Holiday LettingLearnings

10 Things You Should Know Before Buying Property In Spain

With the summer holidays in full swing the attraction of a life spent drinking sangria in the Spanish sun can seem all too alluring.  And if the recent jaw-dropping prices are to be believed, it is now easier than ever to snap up a bargain.  However, as I have shared with you before – owning a holiday home is not as easy and idyllic as it may seem from the glossy magazines.

buying property in spain

Before you part with your hard earned cash you need to do your homework and ask the right questions.

But what should you consider before you buy?

I decided to do some research and call Lucas Fox who are experts in the Spanish property market and ask them:  What should people consider before buying a property in Spain?

Here are the top ten tips:

1. Like the UK, location is everything.  If you buy a built property in an established mature area you will know what is around you and the local area will not suddenly change.  In off-plan developments it can be a gamble what the area will be like when complete.  Moreover, compromising on a cheap location in a mass-built area can make it more difficult to sell in the long run.  Remember you can always improve a property but you cannot move it.

2. Front line and beach view properties have retained much of their value despite the credit crunch.  These type of properties rarely go out of fashion due to their location and views.  Top locations are always in high demand which means they suffer less in a downturn.

3. Investment off-plan properties are rarely a good investment.  Most off-plan projects are sold to investors who have the same idea as you so when the project completes the market gets flooded with re-sales.  This means the only way to compete is by selling at a lower price than your neighbours.

4. Check the developer has a licence for the building.  You should always employ a good lawyer to check these things for you and avoid buying a property which does not have a licence.  There are still quite a few of these buildings around which are in various stages of completion.

5.  Research the credentials of any estate agent as not all are registered and have offices which means there will be no comeback if things go wrong.  Make sure you do your homework on your estate agent and don’t fall for fast talking, charming salesmen who offer the world.

6. If buying an apartment, make sure the building is solid and the community is in a good financial state.  Community charges vary per complex, but well-managed and looked-after communities maintain the value of your property.

7. Think about how and when you are going to use the property – is it mainly a winter sun home or for a holiday rental? A holiday rental will need to be central and within walking distance to the facilities.   If it’s a winter sun home, check the changes in the local area between the seasons as in winter the area may be closed up and dead.

8. More time is spent outside of a property in Spain than in the UK so you need to think about the outside area much more, such as access to a pool and gardens and proximity to local facilities.  The further you move from the facilities and the coast the cheaper property gets.

9.  Factor in the running costs of a holiday home.  This can sometimes cost as much as your primary residence even if you don’t stay there as much.  Community bills will need to be paid regularly and the villa will still require maintenance works to ensure it remains of a good standard.

10. To make a success of living in Spain you need to spend time learning and getting involved – that means learning to speak Spanish and making an effort to mix with Spanish people.

  1. Richard Watters

    Some good advice here. Something else I’d add is ask yourself why you want to buy a house in Spain, or for that matter anywhere else outside the UK.

    If for investment purposes, forget it. It makes much more sense to buy something locally where you understand the law (or can use a local solicitor), understand the market, know there is rental demand, etc etc. This also applies if you plan to stay in it for a few weeks a year and rent it the rest of the time. You just won’t know how much rent you’ll get, then there are all sorts of restrictions, taxes, etc that ensure it’s an easy way to lose money.

    Plus even if you get a bargain (and there are plenty of properties being sold for much less than they were a few years ago) the value could drop further. The Spanish economy is close to being a basket case and with uncertainty over the Euro there are lots of factors you can’t control.

    If it’s to use yourself/with friends/family then it’s an expensive luxury. Great if you really can afford it (i.e. have the cash to buy it) and can make sufficient use of it. If you borrow money to buy it why would you do this rather than borrow to buy a property in the UK?

    The real reason of course that most people get sucked into buying abroad is because they dream of having that place to go to and escape the British weather, allied to the obsession with home ownership. “Owning my home in the UK is good so owning abroad as well will be twice as good”.

    For 99% of people it makes much more sense not to buy and to rent abroad as and when they want to. Rent the place you would have bought for a fraction of what it would cost you to buy it and also have the flexibility to go to other places instead of just one. Although this is a personal thing, whilst I wouldn’t want to go back to the same place every year some people like to have a “second home”.

    I bought a holiday home in Florida (a supposed bargain from a desperate developer) in 2007 and used it twice before selling, at a loss, a couple of years later (fortunately benign exchange rate changes mitigated most of the loss).

    On a bit of a tangent, as an alternative to buying or renting, think about a house swap. In Jan/Feb we “swapped” our house (and car) for 2 months with an Australian family in Coffs Harbour, between Sydney and Brisbane, and enjoyed the Aussie summer in a 4 bed/3 bath house 100 yards from a mostly deserted beach. Paid no rent and no hire car fees.

