the heart of the city, the apartments are going to be small so there might be better options outside the centre of town.

However, if you’re planning to live in a one-bedroom apartment with a second smaller bedroom, the price can be from 500€ to 900€, it all depends in which part of the city you decide to live.

There are good times of the year to look for an apartment, and you should be aware that summer is not one of them. January to April or September to November are the best times to find a flat in the big cities. If you’re planning to live in places like Málaga, Granada, Almería it’s going to be cheaper and easier.

Keep in mind that the minimum period of time that you can rent an apartment is from 6 months to a year, depending on the landlord. One year is the usual period of time that the landlords with accept.

Another important thing is that you will have to give a one

month rent or two as a deposit plus the rent of the first

month in advance, depending again on the landlord.

Some owners ask for:

  • Evidence of employment or ability to pay the rent
  • Passport or NIE
  • Personal references.

Buying a property

There are more things you have to be aware of when buying as opposed to renting: beware of property scams, fluctuations in the Spanish property market and high capital gains tax.

Finding the right one

Buying takes time, and this might seem obvious, but in Spain it will take you a little bit longer than most other places in Europe. And of course the language could be an issue: almost all the paperwork you might need to fill in, and the websites that could help you search for your dream house might be all in Spanish. So if you don’t manage the local language you might need some extra help.

A large percentage of Spanish citizens own their homes, that’s why a significant proportion of youths stay at home with their parents until they can find a decent job that allows them to rent their own place.

In Spain the transaction costs of buying and selling a house or an apartment are pretty moderate compared to the rest of Europe, at around 15% of the property value. What this actually means is that you will probably need to stay for a minimum period of two or three years to stay ahead financially.

Signing

As a potential buyer you have to make an offer through the seller’s state agency, this is the usual first step. If it’s accepted, you and the seller have to sign a preliminary contract and afterwards you will need to pay a deposit, at least 10% of the purchase price.

In Spain, expats are allowed to buy a property whether its commercial, residential or land. But of course you will need a financial number that you have to acquire in your local police station.

What are the legal requirements?

  • It advisable to have the services of a notary but is not legally required.
  • The seller is obligated to be responsible for any defect that the house or apartment may have, even if they are hidden or they are not aware of them.
  • You are responsible for registering the property.
  • You or your agent have to pay the costs and taxes that might be associated with the property you have bought.

Possibles fees and charges (Taxes)

Yes, you have to keep in mind that before you signed any deal with the seller, you will have to consider all the taxes you will have to pay. If the tax is less than the property actual value, the authorities in charge will make sure to figure out a complementary assessment for you to pay the difference.

The buyer will have to pay the primarily costs and it all depends in which region your of Spain you’re planning to buy.

This are the main things that will have to be paid by you as a potential buyer:

  • For existing properties, the ITP tax is 6% in Madrid but it depends in which Comunidad Autónoma you decide to buy a house.
  • The IVA or VAT will be at 8% to 10% for new properties, but it also depends on the Comunidad Autónoma. And also if you’re trying to buy with or without a mortgage.
  • Notary costs, title deed tax and the fee of the registered land will go between 6% or 10%.

 

 

Who is the one responsible for handling the payment of taxes:

As a buyer, you will have to choose a system to handle your payment and you will have to do it and pay the taxes before you can have your right of the home.

  • Depending on the autonomous community where your home is located you will need to fill and take a form to tax bureau (delegación de Hacienda) if in a provincial capital.

If your home it’s outside of a provincial capital you will need to take the form to the liquidadora de distrito office.

You can also find more information about the Spanish taxation here:

Agencia Tributaria.

Mortgages

This is the moment to analyse and compare different Spanish companies and look for different references of people you know that have been living here. If you’re in doubt, asks as many questions as you need to the lender and don’t go home without having the right answers. You will have a 10-day period with the branch you choose to clear everything out after the binding offer is provide.

You have to find the proper mortgage that is better for your need and also for what you’re going to be able to pay. If you can’t keep the repayments, the Spanish bank may retake or repossess the property.

You can also find more information here:

Spanish Mortgage Association.

Renting vs Buying

Now you have the information on your table or in your computer, as you can see the renting process is easier, less paperwork and less bureaucracy, but it all depends on what you’re looking for. You might be tired of renting and you’re looking to own a place for you and your family. It’s up to you to decide.

What we share with you is that Spain will receive you with a warm welcoming. Its culture, traditions, people and its lifestyle will make fall in love immediately.

The sun, the beaches, the food, the mountains are a perfect mix that make this country a huge paradise for those who want to start a new life in the Spanish lands.

Where to look?

You can find more information here:

www.idealista.com

www.servihabitat.com

www.tucasa.com

www.fotocasa.com

 

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