Buying property in Spain has not lost its charm, as Britons remain the leading group of foreigners investing in the Spanish property market.
Numbers of Brits buying property in Spain on the increase
Olive Press reported that the sale of homes to Brits rose 12 percent in 2018 to 10,178, from 10,156 in 2016. Although it has not reached the levels before the UK referendum, 2019 is looking positive.
According to Fiona Govan from The Local, “British buyers continue to make up the largest group of foreign nationals buying property in Spain with 7,613 purchases between January and June, an 8.8 percent rise on the same period a year earlier, they now represent 14 percent of foreign investors.” Particularly, after the British referendum in 2016, purchases by Brits have gone up 13 percent.
For example, Madrid is seen as a “promising city in which to purchase real estate this year. The PricewaterhouseCoopers report ranks it fourth in Europe for investment.”
Along with Paris and Berlin, Madrid is considered a desirable investment as Europe’s strong economic growth, good value and attractive lifestyle have helped keep demand on the rise.
So what do you need to know when buying property in Spain?
- Do your own research before you make any final decisions. You should first understand the Spanish property market and find what to expect in order to avoid disappointment or any potential pitfalls. Apparently, whether you are buying a home in Spain or anywhere else in the world, you should always be aware of property scams, fluctuations in the property market and high capital gains tax.
- Housing costs: There are cheap and expensive alternatives. The average cost of a home in Spain is around €144.432.
- If you are buying property, transaction costs are around 10-15% of the property value.
- NIE number is needed by all foreigners with legal or tax activity in Spain. This guide explains the NIE application process and what you need to get your Spanish NIE number.
- Be aware of the existence of immovable property tax which is a local charge, like a UK council tax, called I.B.I. The tax, which is issued in the summer months, can be paid by the property owner on the 1st January, each year.
- Non-resident’s income tax: being a non-resident, who owns a property in Spain you are liable to pay a non-resident’s income tax. If you don’t, the tax is very low and the amount equals 1.1 percent of the “valor catastral.”
- Know your rights: Once you purchase your Spanish property, you should register it at the Spanish Land Registry (Registro Catastral), which is the official database with all owners of individual properties. This will protect your ownership rights and make sure that the property is not sold twice.
Can I buy property in Spain in spite of Brexit?
Brexit uncertainty about the final agreement has caused many Brits to feel that they need to delay their purchase until the horizon becomes clearer. While some things will remain the same, it is, however, not clear what would happen with the healthcare provision and pensions.
But no matter what you decide to do and when you will always need to transfer money from your UK bank account to Spain in order to pay for your property or for any other related fees. In order to save money when transferring funds abroad, you should always use a company that specialises in international money transfers to help you reduce costs.