SpainTHE BUYING GUIDE

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. Area guide

. Property facts

. Country overview

. The buying process

THE BUYING GUIDE Spain

Tens of thousands of us retreat every year to Spain’s inviting shores, to soak up some of the ambience of a Mediterranean life. Spain’s feisty Latino passion mixed with relaxed outdoor living really lends itself well to a nation bursting with vitality. The good life of its rural pastures and the urban chic of its cities ensures no one taste is forgotten. A healthy expat community is welcomed with open arms, but if it is tranquillity and a taste of the real Spain you are craving then head inland to rolling hills, vineyards bursting with aroma and quaint rural farmhouses just waiting to be discovered.

Spain stretches out to the south of the Pyrenees, as an untamed expanse of beautiful beaches and pristine villages. Sun drenched and stylish in their appearance, the properties available offer much to the overseas investor. Don’t be fooled by the notion that Spain has lost her charm; scratch beneath the surface and you will discover an exciting way of life away from the familiar expat haunts. Spain has an alluring power and once you have sampled her delights, a life anywhere else is simply unthinkable.

The Spanish economy mainly revolves around a large manufacturing base, includimg key industries such as textiles, automobiles, tourism, beverages and metals.

Traditionally, unemployment levels were dangerously high; however this is gradually reducing. A sluggish work ethic, inflexibilities in the labour market and loss of competition in the housing sector are Spain’s current issues.

• Population: 40,491,052 (July 2008 est.)• Currency: Euro• Capital city: Madrid• Major cities: Madrid, Barcelona, Valencia, Seville, Malaga, Murcia, Las Palmas, Palma de Mallorca, Bilbao• Languages: Spanish• Climate/weather: Diverse, ranging from Mediterranean in the south to cooler in the north• Location: South-western Europe, bordering the Bay of Biscay, Mediterranean Sea, North Atlantic Ocean, and Pyrenees Mountains,

southwest of France• Utility costs: It is necessary to pay for all set up costs including, power, water and telecommunications when purchasing in Spain• Economy: Inflation rate (consumer prices): 3.5% (2006 est.) GDP (official exchange rate): $1.081trn (2006 est.) GDP (purchasing power parity): $1.07trn (2006 est.) GDP (real) growth rate: 3.6% (2006 est.) Foreign Direct Investment (net inflow): $35.9 bn

Country Overview - Fast Facts

THE BUYING GUIDE Spain

. Main property markets

. Forms of ownership

. Restrictions

. How safe is it?

. Mortgages

Main property markets

Spain’s property market enjoys a healthy number of foreign investors, with Britain being its prime target. The main trade area is Spain’s ‘Costa del Sol’. This is also the prime tourist destination. The region is home to many golf courses, long sandy beaches and towns such as Malaga and the ultra trendy Marbella. Other key investment spots are the Costa Blanca, home to Benidorm (another favourite holidaying spot for many Europeans). Madrid and Barcelona also have very healthy property markets.

Forms of ownership

Property can be owned on a freehold basis. There are two main ways in which you can own property in Spain: Sole and co-ownership. Always be advised however that under co-ownership you not only own the rights to your property but of the undivided real estate. The option to not own a fraction of the whole estate is not possible in Spanish law.

Another option under co-ownership is to own through a company. This is worth looking into for its added tax benefits.

Timeshare options are also widely available in Spain; however there are a number of unreputable companies that will offer timeshares. Always do thorough checks into any company you choose.

Mortgages

The Spanish lending system is well established and fairly competitive. The options available to foreign investors are:• Release equity on your UK property• Off Shore lenders• Spanish Mortgage in Euros.

If you decide on obtaining a mortgage from the UK, do remember that although your house price will remain constant in Euros, the exchange rate will change.

Restrictions

There are no restrictions for foreign nationals to buy in Spain. However there are a number of legal processes that you must become familiar with before buying into the Spanish market.

Pre-emptionCertain third parties can sometimes have first refusal on your property, and if this wasn’t given prior to your sale they can evoke this at a later stage.Matrimonial and Family lawAlways ensure that again under this heading no one has pre-emptionLimitationsLand that has been set aside for military use or is environmentally protected

How safe is it?

Spain has a reputable court system, if somewhat slow. There are issues that foreign buyers should be aware of though.

