Spain has long been a popular destination for foreign buyers looking to invest in property. And it’s no wonder why – with its stunning coastline, beautiful architecture, and rich culture, Spain has a lot to offer. However, there are also a few things to be aware of before you take the plunge and buy property in Spain. In this blog post, we will explore some of the potential pitfalls of buying property in Spain, so that you can be better prepared and make an informed decision.
What are the risks of buying property in Spain?
When considering purchasing property in Spain, it is important to be aware of the potential risks involved. These can include:
- The Spanish property market is notoriously unstable, meaning prices can go up or down without warning. This makes it difficult to predict how much your property may be worth in the future.
- There is also a risk that you may not be able to sell your property when you want to, or for the price you want. This is because the housing market is so competitive.
- Another key risk to be aware of is that of getting caught up in a scam. Unfortunately, there are many unscrupulous individuals operating in the Spanish property market who will take advantage of unsuspecting buyers.
Legal, technical, and fiscal due diligence not done in advance
If you’re thinking of buying property in Spain, it’s important to be aware of the potential pitfalls. One of the most common mistakes is not doing your due diligence in advance. This means not checking things like the legal title to the property, any outstanding debts on the property, or any potential environmental issues.
Another mistake is not being aware of the Spanish tax system. Property buyers in Spain are required to pay a number of taxes, including capital gains tax and stamp duty. Failure to pay these taxes can result in hefty fines or even jail time.
Insufficient or incomplete property research
If you’re considering purchasing property in Spain, it’s important to be aware of the potential pitfalls that can arise from failing to conduct sufficient research or incomplete property research.
One of the most common mistakes made by buyers is failing to consider the full purchase price when budgeting for their new home. The purchase price is not just the advertised price of the property – it also includes additional costs such as stamp duty, legal fees, and taxes. Your budget should take these additional costs into account.
Another mistake often made by buyers is failing to research the local area thoroughly. It’s important to understand the local market conditions and be aware of any potential problems that could affect your property value in the future. It’s also important to be aware of the potential risks involved in buying a property that needs significant renovation work
Contracts and the full process are not understood
It is very important to understand the contract and full process when buying property in Spain. There are a few common mistakes that buyers make which can be easily avoided with a little research.
One of the most common mistakes is not understanding the difference between a resale property and a new build property. A resale property is an existing home that is being sold by the current owner, while a new build property is a home that is being built from scratch by a developer. It is important to know which type of property you are interested in before starting your search.
Another mistake that buyers make is not fully understanding the purchasing process. The purchasing process in Spain can be complex, so it is important to have an experienced lawyer or conveyancer who can guide you through it. Finally, many buyers fail to consider the ongoing costs of owning a property in Spain. These costs can include things like annual taxes, utility bills, insurance, and upkeep. It is important to factor these costs into your budget before making an offer on a property.
Not Budgeting for Future Fees
Not budgeting for future fees is one of the biggest pitfalls of buying property in Spain. As a general rule, buyers should budget for an additional 10-15% on top of their purchase price to cover fees associated with purchasing property in Spain.
This includes things like stamp duty, legal fees, and other costs associated with the purchase. It’s also important to factor in the ongoing costs of owning a property in Spain, such as annual property taxes and community fees.
Make sure you have a valid visa if you aren’t an EU citizen
If you are not an EU citizen, it is important to check that you have the corresponding visa before buying property in Spain. There are a few different types of visas that allow non-EU citizens to purchase property in Spain, and each has its own requirements and restrictions.
The most common type of visa for purchasing property in Spain is the tourist visa. This visa allows non-EU citizens to stay in Spain for up to 90 days within a 180-day period. In order to qualify for a tourist visa, applicants must show proof of travel insurance, a return ticket, and enough funds to support themselves during their stay. Tourist visas cannot be extended and are not suitable for those looking to purchase property in Spain.
Another option for non-EU citizens looking to purchase property in Spain is the student visa. To qualify for a student visa, applicants must be enrolled in a full-time course of study at a Spanish university or language school. Finally, those who have retired from employment may also be eligible to purchase property in Spain through the retirement visa.
In order to buy a property in Spain, you must dedicate a great deal of time and effort to research and preparation. A common mistaken belief made by first-time buyers is that the purchasing process is the same in Spain as in their home country. This can often lead to mistakes that either extend the purchasing process or cost you more money than required.