spanish property Q&A

January 2005

Do villas on the Costa del Sol usually have their own parking spaces, and if they do, would there be enough room for two cars?

In general yes, but it does also depend upon price and area. To the west of Málaga and on the coast villas for over 1 million Euros will always include garage parking for 2 cars, probably 3, often underground (below) the property.  3 or 4 bedroom villas for between 600,000 and 700,000 Euros will nearly always include garage parking for 2 cars. Below 500,000 Euros it starts to get difficult to find villas in good locations on the west coast. Where these exist they probably won’t include garage parking for 2 cars, though they might have a carport for one car or otherwise it will be on street parking. To the east of Málaga, on the Axarquía coast, villas from 300,000 should have carport space for 2 cars. Villas inland in Andalusia will nearly always have their own parking spaces as land is abundant.

How much deposit will I typically have to put down on a property I wish to purchase?

People often pay two different deposits when buying property in Spain. First a reserve deposit of between 3,000 and 5,000 Euros, demonstrating to the vendor that they are serious and giving the vendor reason to take the property of the market for a few days. In many cases this deposit is returned if the buyer backs out at this stage. A few days later the buyer often pays a bigger deposit of 10% of the agreed transaction value (less the reserve deposit already paid and including VAT if buying form a developer) and signs a deposit contract called a ‘contrato de arras’ that is in effect a private sale contract with penalty clauses. However every sale is different and some buyers choose to pay only the initial reserve and then go straight to signing deeds before notary. If you can move quickly this is the best scenario, though it is not possible when buying off-plan or in the case of a property under construction.

How much should I expect to pa for a typical villa (3-bed) on the Costa del Sol?

The Costa Del Sol stretches from Cabo De Gata to Tarifa, taking in hotspots like Puerto Banus and Marbella, along with cheaper places like Torremolinos and the East coast. It isn't meaningful to talk about the 'Costa Del Sol' in this context - it all depends where on the coast. Breaking it down into more meaningful areas a guide to prices (Euros) is as follows:

Sotogrande area: 800.000-1.000.000
Estepona: 500.000-600.000
Marbella / Puerto Banus: 800.000-1.200.000
Mijas area: 500.000-600.000
East of Málaga: 400.000-500.000
Inland: From 300,000

February 2005

I’m looking to buy in Spain but have heard scary stories that if the previous owner had debts they will pass to me. Is this true? If so, how do I avoid this kind of situation?

It is true that in Spain debts that are secured against a property – for instance a mortgage – become the new owner’s liability unless they are paid off before the property changes hands. However this will only be a problem if the new owner is unaware of the debts ascribed to the property at the time of committing to buy. The debt in itself is not necessarily a problem but being unaware of the debt when you sign a purchase contract can be a very serious problem. There is a simple solution for avoiding ‘unexpected’ debts. Have your lawyer check the ‘nota simple’ (the record of the property in the land registry) before committing to anything. The nota simple will show if there is any debt secured against the property. If you sign a private sale contract before signing the public deeds the contract should state any outstanding debt on the property. And finally your lawyer should request another nota simple from the land registry just before you sign the public deeds before Notary. All good lawyers should do this as a matter of course and this protects from you taking on any unwanted and unexpected debts when you buy property in Spain

I’m torn between moving to the Costa del Sol and the Costa de la Luz. What factors should I be considering, and which do you recommend (and why)?

Property in general is more expensive on the Costa del Sol and the area is being heavily developed which is off-putting for some buyers. On the other hand the Costa del Sol is the more the consolidated of the two coasts, with a huge range of shops, services, leisure facilities such as golf, and a large expat community that can be important for people who would like to have a varied social life. The Costa de la Luz is cheaper and less developed but there is less property to choose from. To my mind it also has a more attractive natural environment and some fantastic beaches that the Costa del Sol can only dream of. However the wind, especially down toward Tarifa, can get some people down, though it also attracts a rather colourful group of wind and kite surfers. There are less expats on the Costa de la Luz, which can limit the social life it has to offer. However at the same time it does create a stronger sense of community amongst those that are there. The Costa de la luz is probably more suited to younger buyers than the Costa del Sol though it does depend upon your character and requirements.

