Thinking of buying a property in Spain
Spain is the number one destination chosen by European purchasers of 2nd homes for use as a holiday properties, as an investment purchase and for semi/permanent retirement living. For many years Spain has been the preferred holiday location and whilst many of us have travelled across the world for far reaching holidays of a lifetime, Spain sits at the top of the list when it comes to the most desirable location in which to own a holiday home.
Important factors such as easy access from most European countries with numerous daily flights being available, steady climate throughout the year and lower cost of living are amongst the key reasons why 1,000's of us return year after year to our all time favourite destination - 'Viva la vida en España'
Although Spain has always been very popular amongst overseas buyers, it was greatly effected by the global crash in the markets. Like many property investment areas it fell from the great heights reached by late 2006 / early 2007. Fortunately Spain has always been a favourite destination for many and whilst property purchase figures fell, the tourism numbers were not effected too much - over the past couple of years Spain has retained its number one status as the most popular destination for holidays and overseas purchases.
Following the down turn many properties saw up to 50% wiped from their value as the market lost confidence and buying clients dwindled during the difficult times experienced by most. The property market saw no growth for a number of years until stability came back encouraging potential purchasers to turn their attention abroad again. During 2014 many had begun to realise that the market had indeed reached its ultimate low and a slow steady recovery could be seen for the first time.
Throughout 2015 this recovery became much more apparent, banks were now willing and able to lend funds to those wishing to purchase and the market regained its edge. Confidence filtered through to those considering buying as prices started to move forward and more and more 'sold' signs were in evidence. By the end of the year a sellers market was beginning to return, many developers had started new projects and the market was in full swing again.
The first few months of 2016 saw the market continue to move in a similar way with an even greater pace up until the announcement of the UK government to hold the promised EU vote, which once a date was set for late June a brake to the market was applied somewhat. Whilst many German, French and Scandinavian purchasers continued to return to the market the British Buyers became a little uncertain in the lead up to the 'Brexit vote'.
Following the EU vote result, the activity from UK buyers was reduced to a standstill for the few days that followed and the property sector became very uncertain during this time. By the middle of the following week, a surprising amount of activity was experienced and those buyers who had hesitated pre 'Brexit vote' returned more determined to purchase before prices rose further and those who decided to continue to wait and see what might happen over the following months were replaced by many new purchasers now coming to the market.
The current momentum in the sector has surprised many post Brexit and it appears that those considering a purchase have now decided to act and secure their future holiday home, investment purchase or future retirement home whilst they can still achieve a very reasonable price compared to the peak even despite the recent fall in Sterling value.
Prices 30% below the 2007 levels can still be taken advantage of by those acting currently and with some good planning and careful consideration we hope we can help you secure a dream Spanish property before the 'boom' kicks in again.
Where in Spain will suit me the most?
All of the staff at Welcome Estates can offer potential clients their own life experience of living in Spain, help you avoid any pit falls and guide their clients towards a happy and successful purchase. Climate is a key factor for most purchasers and this region of Spain enjoys fabulous summers, the mildest winters in the whole of Europe and a staggering 300 days of sunshine each year. With purchasers taking factors such as these into account the beginning of 2016 saw more transactions take place in the Costa Blanca region than the Costa del Sol, Southern France and Florida combined. This makes it a secure market to invest into and is a great place for most European purchasers to begin their overseas property search.
To discover what your most important requirements are is key when looking to buy a property and a simple approach such as making a 'wish list' and a plan beforehand' will help. It is a good idea to list the 5 most important location factors you would like to satisfy, for example these can include walking distance to amenities, easy access to beach areas, marinas & shopping centres or nearby to a range of leisure facilities such as Golf courses, cycling routes and tennis clubs. Once we have a clearer idea of what kind of area may suit you we can then recommend specific areas to you and begin to consider the type of properties available to you. Please feel free to use our contact page to share your requirements with us and we will do our best to help you develop this further and then focus on a selection of properties to meet your needs.
What style of property should I choose?
As we move onto this topic it is often an idea to consider your future needs as well as your immediate preferences such as will stairs be a problem in the future? How big a garden would we want in the long term? At what time of the year will we want to use the property and how often?
There is a lot to consider when purchasing a property but the most important advice we would give to clients would be to ensure that the purchase is kept comfortable from a financial point of view. It is often better to purchase a spacious 2 bedroom/2 bathroom property that is comfortable financially than stretch oneself to buy a higher priced three bedroom property just to have an extra bedroom for the occasional visitor. Again our advisers can help you move forward via our contact page.
What will be the expected payment terms?
