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Property for Sale Buyers Guide for Costa del Sol, Spain, Andalucia

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The first question we are often asked isWhat does my money buy me in Spain?

Spain can no longer claim to be an undiscovered paradise of cheap property. It is one of the worlds most sought after holiday destinations with more than 40 million people visiting it each year. This popularity has resulted in large scale development and is reflected in the property prices.

This is not to say that there are no good value properties to be found. Compared to the rest of European capitals Spain offers good value for money. The increased exposure has also had the effect of making Spain an excellent investment choice with robust growth in property value. With mainland Europe’s best climate, Spain is destined to grow in popularity each year.


In order to make the most of your money, there are a few options to consider.

  • Buy off Plan . Prices always increase as the development progresses and near completion. Clients buying early get the best deal and investment return.
  • Location . The frontline golf and beach properties and other prime locations always command higher prices. Flexibility on location can translate into substantial savings.
  • Renovation . If you intend living in Spain permanently, there is always the option of buying a ruin or property needing some modernization or refurbishment. It is advisable to be on hand to supervise this work yourself.
  • Mortgages . Should you not have the cash available for an outright purchase of the property you desire, there are numerous methods of securing a mortgage to finance the property of your dreams. Pinsapo Realty can assist in all matters relating to mortgages.



Price Guide

€45,000 - €150,000 Rural (Inland) properties, studios, 1 bed apartment of reasonable to mid range quality
€150,000 - €200,000 1-2 Bed Apartments of mid range quality, fincas in need of renovation
€200,000 - €300,000 2-3 Bed Apartments, smaller townhouses, inland villa/finca
€300,000 - €400,000
3 Bed Apartments/Townhouses of good quality, Older Villas needing renovation, Larger apartments of good quality
€400,000 - €600,000
Luxurious Townhouses/Apartments, Entry level of larger Villas
€600,000 - €1,500,000 High Quality Villas and extremely luxurious Townhouse/Apartments
€1,500,000 + Fantasy league. What dreams are made of!

Why Invest?
The best reason for investing in Southern Spain can never change; the sun. The climate has established the Costa del Sol as the “ California” or “ Florida” of Europe, and comes complete with a similar jet-set lifestyle, should you seek it.
With this unique climate on offer in Europe, the Costa del Sol shall continue to be the favourite purchase choice for holiday homes and investment properties. There is also a changing demographic of new resident, with the younger entrepreneurial influence now becoming apparent along with the continued investment by the older resident looking for a sunny retirement. This all translates into a healthy property investment climate for sales, re-sales and rentals.

Facts and figures
Since 1998, property prices have doubled on the Costa del Sol. In 2003, resale (second-hand) property increased by a massive 24%, with that of new property trailing with a very healthy 18.5% increase. At the top end of the luxury spectrum, there was a more measured growth of approximately 12-15%. When considered against the background of the general economic climate of the past year, it is clear that the property market in Spain offers a very sound investment opportunity.
The healthy investment opportunity is not limited to the Costa del Sol, with Spain in general enjoying a 20% national increase in property prices.
Málaga province had 90,000 new homes constructed in 2003, with the national total of homes built being 645,000. Of the total number of homes built, approximately 16% (100,000) of the units built were sold to foreigners.
In the next five years, these figures are expected to increase substantially, with more than 800,000 – 1,000,000 Europeans expected to purchase homes in Spain. Some studies predict twice that figure.

In highest demand by the foreign buyer, is a home of approximately 70 square meters with two bedrooms, in a well maintained area.

Tourism and the Economy
One of the largest contributors to the Spanish economy is tourism. Spain holds the enviable position of being second only to France as the world’s most popular destination. More than 52.5 million tourists entered the country in 2003. More than the resident population of the country!
With so many people falling under the spell of the Spanish people and lifestyle each year, the property sector is expected to continue to have considerable growth. Many visitors, after more frequent visits, choose to purchase a second holiday home in Spain.

