The Guide to Property Investment in Spain
 We hope that some of the following questions and answers will help you and we have also produced a
buyers guide that is available absolutely free of charge. Please ask us to send you one with our compliments.
Buying an Invest Property in Spain
So how how do you go about buying property in Spain? Firstly, consult a reputable agent in the desired area.
Most agents share a property portfolio, so building a relationship with just one, rather than several can save you time.
Premier Property Investments are such a company having spent considerable time and effort finding the most reliable
companies and agents in Spain to collaborate with, plus we are members of the Infocasa MLS giving us access to
1000s more properties than your one man band you so often find in Spain.
 When you find your dream property, a small reservation deposit (usually €3.000 to €6.000) is required by the developer to reserve the property. A reservation document is drawn up which means that the property is taken off the market, and the purchase price fixed. This reservation sum is fully refundable if the developers do not have their paperwork in order. Also, if the developers fail to acquire a building license for the development, the funds paid will be returned.
Normally at this early stage our clients are introduced to a local lawyer (unless our clients have already secured a lawyer’s services) who will advise them on the entire purchasing process, in addition to arranging for the transfer of the monies required for the signing of the purchase contract.
 Usually private purchase contracts are exchanged within 30 days. At this stage your legal representatives will be required to hand over your first instalment of funds, usually anything from 15% to 30% of the purchase price.
During construction, some developers´ payment terms require further payments to be made. We of course would have advised you of this prior to your commitment. Again, your lawyer will also advise you when these instalments are due.
On the day of completion, the balance of the purchase price is paid, and you (or more commonly, your Spanish lawyer) will sign the title deeds for the property, and the keys will be handed over.
Selling your Off Plan Investment Before Completion
 Some clients decide to re-sell the properties prior to completion or pre Escritura (title deeds).
So, in simple terms, a client can ´buy´ a property for €200,000 (approx £137,000) secure payment terms of 20-30% on signing the purchase contract, followed by the balance of 70-80% on completion, say in 2 years time.
The client pays €60,000 (30%), or €50k at 20% and sits back, waiting for the market to rise at its historical level of 20%.
When the time approaches to complete the purchase, the client is ´sitting on´ a property worth €312,500 (assuming 20% growth p.a.).
It is possible to then sell the property to a second buyer for the market value at that time.
The ´new´ buyer simply pays back to our client the monies that have already been paid and arranges to pay the 70-80% balance directly to the developer.
 Crucially, the ´new´ buyer will also pay to our client the profit on the purchase price of the property, in this case €112,500. Even with projected growth of 10% per annum, this could still generate gross profit for our client of €52,500 (a gross return of 70% on initial investment).
Buyers should bear in mind that there are some purchasing and selling costs that are incurred. Personal illustrations can be provided.
There are also certain tax advantages to this scenario, which can be explained during personal consultation.
The Spanish have been doing this for years and only recently have we in the UK cottoned onto this.
Buying into Off Plan Developments - Is It Safe?
Yes. The laws regarding developers in Spain have been tightened up the process quite considerably. When signing private
purchase contracts, the developer must now produce evidence that he has in place a bank guarantee or an insurance policy.
Following this, if the developer runs into difficulties, such as bankruptcy, the purchaser’s lawyer will arrange for the
return of all monies paid to date, plus interest.
Completing on your Off Plan Development
We always advise clients to arrange for Power of Attorney so that the lawyer can sign the completion documents on your
behalf. This saves the frustration of sitting around in a notary’s office not really understanding what is going on and
waiting for things to happen. We speak with personal experience here!
Once the deeds are signed and the keys handed over to you, your lawyer can arrange for the utility contracts with
the water and electricity companies.
Physical possession of the property normally takes 1-2 weeks once deeds are signed.
My New Development Investment - Are there areny extra costs
Only legal and the usual house buying fees. Allow around 10% and 11% of the purchase price as costs.
These costs breakdown as follows:
- IVA (or transfer tax) 7% - Payable with each staged payment.
- Stamp Duty 1% - Payable on completion
- Notary & Land Registry Fees, circa 2% - Payable on completion
Community Charges in Spain
Many urbanisations in Spain have a Community of Owners, and fees to keep the development are payable usually by direct
debit on a quarterly basis. They usually cover all costs relating to the external fabric and upkeep of communal areas,
e.g. pools, gardens, paths, staircases, external painting, security etc. Exact budgets are discussed and agreed at AGMs,
chaired by an elected president. Attendance is not compulsory, as votes can be registered by proxy.
Can I get a Mortgage to buy my Investment Property
Banks in Spain will usually lend up to 70% of valuation to non-residents, sometimes up to 80 % with a builders mortgage. The mortgage market is not as sophisticated as the UK (in terms of product choice) but the application process tends to be very similar.
Paperwork required includes evidence of income and a letter from your bank.
Most mortgage products are repaid on an interest and capital basis, with a maximum length of 20 years. Some lenders are introducing products such as interest-only mortgages, but these are not easily found.
There are various ways of financing the purchase, and the best way will very often depend upon your personal circumstances. Some of our clients choose to release equity from existing UK to part-fund the purchase, and then take a Spanish Euro mortgage. The advantage of a euro mortgage is that buyers are protected from currency exchange volatility.
Spanish mortgages are paid directly from your Spanish bank account, which can be set up by your lawyer .
 When paying for your property, you will have to convert your local currency into Euros. The price that each euro costs
you will vary constantly, often by the second, and thus the timing to buy your euros, and the rate of exchange achieved is
important. The different rates of exchange available from banks and foreign exchange dealers, coupled with this timing,
can make a major difference to the total cost of the property.
Premier Property Investments recommends Currencies 4Less (www.currencies4less.com), the foreign exchange arm of the
4Less Group plc, which offers competitive exchange rates on all major currencies. All funds are kept in a client account
and are transferred through their primary banking partner, The Bank of Ireland.
How do I rent out my investment?
Lots of clients are looking to purchase a home for their retirement, but would like to use it for holidays before then.
Letting the property out whilst you do not require it ensures that someone else is paying for your retirement home.
On the completion of your purchase we will introduce you to a highly recommended management company who will look after
the property whilst you are in the UK. They will also look after your tenants. Handling any emergencies.
We only recommend local management companies, those who are on hand to quickly deal with any problems or queries.
Some companies think that they can cover the whole coast from one base. In our experience this cannot be done.
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