March 2005

Is it always necessary to get a survey done before buying? What about on developments?

The short answer is yes, though many people don’t. There are countless things that can be wrong with a property, many of which aren’t clear to the untrained eye, and a building survey carried out by a chartered surveyor (the Royal Institute of Chartered Surveyors operate in many areas of Spain) or architect can identify potential problems before they become headaches. Surveys before buying are a good idea anywhere in the world.

Surveys when buying newly-built properties on a development are equally important. ‘Just built’ doesn’t necessarily mean ‘problem free’ and a survey will identify if a property has been built to standards that do not meet the specifications. Surveyors can also provide an invaluable snagging service.

I’ve recently heard that Spain is no longer a market worth investing in. How true is this?

In recent years the Spanish property market has been exceptionally buoyant, driven buy low interest rates, a strong Spanish economy, increasing demand from both Spaniards and foreigners, and to a certain extent a lack of alternative investment opportunities with the stock market under performing. Many experts now expect the property market to start cooling down, though few forecast anything close to a collapse. Investing in Spanish property over the past few years has been child’s play given that all boats rise with the tide, but in future it will require greater insight and research by investors, which is no bad thing. I think that good quality property in Spain still represents an excellent investment over the long-term, but amateur off-plan investors looking for a quick profit should stay at home.

May 2005

"People keep telling me water in Spain can be expensive. How much does it cost to run a small swimming pool for a year - the sort of thing you'd get with a villa - and do water prices vary from costa to costa?"

The costs of water for residential use in Spain varies from region to region, though in many areas where mains water is available the marginal cost for a cubic meter of water is only around 1.10 Euros. Water is going to be a big issue in ‘dry’ Spain in the coming years and marginal water rates could rise significantly in some areas. However for the time being water is not particularly expensive in Spain, though this is only true where you have mains access or a good borehole. On the other hand shortages can be a problem in some areas.

As things stand the water costs of running a typical pool – say 8 x 4 meters with a capacity of around 50m3 – are far smaller than the labour and chemical costs required to maintain the pool. Whilst it might only cost you between 50 and 100 Euros to fill a pool, it will probably cost you around 150 Euros a month to have a pool maintenance company look after it for you.

"I’ve been thinking of buying a mobile home in Spain to use as a holiday home as it’s cheaper than a villa and quieter than an apartment block. When I have my house, what sort of costs am I likely to have besides electricity bills?"

You will have to locate your mobile home somewhere whilst you use it, and then somewhere whilst you don’t. There are many mobile home storage parks in Spain and the cost of leaving a mobile home in a secure storage area over the winter will not be as high as the cost of renting a space in a camping area during the holidays. The variable costs of using a mobile home, such as water, electricity and rubbish, will depend upon the camp site that where you locate. Of course you will also have to spend money on maintaining your mobile home.

June 2005

What’s the best way to find out if the land your house is on has been reclassified as suitable for urbanisation?

The best and only really secure way to clarify building permissions is by visiting the urban planning desk at the local town hall (ayuntamiento). This department will have plans for every piece of land within the municipality, along with the regulations that govern what can and can’t be built. The local zoning plan will make clear if land has been classified for an urbanisation or not. You will probably need a qualified Spanish architect to interpret the regulations for you, as they can be quite technical. For the time being this check can only be done by going in person to the town hall. However before long it will also be possible to do this check online.

I’m looking to buy off plan. What things should I consider?

When buying off-plan it is particularly important to use a competent independent lawyer from the very start. You should not sign or pay anything, not even a modest reservation fee, without having your lawyer check that all the licences and paperwork are in order first. You also need to confirm that the developer has a bank guarantee for your stage payments. All of these things are critical and you should not proceed without them. The contracts you sign, including the plans and specifications, must be detailed and watertight from your point of view, and you will have to depend upon your lawyer to ensure this. Finally don’t sign the deeds and take possession before the developer can demonstrate that the town hall has granted the occupancy licence. Utility companies will not deal with you without this licence. 

How much should I expect to pay to find a decent (2-bed) seaview apartment on the Costa del Sol?