Spain ’s popularity as a tourist destination has definitely helped Spain to achieve the strongest economy in the Union, with a substantial 2.4% growth rate, more than 4 times that of its partners.

In Conclusion
With the unchangeable weather, the low crime levels and the high standard of living at a comparatively low cost, all add to the allure of investing in Spain. There is a continuing high demand from other countries, as well as resident Spanish buyers, and it is expected that Spain, and the Costa’s in particular, shall remain a favourite of investors for many years to come.

Legal Guidelines

Prior to Visiting/Viewing
Most importantly, prior to coming to Spain, is the analysis of your financial situation and making sure that you have funds at your disposal for making a reservation deposit. The sum normally required is a minimum of €6,000, however this may be higher for more expensive properties. Cash or credit cards are the most commonly accepted forms of payment. Should you not have these funds at your disposal, you risk losing that dream home to someone that does!

Negotiation on Purchase Terms
Once you have chosen your property, you can negotiate the terms and conditions of the purchase. Sale subject to mortgage, payment terms or handover dates are some of the issues that may need to be discussed. In order to comply with all legal criteria, we may recommend that a lawyer assists in this process. This protects all parties in the negotiation and may ease the transfer at a later date.

Appointing your Legal Representative
We can almost guarantee that we can recommend a Spanish lawyer that speaks your language! A lawyer is necessary to provide the legal guarantees that the property being purchased is free of debt, embargos or charges and has fulfilled its obligations with regard to payment of taxes, local contributions or community charges. Debts remain attached to the property, not the individual, so it is crucial that a local lawyer conducts the necessary searches and checks to ensure a property is debt free before transfer to your name.

Formal Offer
Once the negotiations are complete, it is time to formalize the offer in writing. It is standard practice to include the reservation deposit with the formal offer, until private contracts are exchanged. The reservation deposit must never be given directly to the vendor. It should be given to your lawyer to be held in a protected, bonded account until completion of sale.

Exchange of Contracts
Once the owner has accepted the offer, the next step is to exchange private contracts or sign an option to purchase. This takes place within two weeks after the formal acceptance of the offer to purchase. Your lawyer will have completed all his investigations into the property and arranged with the owner to settle all outstanding debts. The private contracts shall set out the details of the agreed offer to purchase and set a date for final completion at the notary. At this stage, you are expected to pay between 10% - 30% of the purchase price, depending on the type of property and mortgage granted.

Final Completion
The sale is formally completed when the public property deeds are signed in front of the notary, the final payment is made to the seller, and possession of the property handed to the buyer, with the keys.

Registration
Once the property deeds are signed, the notary will advise the local land registry of the changed title deed. All the relevant taxes on the purchase will then be paid by your lawyer on your behalf and he shall register your title deeds. Your lawyer should also assist with the transfer of the local utility suppliers accounts to your name and arrange their payment through direct debit from a local bank account in your name

Costs Involved
As a guideline, estimate the total costs of transferring the property to your name to be 10% of the total purchase price.

The Fees
As a guideline, the fees and taxes are normally approximately 10% of the purchase price. All fees quoted are approximate fees only. Please consult your legal advisor regarding each individual purchase.

Legal Fees
€ 1.200 - €1.800 or 1% of the purchase value, whichever is the greater, plus IVA charged at the standard 16%

Notary Fees
This scale is fixed by law; however the costs range between €300 and €1.000.

Property Registry
Approximately 60% of the notary fee

Taxes
These taxes are specific to the type of property purchased.
Commercial property, plots of land and garages attract IVA of 16%
Promotion, Developments or property purchased from a habitual trader – 7% plus 1% Stamp Duty
Standard Purchase – 7%
‘ Plus Valia’ tax is usually paid by the vendor. Should the vendor wish for this to be paid by the buyer, it must be stipulated in the terms and conditions of the private contract. This tax can range from a few hundred euros to several thousand on larger properties with a lot of land. Who pays this tax must be discussed with your lawyer prior to signing the transfer of the property.