Earlier this year one of Spain’s largest property developer’s reported a huge increase in enquiries from British buyers. To help all those planning a dream life abroad, Sean Woolley has produced a step-by-step guide to buying Spanish property.
Sean Woolley is the Founder and Director of leading real estate agency Cloud Nine Spain. During lockdown he wrote the book From the Ground Up – The Insider’s Guide to Buying Spanish Property, sharing his years of experience, real-life stories, tips and tricks with buyers interested in investing in Spanish Real Estate.
We asked him to give our readers a definitive ‘step by step’ guide to buying Spanish property and he was kind enough to agree.
Step 1 – Understand the truth about living in Spain
So many buyers come to Spain with a fantasy of what living in Spain will really be like, and it’s important to know that there are pros and cons of living here, just like anywhere in the world. Although the weather is mainly amazing, it does rain and temperatures drop in the winter.
This is important to understand when choosing a property to live in year-round. It can be tough to get things done due to the laid back attitude, the famous siesta and the tricky bureaucracy, which can be frustrating.
I am not trying to put you off buying in Spain, I love so many things about it, but don’t expect life to be a bed of roses, it never is anywhere. If you can be realistic about life abroad, you’ll enjoy it so much more.
Step 2 – Be clear about what you want in a property and why
Decide right from the beginning what you’re going to do with your property – is it just for holidays, will you live there full time, will it be used by the whole family, will you be renting it out, is it an investment property etc. There are lots of options here and deciding the principal use of the property early is vital to getting the right place.
Make sure you don’t fall into the trap of adding extra rooms or expensive features for other people – you’re the one who is paying for it, so don’t be a slave to family and friends. However, if you will be renting it out, you do need to factor in the elements which long-term and short-term rental clients are looking for, to make it easier to rent down the line.
Accept that there is no such thing as a perfect property, it normally doesn’t exist, and that’s irrespective of the budget. That’s not being negative, simply practical. So, make a list of 10 things that the ‘dream’ property needs to have – sea view, south orientation, eat-in kitchen, private pool etc. etc.
Look at your list with the understanding that you would be doing really well to tick 7 or 8 of those ten boxes. This means that you can remain grounded during the property search, and it provides a point of reference when looking at properties and comparing them on a like-for-like basis.
Step 3 – Set a realistic budget
It’s really important that clients understand the costs involved in purchasing a Spanish property, and also the costs involved in owning the property from month to month. As a business, this is one of the first things we cover with a client, and when I find myself face to face with a client, I run through it all again, and maybe again after that.
As a rule of thumb, the total buying costs for a resale property will be somewhere between 10% – 11%, while the costs for purchasing a new-build property will fall into the range of 13.5% – 14.5%. Check that you’ll be able to afford the kind of property you’re dreaming of, with the fees, and if not, then revisit your list of requirements and scale down until you’re comfortable with the costs and any monthly repayments.
Step 4 – Make sure you’ll be able to get a mortgage
To be eligible for a mortgage, you will need to satisfy a number of conditions, primarily the affordability test, i.e. that they have the means to afford the monthly repayments.
Most banks and mortgage brokers will insist on you providing your last 3-6 months bank statements, payslips and a list of existing liabilities (other mortgages, loans etc.), plus a credit report from the likes of Experian. Once they are armed with this information, a decision in principle can be given pretty quickly, normally within a week.
Nowadays, for non-residents, most lenders will agree to 60%-70% of the purchase price or the valuation – whichever figure is lower.
Contact a mortgage broker at the beginning of your search and make sure you will be able to borrow the money you need.
Step 5 – Find a good agent and trustworthy advisors
The key here is to work with the right people, as it’s vital that you have a team around you that you trust and like dealing with. Unfortunately, here on the Costa del Sol, the property industry is unregulated, so just about anyone can do it. And it doesn’t take much.
A website for a few hundred euros and a spare bedroom. So, we’d recommend you do a bit of research before you choose your agent and ideally look for an agent with their own office, with its own portfolio of properties, with a track record and who is willing to show you properties listed by other agents. If you can tick these things off the list, we believe you’re likely to get a good agent who you can trust to represent your best interests and be honest.
Similarly, when it comes to working with ancillary service providers such as lawyers, mortgage advisers and foreign exchange specialists, by all means, listen to recommendations from your estate agent, but also do your research and keep an open mind.
A lot will come down to gut feel. Do you trust your agent with the recommendations he/she has made? If you think something’s not right, or it feels strange, then don’t do it. Trust your instinct and take time to check online and with local sources when choosing your agent and suppliers.