The Costa del Sol stretches for hundreds of kilometres and prices vary considerably according to locations, as always. Generally speaking prices are highest to the West of Málaga, with the most expensive areas centred on Marbella and Puerto Banús, where you could expect to pay around 400,000 – 600,000 Euros for a 2-bedroom apartment with sea views. Prices drop to around 250,000 – 400,000 Euros in more popular but less expensive areas such as Estepona and Fuengirola, and to the East of Málaga you will be in the market with 200,000 Euros.

August 2005

If I buy off-plan and my completed property turns out to be smaller than expected, or is lacking certain facilities like the shared pool, what legal actions can I take?

In theory you should be able to either gain compensation from the developer or withdraw from the sale entirely, with your funds returned in full plus interest. However it depends upon the scale of the discrepancy and the private contract you signed with the developer. This shows how important it is to insist on detailed and watertight contracts when buying off-plan. Without these, it can be difficult to prove that the developer has not delivered a property with the characteristics that you agreed to buy. Also be sure to keep all brochures and other sale material given to you buy the developer at the time of buying off-plan. These can be used as evidence as to what you were lead to expect from the developer, but many people through this material away once they have signed a private contract.

If I buy a rural property without mains electricity, would solar panels or some other renewable energy source make a good substitute? I’m only planning to use the property for holidays.

Not only do wind turbines and solar panels make a good substitute, they are effectively the only substitute if you don’t have mains electricity and don’t fancy listening to a generator all day. With plentiful sunshine in most parts of Spain you can use an array of solar panels to charge big batteries, such as lead-acid and nickel-cadmium batteries, and then run your home appliances from this power source. These systems, however, are expensive, and you will probably have to spend around 5,000 to 10,000 Euros for a basic system, though you may be eligible for government grants to help finance the purchase. Even so, many people find they have to change their power usage habits as the power output from renewable systems are limited unless you spend a huge amount of money. Forget about washing machines, tumble dryers and aircon and just focus on the basics. Be warned that solar panels are expensive and could be stolen if you leave them exposed when not living in the property.

September 2005

We are selling an apartment and buying a villa in the same resort. We now have a buyer for our apartment with completion due September. We viewed the villa in May whilst on holiday and agreed a purchase price for completion October/November 2006. This made sense as we had to sell the apartment to enable us to go ahead and buy the villa. The villa vendors are looking for us to pay a deposit of 10% this September which is substantial amount 13 months in advance of the completion. Is this normal practise in Spain?

Yes, it is normal practise in Spain for a buyer to pay a 10% deposit to a vendor when it is not possible or desirable to complete the sale straight away. A vendor cannot be expected to reserve a property for a buyer without some assurance or guarantee that the buyer will indeed go through with the purchase. Therefore a deposit contract (Contrato de arras penitenciales), which involves the buyer paying a 10% deposit to the vendor in return for the right to buy the property at a specified price and date, is one of the most common private contracts used in Spain. Under the terms of this contract, if you fail to go through with the purchase you will loose your deposit, and if the vendor backs out or sells the property to someone else, you get back double the deposit in compensation.

November 2005

Is it still a good idea to buy two off-plan properties and sell one on completion to fund the other? I’ve had friends tell me this is a very bad idea nowadays.

Your friends are right. This kind of speculation is a very bad idea in the present market, and probably illegal anyway. In many areas there are now too many new properties chasing too few buyers. Many of the Brits who bought off-plan to sell on before completion are finding that they can’t sell on and have to buy the property outright – which they never planned to do – or loose their stage payments. In the present market you are more likely to loose money this way than help fund your purchase.

I’m buying a Spanish property for my own use, not as an investment. However, I’d like to think I could sell it if I needed to. As well as a good location, what sort of thing will make a home more likely to sell?

A liquid resale market always helps. This means buying a property with characteristics that will always be popular with the largest possible number of buyers. So avoid properties with, for instance, 5 bedrooms and one bathroom, and look for properties with good internal distributions and balance, strong on the characteristics, such as modern kitchens and bathrooms, that will appeal to the typical 50+ couple buying in Spain. But also try and find a property that is special or unique in some way, whilst not being weird, as that also helps. And lastly look for a good orientation – South is usually best in Spain – as this ensures maximum sunshine on terraces and patios.

