Buying property abroad has remained a popular investment for Brits, as Spain, France and Portugal are the top desirable locations for holiday homes. So buying property in Spain, for example, more particularly in Madrid, is currently on demand.
According to Homes & Property, Madrid “represents good value against other capitals. Prime prices are 70 per cent lower than in London and a third of those in Berlin.” Speaking to Homes & Property, Carlos Zamora, head of residential at Knight Frank Madrid, said that “Prices rose eight per cent in Madrid in 2018 against a global average of 1.3 per cent and we forecast a six per cent increase this year. Transaction numbers are increasing and building permits rose 35.5 per cent between 2017 and last year. All signs point to a clear, stable recovery in Madrid.”
While Brexit has affected the exchange rate and many have initially postponed the decision to buy their overseas property, things are now much clearer in terms of what might happen. Most possibly many privileges enjoyed in the past might be lost after the UK’s exit from the EU, but being able to own your dream holiday home and live abroad are still as feasible and attractive as ever.
So, let’s have a look at how much Spanish property costs and all the details you might need to consider before buying your property abroad.
Buying property in Madrid
Whether you are buying or selling, transaction costs are around 10-15% of the property value. If you are not certain whether you want to commit to something permanent, renting is also a valid option, especially when one takes into consideration the expensive capital gains tax.
But, nonetheless, if you are searching for sophistication and luxury and you can afford to spend a bit more, you can enjoy five-star luxury with Four Seasons residences, which are unique in Spain. As the Homes & Property website noted, “the outstanding architecture, top-quality building work and extensive wellness facilities, as well as the five-star luxury of dedicated, on-site Four Seasons service mean the remaining five residences for sale have price tags starting from £2.76 million.”
If you want something more affordable, but still modern, Javier Ferrero is a contemporary development of 87 apartments in the fashionable residential area of Chamartín, where prices are approximately half of the average in Madrid. These properties start from £254,000 for 344sq ft to 1,960sq ft, and owners are able to choose the design for their apartment.
How it works
Once you found your dream home and your offer has been accepted, then you will sign a preliminary contract (contrato privado de compravento) and pay a deposit, usually something around 10% of the purchase price.
If you are thinking of getting a mortgage, this is the time to make arrangements, if you haven’t done so already. The contract of sale (escritura de compravento) is finally signed in the presence of a notary, who is usually required by many mortgages. You will be responsible for paying all related taxes and costs, as well as registering the property. Registration can be done for free by the notary who will notify the registry office about your property being sold.
It is normal that you might not be able to get a mortgage until you actually own the property, so you might need to make sure that your contract does not deter you from exiting it if you have not acquired a mortgage.
Costs you will be paying
The estate agent will be paid by the seller, as it usually happens, but you will need to pay the notary costs. You will have to deal with paying the property transfer tax 6–10% (for existing properties) / VAT (or IVA) at 10% (for new properties), the title deed tax and land registration fee 1–2.5%. Legal fees will cost you 1–2% (including VAT).
Buying property overseas will involve many considerations and especially financial complexities that a foreign exchange specialist like Universal Partners FX can help clarify and overcome.
As you make arrangements to transfer large amounts of money internationally or you are required to conduct multiple transactions, you will find that navigating a volatile market and the uncertainties of Brexit can be time consuming and stressful. Entrusting your international money transfers to a professional and dedicated currency dealer at UPFX will significantly have a positive effect on your currency transfers. This is very important when you want to transfer your hard-earned money to buy your property abroad. UPFX’s research and technology is coupled with professional dealers’ expertise to help you access the best exchange rates, at the most opportune moment, without sacrificing the value of your funds. Give your personal dealer a call to find out how much you can save when you buy your dream home.