The infamous Valencia ‘land grab’ system that is currently in the process of a reform was a law introduced in the 90s to ensure there was enough land available for urban development. This was abused by some land developers which resulted in small time land owners losing out.

Marbella had a similar problem where it was revealed that the council-planning department had become corrupt, resulting in property being built illegally. This is still undergoing court procedures.

As in Italy, vendors sometimes accept offers on their properties that are higher than that which is written in legal documents. This is a tax avoidance scam and can lead to harsh penalties.

Legal representation

Once you have decided on a property, a Spanish notary will handle all the legal avenues. They are non-biased legal professionals who simply register the property, do any checks on the land, property and vendor. They will handle all documentation and ensure all taxes are paid. As they are not acting in the interests of either the buyer or vendor it is advisable to employ the talents of a second lawyer who is both bilingual and has knowledge of both English and Spanish law. It is generally uncommon to find a Spanish solicitor who has this knowledge, therefore most foreign investors use a solicitor from his or her own country.

The sale

Now that you have found your property, the process can begin. Firstly, it is advisable to get a survey. Although in Spanish law this isn’t compulsory, it is nevertheless a good idea, especially if you are buying property over ten years old, as younger property is required to have a structural guarantee from the builders. The survey will also allow you to make accurate estimations in regards to renovations. Also if you are acquiring an English mortgage you will legally need to have this completed anyway.In Spain, your lawyer won’t necessarily carry out all checks such as land ownership and land registry records, your surveyor will. This is another very important factor to consider if you are thinking against having one done.

The next process you should complete is obtaining a NIE number. You will need this for any financial dealings and no estate agent will start any procedures until you have this. The number can be obtained from the foreigners department at a national police station. Negotiating the price is next on the agenda; a small reservation fee is paid to take the property off the market whilst your lawyer carries out the proposed private contract check. It is normal to go in at 5-10 percent below the asking price. Many Spanish vendors assume foreign buyers are ignorant of the market and therefore ensure you do not fall

THE BUYING GUIDE Spain

. The buying process

. Choosing an area

. Viewings

. Legal representation

. The sale

. Taxes

The buying process

The Spanish market is very popular with foreign investors and studies have shown that tens of thousands of Brits have already emigrated there. At one stage it was thought of as an exhausted market; this is far from true. The turnaround between signing and completion can be very quick and can sometimes take a few days. The only downside is Spain’s legal procedures. However, just ensure that prior to making any decisions that you have done your homework. Being familiar with the property market in Spain will reduce any need for concern or unnecessary stress. Always employ a bilingual lawyer who is familiar with both English and Spanish law to look after your own personal interests.

Choosing an area

Spain has an abundance of different houses on the market and this can range from brand new apartments to complete renovation projects deep in the heart of rural land. The key questions to ask yourself are what you are looking for, what is its purpose and of course price; what are you prepared to pay? This will help determine an area and help filter search results. Finding a property in Spain is relatively easy. With technology being as it is, the Internet provides a really good place to begin. Always check out local newspapers and magazines to find hidden gems. It is advisable to use a registered estate agent in Spain (API) and they will be happy toshow you around a number of selected properties. Always keep an open mind too, as when you visit different areas you never know what you will find. This will help you discover where you can get the best deal for your money.

Viewings

Even though the Internet provides a very good basis for research there is no substitute for actually going there and getting a feel for an area. Viewings are highly recommended. First viewings are all about falling in love with a property, second viewings are for going in with your head. It is advisable to take a checklist.

prey to this. Once you have both agreed on a price, it is not uncommon for you to sign a reservation agreement. Although this is non-binding, if you ‘pull out’ you may lose your reservation fee.

The next stage is to get any outstanding legal checks made. This should include• No outstanding monies or taxes on the property• The vendor actually owns the property• The vendor has legal rights to sell the property

You will now be in a position to sign the private purchase contract. This is legally binding. You should ensure the contract is translated so you fully understand what is that you are signing. At this point a 10-15 percent deposit will be paid; if the buyer walks away, he/she will lose the deposit, if the Vendor pulls out, they will be liable to reimburse the buyer twice the deposit in compensation.

Once all legal paperwork has been completed the sale is near closure. The final step is to sign the public deed at the notary’s office. The vendor, buyer and notary are required to be present at this event. Once signed, the deeds are passed over and the notary will ensure all monies, including taxes and fees are paid. The property must be registered on the land register, which will be handled by your private lawyer. This will make sure no third party claims can be made.