If a region’s seen high property price rises for a couple of years but hasn’t caught up with the more expensive parts of Spain, are prices likely to continue to rise there?

Not necessarily. There is usually a good reason why some areas are more expensive than others, related to levels of supply and demand. So whilst prices in Murcia have been rising strongly in recent years (26% in 2004), they are still over 30% cheaper than on the Costa del Sol, where the climate, infrastructure, services and reputation will keep demand higher than in Murcia for the foreseeable future. Just because some areas are cheaper than others doesn’t mean that prices will equalise anytime soon.

January 2006

If I buy a house off-plan, should I start having to pay utility bills from the time my apartment is finished, or from the time I complete payments? Should the builder be responsible for bills before then as I don’t actually own the apartment?

You start paying utility bills once you have set up standard consumer contracts with your local utility companies, which can only be done once you have completed on the property. The developer should have installed the mains connection, but it will normally be your job to have the connections activated, and set up a direct debit payment account with the utility companies. To do this you will need to produce a copy of the deeds and a municipal certificate showing that your property has been given an occupancy licence. The developer is responsible for all ‘works’ utility charges prior to you taking possession by signing the deeds before notary.

In Marbella, is there any way that I can check an apartment that has planning permission from the local council isn’t likely to be declared illegal by the Andalucian regional government?

Your rarely need to check on the legality of planning permission granted by local authorities. However in a few places, such as Marbella, it may be necessary to run this extra check, as town hall corruption means that illegal building licences have been granted over the last decade or so. Measures have now been taken to put a stop to illegal building licences, largely by striping places like Marbella of their powers to such licences. To avoid this problem a local conveyancing lawyer to buy, as local lawyers know if there are any instances of illegal building permits. They can check on the legality of building permits by asking the town hall to confirm in writing that permits conform to the ‘general plan’ currently in force.

February 2006

Should I complete the purchase of my off-plan apartment before the first occupation licence is granted? If the place has been built, what’s the worst that can happen?

The First Occupancy Licence is a certificate issued by the municipal authorities that confirms that a newly built property is fit for use as housing. You should never sign the purchase deeds and hand over all the money for a newly built property that has not yet been granted this licence, which is known in Spanish as the Licencia de Primera Ocupación. A developer cannot force you to complete on a property that does not yet have this licence. If a developer tries to pressurise you to complete without the licence the best course of action is to register your intention to complete, and the funds to do so, with a Notary, conditional upon the developer producing the First Occupancy Licence. This licence is a prerequisite for getting connected to the utilities and for taking out a mortgage, so completing without it means you risk buying an uninhabitable property that you cannot borrow against.

March 2006

I know Spain has a low rate of burglaries, but I’m still worried for my holiday home as I’m not there for much of the year. What are the best ways to secure my home?

Burglars are unlikely to target holiday homes out of season because, despite the lower level of risk, there is often little of value left in holiday homes when they are not being used. Nevertheless, to be on the safe side, you should make sure that all windows and doors are secure, as robbers will always go for the properties that are easiest to enter. Doors should be reinforced security doors with multiple bolts, whilst windows should always have a security cover such as shutters or bars. Try and have someone check on your property regularly to make sure that all is well, which may mean hiring a property management company to look after your property whilst you are away.

If my off-plan property doesn’t get built, should I get my money back, or do I have to accept an alternative property?

In the vast majority of cases developers deliver the properties they have sold off-plan more or less on time, but in recent years there have been a growing number of problems with delivery in the Costa del Sol and other popular areas. In most cases this is because developers have failed to obtain building licences they expected when they started selling. When this happens the developer is in breach of contract and buyers have the right to demand their money back with legal interest. However there is always the risk of developers going bankrupt, so buyers also need a bank guarantee from a reputable Spanish financial institution to guarantee the stage payments they make to developers. It is mandatory for developers to arrange this guarantee, but many don’t bother unless buyers insist. If a developer fails to deliver a property bought off-plan the buyers is free, but not obliged, to accept an alternative property in lieu of a refund.

