MARBELLA – In recent years, the prices of new construction in Spain have risen sharply, on average by 7 percent per year. In 2019, pre-corona, there was even an 18 percent increase. This hits hard not only for Spaniards, but also for foreigners.
- Welcome to the Costa del Sol
- 1. Never do business without an attorney or lawyer
- 2. Beware of local brokers
- 3. Beware of the term ‘new construction’
- 4. Be realistic about the rental yield
- 5. Beware of so-called bargains
- 6. Choose the right region
- 7. Negotiate
- 8. Don’t buy off plan…without a plan
- Rely on Expertise
Geschatte leestijd: 5 minuten
Welcome to the Costa del Sol
Living on the Costa del Sol offers a lot of quality of life. That is nothing new for those who have experience with it. Then you have personally been able to enjoy the climate and all the other advantages of this coastal strip of over 150 kilometers on the Mediterranean Sea.
The Costa del Sol is now a reference in the world for both tourism and for people who want to settle there permanently. With more than 300 days of sunshine a year and an average temperature of 19C, it goes without saying that the leisure offer of sports and other outdoor activities is very extensive. The coastal zone has more than 70 golf courses, 12 marinas with more than 1,000 moorings, walking paths and cycle routes… In addition, there is a wide choice of properties and projects if you are considering buying a home in Spain.
Building in Spain today is only about 15 percent cheaper than in Belgium. The biggest difference is in the VAT, 21 percent versus 11 percent. What should you watch out for when buying real estate in Spain?
1. Never do business without an attorney or lawyer
Never do business without a lawyer or legal counselIn Belgium, the notary plays an important role in the purchase of real estate. But his Spanish counterpart has a much more limited role: he only checks the identity of the parties and the ownership and is not responsible for searches.
2. Beware of local brokers
Never pay a retainer to a broker. Always have that money go through a lawyer or notary. In Belgium, real estate agents are a recognized profession, which is monitored. In Spain, anyone can play broker. Last year there were over 175,000 companies active in the brokerage business. By comparison, in our country there are 10,500 brokers.
3. Beware of the term ‘new construction’
In Spain, a property is considered new as long as you buy from the first owner. If you bought an apartment from a struggling developer in 2012, it may have been completed in 2008. And yet that is considered a new build and VAT (today 10 percent) is due on it.
4. Be realistic about the rental yield
In some places you are not allowed to rent out the first few years after the purchase. The net rental yield is limited to 1.5 to 2 percent. Don’t automatically count on a 5 percent capital gain over five years. Selling within five years means selling at a loss. The cost of the purchase (14 to 15 percent) must also be recovered.
5. Beware of so-called bargains
If it seems too good to be true, it’s probably just not true. There are still 500,000 homes sitting with Sareb, the “bad bank” that was created to take over all those homes at a 40 percent discount from banks that got into trouble because of bad credit. Even if these are offered at a further substantial discount, they often still remain uninteresting. Most foreigners want modern white buildings with large windows and a large terrace. Not ochre or rust-colored buildings with small, fully covered terraces.
6. Choose the right region
Not all regions in Spain attract foreigners. They have the largest share of purchases in the Balearic Islands (31%), Andalusia (30%), Canary Islands (18%), Region of Valencia (16%), Murcia (13%), and Catalonia (12%). Foreigners often have a different preference for homes than Spaniards.
One of the best regions to invest nowadays is the Golden Triangle – Estepona, Marbella, Benahavis.
In some places on the Costa del Sol, the oversupply is growing and developers, even if they won’t advertise it, are willing to give substantial discounts. Ten percent discounts are achievable. Have yourself assisted in the negotiations. Discounts of 5 percent should also be negotiable for existing homes.
8. Don’t buy off plan…without a plan
Years ago it was logical to buy off plan. At the start of the commercialization of a project, it was often 20 to 25 percent cheaper than when the very last housing units were sold. Today, there are few arguments for buying off plan, but you have to make sure your research checks out. There is a sufficient supply of homes that you can move into immediately or very soon. It could be risky to subscribe to a project that is only 40 percent sold. There is no need to rush. Make sure to get objective advice from an experienced realtor in the area.
Rely on Expertise
And don’t forget that the best option to avoid problems is to rely on the expertise provided by real estate professionals such as InvestinSpain. We have +7 years of experience in selling homes. Throughout the purchase process, they take responsibility for resolving any issues that may arise during the purchase. You, the client, will only have to worry about what it is all about in the first place: enjoying yourself.