Taxes

When purchasing a property in Spain the following taxes and charges will be required.

• Transfer tax (resale properties only)• Value added tax (new properties only) • Legal document tax (new properties only) • Land tax • Notary’s fees • Legal fees• Deed registration fee • Surveyor’s fee (optional)• Selling agent’s fees • Utility fees

THE BUYING GUIDE Spain

AREA GUIDE . Costa del Sol . Costa Brava . Costa Dorada . Costa Blanca . North and North West . Madrid

Costa DoradaThis region of Spain spans from Barcelona south along the west coast. It acquired its name from the vast number of golden sand beaches. This is what sets it apart from its northern neighbour, the Costa Brava, it is less rugged favouring miles of flat coastline. Inland, vineyards dominate almost every view.

Arriving in the Costa Dorada is extremely easy with dozens of low cost airlines flying into Barcelona’s two airports daily. Excellent train routes connect to the rest of Spain also, making exploring hassle-free.

The diverse personalities of the towns and cities in this area allow everyone a little taster of Spain, be it vibrant cities or relaxed fishing towns, historic rural villages or vast vineyards bursting with fragrant grapes just ready to be picked and turned into their world-famous red wines. Property prices vary greatly, but a bargain can be caught by just heading a little way in from the crowds.

Other cities and towns:Barcelona, Reus, Salou, Cambrils, La Cava, Tarragona, Tortosa

Costa BlancaThe Costa Blanca fits snugly between the Costa Brava and the Costa del Sol on the south-east coast. Miles of Mediterranean coastline make this spot a firm favourite with tourists. It is home to the hugely popular resort of Benidorm, which welcomes some five million foreign visitors every year. If it is, however, not your preference to be partying every night then there are still some very charming fishing villages and rural towns left to be explored.

Other cities and towns:Alicante, Torrevieja, Benidorm, Cartagena

Costa BravaBrava in Spanish means rugged or wild, and this part of Spain really does have a dramatic beauty. It runs along the north- east coast from Barcelona to meet the Pyrenees, which divides the country from France.

In the late 50s, the Spanish government decided that this particular area deserved a development project, as it was thought of as a prime tourist destination for holidaying northern Europeans. This has led to heavy building projects and now most of this area is built up with resorts and hotels. Most of the development took place in coastal towns such as Lloret del Mar, Blanes and L’Estart. However, a few places escaped and retained their independence – so it is still possible to buy a piece of the ‘real’ Spain.

The Costa Brava has always been a firm favourite for foreigners wanting to buy second homes and areas such as Baix Emporda, with its craggy coastline, beautiful harbours and tiny coves, or Alt Emporda, with towns made up of small canals, roses and world famous fine sands, are extremely popular choices.

North and North WestFor a piece of the more deserted Spain, head to the relatively forgotten North and North East. With its charming fishing villages and rural pace of life, this area is rare gem in a country dominated by tourists.

Here, you can find the absolutely stunning town of La Coruna, which in recent years has become a popular docking port for Cruise ships. The old town has all the charms of traditional Spain and the airport provides regular flights back into Heathrow.

House are very fairly priced here, favouring rustic farm houses inland and beachside apartments along the coast.

Other Cities and towns: Vigo, La Coruna, Bilbao, Leon

MadridThe mighty Spanish capital. A city full of tenacity, Latin Spirit and senoritas who know how to live life to its fullest.

The city has so much to offer all year round. The abundance of art galleries, museums, sporting venues, shops, cafes, live music spots, night clubs... the list is endless. As with most cities, property can be expensive but head out into the suburbs and the prices come down a little.

Costa del SolSpain’s sunshine coast is by far the most popular tourist destination in Spain. It also leads the way in real estate. Since 2000, prices have rocketed by 25 percent whereas the average for the rest of Spain is just 14 percent.

The long sandy beaches, vibrant resorts and easy access means that there is no shortage of entertainment or visitors.

Marbella plays host to the young and rich, with its chic night scene and designer stores, while Malaga has its attractive Spanish charms, lively restaurants and laid-back lifestyle. Travel a little inland to the hills that surround the cities and be astonished by how the pace of life changes.

Most popular places to buy: Benalmadena, Fuengirola, Torremolinos, Marbella, Mijas, Nerja

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