April 2006

I have been told by the developers building my property that we now have power at our off-plan development and they are installing temporary meters for both blocks on Tuesday. He advised we could go to the notary to sign after that. However, the Licence of First Occupation has not yet been granted. I am concerned, as I have always read that it is foolish to sign before this is issued. What should I do?

You should never complete on a newly built property if the developer can’t produce the Licence of First Occupation (Licencia de Primera Ocupación). You will need this licence, which is granted by the town hall, to connect to the utilities on a permanent basis – rather than via the developer’s temporary works supply. If you complete without this licence the developer might be tempted to leave you to sort it out, which means you having to spend time and money dealing with the town hall. Occasionally it happens that developments do not comply with regulations and are not granted the licence at all. People who complete on these developments then have a serious problem. To minimise risks, never complete without the licence.

My lawyer is currently going through the process of agreeing a contract to purchase an apartment on an off-plan golf resort. The developer has stated in their marketing brochures that the resort will include golf courses, tennis courts, an athletics stadium, horse riding facilities, a medical centre and so on. However, my lawyer has so far identified that these are not included in the draft contract that the developer has sent to him. Should the facilities that a developer is offering be included in the contract for the purchase of an individual apartment, and is it okay to go ahead with the purchase if they are not?

It is quite common for developers to use their brochures and other sales material to exaggerate the common facilities they plan to provide. Developers often get away with this because purchase contracts rarely mention the common facilities. As it is nigh on impossible to ensure that a developer will deliver on everything promised in the marketing material, your best option is to ensure that you have a good case for claiming compensation if the developer fails to live up to promises in brochures, etc. If you can, have all the common facilities described in your private purchase contract. Another solution is to have any relevant marketing material that describes the facilities you are being promised attached as an addendum to the contract. Never throw away any brochures or other marketing material until you are completely satisfied with the surroundings. According to Spanish law the developer’s marketing material is considered as a binding, and you may need this material to win compensation.

May 2006

If I’m unhappy with the service my lawyer provided me with when I bought my house, are there any official bodies I can complain to?

There certainly are. The most appropriate organisation to take your complaint to would be the local professional association of lawyers, know as the college of lawyers, or colegio de abogados in Spanish. Look up ‘colegio de abogados’ plus the name of the province where you are buying in Google and you are almost certain to find the website of the local college. Alternatively use the same search term in the local yellow pages (pagina amarillas). The college should investigate all complaints, and can reprimand or expel lawyers who are found to have acted unethically.  You can also take your complaint to the local consumer office run by the government, if you feel you want to complain to more than one organisation.

June 2006

Earlier this year I sold my home (which I’d only owned for a couple of years) for the same price that I bought it at. How long should it take the Capital Gains Tax retention to be repaid?

You have up to 3 months from the time of sale to request a refund if the 5% withheld by the buyer was greater than your capital gains tax obligation. Once you have requested a refund via the tax office in the area where the property is located, the refund will be paid approximately 6 months later. So expect the process to take between 6 and 9 months, depending upon how quickly you request the refund.

August 2006

If I’m buying a property off-plan, is it worth me going to Spain to look at the site? Surely it’s easier for me just to sign all the documents and wait until it’s been built to go over.

As we all know, when it comes to buying property, the key to success is location. If you don’t take the opportunity to visit Spain and see for yourself where an off-plan property is going to be built, you are passing up on a valuable chance to find out more about the location, not to mention the promoter. One can imagine that a pure investor, already familiar with a particular development, might decide to buy off-plan without visiting. Everyone else, however, should always visit before buying.

Are there any particular types of property that hold their value or gain in value particularly well?

Demand for property changes over time, in response to changing family sizes, demographics, and lifestyles. So it is difficult to predict what types of property will be in ‘hot’ demand in 10 years time, though the long-term trend does seem to be towards smaller properties. However the factor that most seems to determine how well a property holds its value is its location. Beachfront locations walking distance to sought after amenities like shops and restaurants will always be in demand, and so are more likely to hold their value, even in difficult markets.

September 2006

I’ve heard that councils other than Marbella are being investigated for corruption. Does this mean more places in Spain are likely to see building licences suspended or revoked?