    1. Sam

      Richard, thank you for sharing your comments and experiences which are most insightful.

      I agree with you that a second home is an expensive luxury. This is something which I have raised in a previous post and a point which I don’t think we fully considered when we bought (young and naive!).

      However, having said that, owning a second home abroad does give you an emotional benefit which is quite hard to quantify. The best way I can explain it, is by knowing that you have somewhere to “escape to”. I think the same may be said of many other second homes (even if they are in the same country) it’s not just a case of being abroad, somehow the second (holiday) home has a different resonance to it and an emotional hook which is not really about financial calculations.

      I wonder if when people look to buy a second home, it is not so much a financial decision as an emotional one which is more applicable to dreams and hoped for lifestyles?

  2. Louise

    Hi Sam
    An interesting post with points I tend to make to people when offering advice and in my own overseas property blog posts, although it is good to mention the outdoor space bit, which we tend to forget in the UK and have only been woken up to it again by the latest great Summer.

  3. Paul Davis

    Richard, I question your statement about buying in the UK because to quote you “It makes much more sense to buy something locally where you understand the law (or can use a local solicitor)” The part I question is, what other kind of solicitor is there? You would need your brains tested not to use a local solicitor whatever part of the world you buy into.

    I agree the UK is a better investment, but not everyone buys abroad to make money, in truth very few do. It is more about lifestyle than making money. We own a property in Kefalonia and yes the property is for sale, time to downsize we don’t need 5 bedrooms and 4 bathrooms anymore, But we are not desperate for the money and not going to cash out at a loss, happy to plod along checking the cheap flight options every so often and when Easy Jet offer a flight out there for under fifty quid, I hop on it because I can. It could take us 10 years to sell it but who cares? It was never an investment purchase in the first place, it was a change of lifestyle. When the views here pale a bit and start to get a little boring, we change them for a while, it teaches us to appreciate the good bits in both worlds. Besides this year the summer here has been fabulous, but usually in the UK planning a Bar B Q involves either checking the seaweed hanging in the hallway, tapping the barometer everytime you walk past it, or these days constant viewing of the weather app on your smartphone. Out there you can just plan it without a plan B if it rains.

    Expensive Luxury? Yes maybe, but is that a bad thing? It is all about choices, I drive a car we got in 2006, I do not feel the need to change it, and I no longer need the street cred from sexy expensive cars. The richest Greek I know rides a 10 year old 100cc moped everyday, claims it is cheaper on petrol than his Merc which is in his garage and never turns a wheel from one week to the next. He now says it is the worst thing he ever purchased.

    I am also trying to understand why you sold your property in Florida at a loss. Why buy your losses by cashing out? Better to sit it out and wait because eventually (like right now) property in Florida will come back.

    The general rule of thumb is:
    New money sells in a recession but old money always buys! Which is why it is old money.

    1. Richard Watters

      Hi Paul,

      I don’t think I was very clear when making the comment about local solicitors. The point I intended to make was that it’s better to buy property where you know “How things work”. Not just the legal process but the market, how easy it is to rent out, can easily check out things like Letting Agents, know the costs involved when selling, etc. There are so many cases of people just assuming that the way it works here in the UK will be similar to how it works elsewhere, which often isn’t the case.

      I sold the USA property because I’d paid cash and it wasn’t giving me a good return. When I bought it the return didn’t seem important as I intended to use it for my self, family and friends. The reality is that I realised after a couple of trips that didn’t want to keep going back to the same place (Sarasota). So from both a financial and personal point of view it made sense to sell and invest the money elsewhere for a higher return (the UK, where I believe prices will recover at a faster rate than Florida).

      You’re obviously happy with your property in Kefalonia and are comfortable enough to sell if and when. The caution I urge is based on my experience, and of a couple of other people I know, who regretted having bought abroad as they realised that they would rather travel to new places than return to the same place over and over again.

      Also a lot of people finance their purchase abroad either by getting a mortgage their or refinancing their UK property to raise the money. I’m sure that for some this works out fine, but I know that there are people who are captivated by the dream of that holiday home and the reality turns out to be different. Buy locally is my view, and use your money to travel to different places. The house swap we did in Oz was so cheap. Next year we’re renting an apartment in Cambodia for a month for next to nothing. For me that’s much more interesting than going to Sarasota every winter.

    2. Rob

      Paul, I really like your attitude! You seem to be someone who knows how to enjoy life, something that we many of us in UK have forgotten.

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