The majority of purchasers over the past 25 years or so have chosen one of two options, being to purchase a 'new-build' property that may be off plan or in construction stage from a developer OR what is known as a 're-sale' property which is a pre-owned dwelling from a private individual. Payment terms are quite simple and will be similar to the examples quoted below:
Developer Purchase - New Build
1) A reservation deposit (usually 5,000€) will secure the property and fix the price. Legal checks will follow to ensure all is it should be and that the developer meets with legal requirements and can deliver a bank guarantee (Aval Bancario) to support/guarantee clients funds prior to completion.
2) An interim payment (usually 40%) will follow within agreed timescales whilst further construction takes place.
3) Finally the balance of funds and taxes are paid at an appointed Notary when full and clear title is passed to the owners upon completion.
Private contract - Re-sale Purchase
1) A reduced reservation fee of 3,000€ is usually acceptable (except for higher priced properties). This takes the property off the market and fixes the price in order for legal due diligence to take place.
2) Upon completion of legal checks purchase contracts will be exchanged by Solicitors and timescales agreed - a 10% interim deposit is often paid at this time.
3) The final balance including taxes is paid when full and clear title is passed to the new property owners. Existing furniture, fixtures and fittings may be purchased at this time or disposed of subject to the agreed terms stated in the contracts exchanged in step 2 above.
Note - In all cases utility contracts are created upon completion, certificates of habitation granted and full legal process is completed on behalf of all parties.
How can I be sure everything is legal and as it should be?
100% legal due diligence is carried out in all cases - this must be completed before any money exchanges hands so as to protect the purchaser. This is processed by our own legal team which consists of a local Solicitor panel who are very well known to us, but most importantly are independent. However we invite our purchasing clients to engage with their own Solicitor if they wish to do so as all property we offer to our clients is 100% legal, 100% secure and if in build holds a full bank guarantee that is 100% clear and titled in the name of the purchasing client. There is never a reason to deviate from this approach and we will never do so - rest assured.
Our legal team are available to discuss any aspects of the purchase process with potential clients long before a purchasing trip is agreed - please feel free to request this service from us.
Will I be able to arrange a mortgage?
Is it difficult to arrange a Spanish Mortgage?
The recovery experienced in recent months has brought a competitive nature back to the Spanish lending market and whilst all mortgage offers are ''subject to status'' most Uk residents should be able to secure funding providing they have a decent credit score and can provide the following documents:
- Most recent P.60 (employed) or most recent tax return (self-employed)
- Last 3 months bank statements to show income
- Proof of UK address (A utility bill will suffice)
- Experian credit report
Currently the banks will offer a LTV of 60%, (higher in some cases) and a fixed interest rate of 1.99%* for the term of the loan which can be up to 25 years.
* The rate of 1.99% is subject to taking life and home insurance from the lending bank.
Will I be able to rent the property I purchase out to gain income?
The rental income potential of the properties available within our portfolio provide much better returns for investment than the majority of high street banks can offer. Our 'landlord' owners have the comfort and knowledge that they own their own property, a bricks and mortar investment, that can be enjoyed for their own use whilst having the ability to cover costs and provide an income yield of between 5 - 8.5 % if managed correctly. Further detail of our current guaranteed rental schemes, rental pool options currently available on both Golf and Coastal resorts are available upon request. Please do not hesitate to register your interest in these services.
How can I arrange to view a selection of the properties I am interested in?
Following contact being made with ourselves and an assessment of your potential requirements we will then arrange for viewings to take place at a convenient time - all aspects of this we can be discussed to agree a comfortable plan with you. It is a good idea to carry out a degree of planning and potential funding options prior to property viewings as trying to purchase something that cannot be funded can be very disappointing for all concerned, especially when potential purchasers have been misinformed before starting the viewing process. Our in-house team of experts are available to all clients so please feel free to use them.
What should I do next?
You can make contact with us using the link above so that we can start to work for you. Bringing over twenty five years of market experience we trust you will find us an invaluable partner and a great resource. A successful purchase has many important 'team' players - choose Welcome Estates to help you move forward and we are sure you will not be disappointed.
Service providers we can supply and recommend if required:
Legal - a panel of independent Solicitors
Currency purchase - forward contracts, spot trades and above all clear advice can save you thousands during the process
Banking - a selection of local bank managers happy to meet you in private to discuss your individual needs
Accountants - future tax planning and management of your Spanish asset
Architects - advice on new build, self design, modifications to your property, including swimming pool installation
Management - Key holding, rental management services available
After sales - all aspects of completing your purchase, furnishing, IT and any other requirements can be managed by our in-house team.