There will be problems with illegal building in other parts of Spain, but nothing to match the scale of the problem in Marbella. Under the corrupt administration of a mayor called Jesus Gil, Marbella drew up a new urban plan that was not authorised by the regional government in Seville, and granted building licences on the strength of this illegal plan. No other municipality went that far, which explains why the problem is so big in Marbella. Municipalities in other areas of Andalusia have submitted new urban plans, and most are waiting for final approval from Seville before granting new licences. However, in some municipalities, developers have been allowed to proceed with their projects before plans were approved, and this is now turning out to have been too hasty. As a result, there are instances of illegal projects in other areas of Andalusia. But it is important to realise that, in the long run, the vast majority of illegal projects will be legalised.

I’ve heard a lot about plans for large developments not taking adequate water provision into account. Is there any way I can check on the water supply to an area?

Local authorities in Spain are only allowed to grant planning permission to new developments if there are sufficient water resources for the expected increase in demand. So if a developer has planning permission, and can produce all the necessary building permits from the local authority, then it follows that there are sufficient water resources, in theory at least.  If you have doubts, there is nothing to stop you checking with the developer and the town hall that water supplies will be adequate in future. Despite the theory, there is a chance the water supplies will be a big problem in the short to medium term in some dry parts of Spain like Almeria and Murcia. But in the long run the problems will be solved, as water is too important an issue to ignore. Solutions are likely to involve building more desalination plants and increasing the price of water to encourage more rational usage.

October 2006

What’s the best way to find out a developer’s track record?

Researching developers in Spain can be hard work, especially if you don’t speak Spanish. Nevertheless, there are some basic steps you can take. If a development is already up and running, then visit on your own and talk residents. Last year I visited a large new development in Murcia: Within 5 minutes I was talking to some friendly British residents, and within 6 minutes I knew that the developer was a crook, and the place should be avoided at all costs. You can also search the internet for any references to the developer, and try to unearth negative reports using search terms like the developer’s name and the word ‘problems’. Forums are also a very useful source of information where you can ask others for feedback on specific companies.

December 2006

With European interest rates rising, is there much of a difference between Spanish and British mortgage rates nowadays? I’m not sure whether to remortgage my house in the UK to raise capital rather than take out a new mortgage when I buy a property in Spain.

It’s true that the interest rate differential between the UK and Spain (Euro-zone) has shrunk, but with standard variable rates in Spain around 5%, compared to 7% in the UK, average mortgage interest payments in Spain are still 30% lower than in the UK. On the other hand, mortgage set up costs in Spain are higher than in the UK, so for a short-term mortgage of, say, 5 years, it may work out more economical to us a mortgage in the UK, assuming that interest rate differentials don’t change. However, it nearly always makes sense to use a Spanish mortgage when buying Spanish property. This is because of the benefits of having the asset (the property) and the liability (the mortgage) in the same currency. If you use a Stirling mortgage to buy a Spanish property in Euros, you might have serious problems if the Euros weakens against the pound. The less risky option is to take out a mortgage in Spain.

When is a property actually regarded as complete? Should I make my final payments when the building is finished? Several people on my development say it’s when the Licence of First Occupation is in place, but I don¹t see why we need to wait it if the apartments can be lived in.

You should never complete on a newly built property that does not yet have a licence of first occupancy (licencia de primera ocupación in Spanish). This is a document issued by the town hall certifying that a newly completed property complies with regulations and planning permission. It is important because utility companies need to see it before they can start supplying a new property with water and electricity. Also, it may be difficult to get a mortgage without one (you can, however, inscribe your title in the property register without one).  Under Spanish law you can’t be forced to complete without an LFO, but that rarely stops unscrupulous developers from putting buyers under pressure to do so. But if you make the mistake of completing without one, you may have to live for months, if not years, without basic utilities such as water and electricity.

January 2007

At the Madrid tourism fair FITUR recently, the President of the Association of Promoters and Constructors on the Costa del Sol said they expect to see a fall in the sale of properties to use as holiday homes, and that sales were down 57% last year. Does this mean prices of properties there are likely to fall significantly this year?

