Lawyer Raymundo Larraín briefs us on Spain’s ongoing property bull market.
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Article copyrighted © 2021. Plagiarism will be criminally prosecuted.
By Raymundo Larraín Nesbitt
Lawyer – Abogado
8th of October 2021
Plain and simple, now is the right time to buy (or sell) in Andalusia, period.
Feel free to skip the rest of my article below.
2021 was poised to be one of the worst years on record in Spanish real estate sales. The virus’ financial aftermath proved devastating, nothing seemed to withstand its relentless wake.
And that’s when – least expected of all – politicians stepped in saving the day.
Andalusia’s regional government took the bull by its horns and approved in April of this year a taxpayer’s aggressive relief package to combat the adverse consequences brought about by Covid-19. These included, amongst many others, drastic tax cuts on buying property, both off-plan and resale.
We published a detailed article in SPI: Andalusia lowers taxes including Property Transfer Tax and Stamp Duty in move that will boost the market – 28th April 2021
Little did we know at the time of publishing it that it would give way to one of the best performing years on real estate sales ever.
Six months later, we have witnessed one of the strongest bull markets to date in the Spanish real estate market. We have published several articles during this time to reflect this:
- €40mn villa sold in Marbella – 21st March 2021
- Stunning €32mn villa sold in Marbella – 11th May 2021
- Villa property boom: 573 selling a day in Spain! – 11th July 2021
- Spain records highest number of property sales since 2008 – 1st September 2021
Spain’s National Bureau of Statistics (INE) published in August the hard figures on this bull market. INE reports a record-breaking 267,700 properties sold during the first 6 months of this year. We need to look back 13 years, all the way back to Spain’s property boom heyday, to see such strong sale figures.
You can see it in a graph here: House sales in Spain in 2021 (first six months of 2021)
In June ’21 alone, over 48,000 properties were sold, which is an 73.5% interannual increase. This is hands down the best performing June in real estate history. This confirms the unabated trend that we are witnessing the best sale figures in real estate in over 13 years. The property market has been nothing short of spectacular from March of this year.
There are several underlying factors that help to explain this spectacular property rebound (huge liquidity, new covid-induced consumer trends, drastic property tax cuts, ultra-low interest rates, sharp inflation spike, underperformance of bonds and other financial assets, etc) which we’ve collated in the above-mentioned articles. But to avoid beating about the bush, hands down it is the spectacular tax breaks now in place in Andalusia which have fostered the bull market we are in.
Even El Mundo (newspaper daily) reports how the buying frenzy is slashing the available stock of real estate in large cities in Spain.
Long story short, if you were ever expecting someone to tip you off when was the right time to buy real estate again in Andalusia, the time is now. If you’re thinking of buying (or selling) property in Andalusia, you should most certainly take advantage of the ultra-lenient tax breaks this regional government has on offer (for a limited time only):
- Off Plan: 20% discount on Stamp Duty Tax
- Resale: tax savings ranging from 12.5% to 30% (or more) on Property Transfer Tax, hinging on the sales price
Of particular interest are the tax cuts in resale property. The gist is that the higher the sales price, the more tax a buyer stands to save.
- On a €500,000 sale price, the tax savings are 15%.
- On a €3,000,000 sale price, the tax savings are 27%, and so forth.
In short, simply spectacular for high-end property. This has prompted a tidal wave of villa sales, the press reports 573 villas are selling a day in Spain! This is the highest figure on record since 2007, in the midst of Spain’s property boom.
As El Pais (newspaper daily) reports in August ’21, the capital appreciation of real estate in coastal areas has surged by 8.4% in 2021, as compiled by property surveyor TINSA (Spain’s largest surveyor). We hadn’t seen such capital appreciation figures since the early 2000’s.
Spanish financial newspaper The Economist reports today how some property hotspots in Spain have increased the asking price by over 20% year-on-year, particularly in coastal areas.
Undeniably, there is an upwards sales trend in Spain going on since March, but it is more prominent in coastal areas.
Bottom line, now is as good time as any to invest in real estate in Andalusia and take advantage of its time-gated tax breaks. In plain English, we’ve never had such low taxes on buying property in Andalusia – ever. ’Nuff said!
This is of particular interest to some fellow European investors, such as Dutch, who now face negative interest rates on their bank deposits (that is, you need to pay the bank to deposit your money)! Ha ha ha. Excuse me, cheeky buggers!
It’s booming y’all! Are you gonna miss out?
At Larrain Nesbitt Abogados we can assist you buying & selling property in Spain and deal with its taxation. Ask us.
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“We human beings become what we dream as children and during our youth.” – Manuel Patarroyo
Manuel Elkin Patarroyo (1946, Colombia). Reading comics as a young boy on Mr. Louis Pasteur, Father of Immunology, would inspire him to heed his calling in life as an immunologist and save (millions) of lives. He is a Colombian Professor of Pathology and Immunology who developed, under precarious third-world conditions, the world’s first synthetic vaccine against a severe strain of malaria, a disease which kills 1.5 million people per year. The man was offered a fortune by leading US Pharmaceuticals for his patent (rumoured at over 1bn US Dollars). Anyone would have accepted such a generous offer; anyone but him. He altruistically donated his patent to Humankind, and as a result the prices charged for his vaccine are ultra-low, because anyone can mass produce it without having to pay royalties brutally reducing the costs of the development pipeline. It is estimated his work saves two million lives every year. Much like his childhood hero, M. Pasteur, he too would one day grow up to become a real-life hero.
Legal services available from Larraín Nesbitt Abogados:
- Buying distressed property in Spain – 8th August 2011
- Let-to-Buy in Spain: The Smart Choice – 8th of April 2012
- Buying resale property in Spain – 21st February 2013
- How to buy commercial property in Spain – 4th July 2014
- How to buy rural property in Spain – 8th August 2014
- How to Buy Property in Spain Safely – 10th October 2014
- House Hunting in Spain – Interview with The New York Times. June 2015
- Buying property in Spain from a private seller (Resale Property) – 21st of February 2017
- Buying property in Spain – 10 reasons to hire a lawyer – 8th November 2016
- Selling property in Spain – 10 reasons to hire a lawyer – 8th December 2016
- How to inspect an off-plan property overseas – Q&A with The Sunday Times. July 2017
- 8 Tips on Buying Off-Plan in Spain – 8th June 2018
- Tax advantages on becoming resident in Spain – The Address magazine (pages 358 – 373). December 2018
- Taxes on buying Spanish property – 8th December 2018
- Do’s and don’ts on buying property in Spain – 8th April 2019
- 8 tips on buying a home in Spain – 8th June 2019
- Rentals climb for fifth consecutive year in Spain! – 12th February 2020
- Home-Buyer’s Checklist – OFFPLAN – 1st March 2020
- Home-Buyer’s Checklist – RESALE – 11th March 2020
Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.
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