Many agents working on the Costa del Sol report a significant slowdown in sales in 2006. Declining sales on the coast, and a drop in overall foreign investment in Spanish property (down 12% in 2006, and 33% below the peak in 2003) come at a time when the stock of unsold property on the coast is increasing, which is bound to put further competitive pressure on the market. Estate agents report that prices for most types of property are now stagnant or falling, despite the fact that the Spanish government’s figures show that property prices in Malaga province (home of the Costa del Sol) rose by 8.8% in 2006. Demand is weak because prices are high, and because buyers are turned off by a constant stream of bad news concerning corruptions scandals, illegal building, and dodgy developers. So I think it is reasonable to expect prices on the Costa del Sol to continue falling this year, though not necessarily across the board. 2-bedroom apartments in mediocre locations will be hit the hardest, but super luxury properties, and attractive beachfront properties might even appreciate in value. It is certainly a buyer’s market, but there also appears to be a firm price floor for most legal and attractive properties on the Costa del Sol.

March 07

If an estate agent is selling a plot of land, is there any quick way of double-checking from the UK whether it’s classed as urban or rural?

The only way to be sure of the classification of a plot of land in Spain is to check with the urban planning department of the local town hall. Fortunately, many town halls in Spain now publish detailed urban plans online, so in many cases it is possible to verify the urban classification of a plot of land in Spain over the internet. In cases where the local town hall does not publish urban plans online you have to go in person to the urban planning department of the town hall. But even if the town hall does publish plans online, you have not know how to interpret them, which requires a certain amount of specialist knowledge of local planning regulations, not to mention a command of Spanish. Whether or not the plans are available online you are strongly advised to take advice from an independent lawyer specialising in property law and conveyancing in Spain.

April07

There's been a lot of talk about Spanish developers' share prices falling in the past couple of weeks. I'd been considering buying off-plan but am now worried that if I did and the developer got into real difficulties, I could lose my money. Would resale be a safer bet? I want to use my property myself, so I'm not so worried about prices falling in the short term. I just want to be sure I get my house!

It is increasingly obvious that the Spanish property boom is coming to an end, and that a more challenging economic environment is around the corner. The drop in property sector share prices on the Madrid stock exchange is just one symptom of this. But given that the construction boom is still in full swing, the risk of some developers going bust must be increasing. To avoid unnecessary risks, only buy off-plan for the most established blue chip developers with solid financials. And unless buying off-plan really suits your requirements, you are better off buying one of the many brand new apartments finished but never occupied now on the market. There’s never been a better choice than of these than now.

May 07

The property my wife and I are hoping to buy a property that has an extension which isn't on the deeds, and we've asked the vendor to register the work. How long should it take for the registration? We've already got the 'Escritura de Obra Nueva' but I still don't want to go ahead with the purchase until everything's right at the property registry.

Under normal circumstances the process of inscribing a new construction deed in the property register shouldn’t take more than 20 days, but it can take several months, depending upon the registry. A good lawyer should have an idea of how quickly the local registry works, and should also check the legality of the new construction with the town hall, as a new construction deed does not necessarily mean that everything is in order.

June 07

If I go on an independent viewing trip ­ that is to say, my wife and I book our own flights and drive around region by ourselves ­ will it be easy for us to see developments? Do most developments have site offices where prospective buyers can call in?

Independent viewing trips are nearly always better for buyers than subsidised inspection trips, which only focus on the property being offered by the company subsidising the visit. Buyers paying their own way will learn more about the market, enabling them to take better-informed decisions. Cheap flights and the internet mean that it has never been easier to organise your own viewing trip to Spain. Once in Spain you should visit as many relevant developments as you can manage.  All but the smallest developments have site offices that you can visit during office hours, and obtain prices and plans of property on sale.

July07

What exactly is a certificate of antiquity? Do old houses get these automatically or do I have to apply for one?

A certificate of antiquity can be issued by either a qualified architect or the town hall, and certifies that a structure has existed for a certain amount of time. In most cases, and in most parts of Spain, owners need this document to prove that a structure has existed for over 4 years, which means that it is safe from demolition, even if it is illegal. You have to apply for this certificate, usually by paying an architect to produce one. Note that most architects will not lie about the age of the property, as doing so risks jail, so best to be sure that a property is over 4 years old before requesting this certificate. This certificate does not make a structure legal, just protects it from demolition, and can never be obtained if the town hall has already registered an infraction, or if the structure is on certain types of land, for example municipal public zones.

August 07

With property price growth slowing, and some say falling, in parts of Spain, are there any really popular resort towns where I can pick up a bargain already or am I better off waiting to see if prices fall around the country?

If you want quality property in Spain, then now is the time to buy. The buyer’s market means that good value can already be had, if you do your research. Quality property is always in short supply, and is unlikely to get much cheaper than it already is, unless the Spanish economy goes into a construction-lead recession, which is not out of the question. Unattractive, poorly built property in undesirable and over-developed locations, however, is likely to continue falling in price, as there is now a glut of this kind of property in Spain. In contrast to the boom years, when all properties rose in price, in future we are likely to see increasing market segmentation, with quality builds and locations holding value, whilst unattractive properties fall in price. So prices may be simultaneously falling and rising, according to quality and location, even in the same town. So if you want quality, and you are ready to buy, then now is the time to take advantage of the buyer’s market, as opposed to waiting for a fall in prices that might never come.

September 07

With so many news stories about estate agencies in Spain closing, should I be wary of paying an estate agent money for something like a deposit for a house? Could I lose my deposit if an estate agent goes under?

Yes, you should be wary, and yes, you could lose your deposit if an estate agent goes out of business whilst in possession of your money. On the other hand it can also be risky paying a deposit to the vendor, as  you might struggle to get your money back if the vendor  breaches the contract. The best solution, if possible, is to agree to pay the deposit to your lawyer’s client account, though many lawyers do not have client accounts.

October 07

Does all the talk of falling Spanish property prices mostly relate to the Spanish domestic market? As I understand it, they tend to buy different sorts of homes to British buyers. Would this make the expat property market more stable?

Primary residencies satisfy a basic need for housing, but holiday properties are a luxury, and when the going gets tough, the holiday property is the first thing to go. It looks as if demand for holiday homes is falling as higher interest rates start to bite, and repossessions are starting to rise in some coastal areas. Furthermore the supply of new holiday homes being built exceeds demand, adding further instability to the holiday home market, which already suffers from quality and urban planning issues. So if anything the property market in tourist areas is more volatile and risky than the broader market for primary residencies. In the present market the best strategy is to focus on quality, which is always in short supply.

November 07

I’ve read a lot about high-quality property holding its value better than low-quality property, but does this just apply to villas or does it include apartments? Is there any way to raise a property's value if it's on a fairly ordinary complex?

In a difficult market characterised by oversupply there is usually a flight to quality, as quality is nearly always in short supply. All types of property can benefit from this trend, not just villas. Spain certainly has a problem at the moment with over supply, and buyers appear to be following the quality first rule as they look for the kind of property that is most likely to hold its value in a post-boom market. Location is a big part of the quality equation, so property on a bog-standard complex in a second rate location will probably struggle to retain its value in the next few years. There is not much you can do about this, except try and keep your property in good condition, looking clean, and well decorated, so that it stands out within its surroundings.

Decembre 07

What is a DIA? Is it like a British HIP? And are they only mandatory in some parts of Spain?

DIA stands for Documento Informativo Abreviado or brief information document, or in English. As of February 2006 anyone buying or renting a property in Andalusia can request one from the counterparty in the transaction, which might be a developer, estate agent or vendor, depending upon the circumstances. It is only applies to property in Andalusia, and includes all the relevant information about the property and the terms of its sale or rent. Like the British HIP, the DIA is meant to provide buyers and renters with important information on the property in question, such as title and charges on the property. However, there are also considerable differences; the HIP, for example, requires an energy performance certificate not necessary in the DIA.

If I’m viewing rural properties, is there any way I can tell a small finca from a non-residential casita or nave just by looking?

When it comes to buying rural property in Spain, never rely on what you can see. There is now sure way to tell just by looking at a property that it has the correct residential classification. You need to see the deeds and cadastral records, and if necessary do a search at the town hall urban planning department to confirm how you can use the property and what you can do with it before you make any commitments.