Legal Information.
When looking to invest in the overseas property market, the main question is where to buy? With so much on offer its a hard choice to make: the French Riviera and rural France, Tuscany in Italy and of course all the Spanish Costas. It may help you to know before you buy, how the Spanish market compares with the other European areas when making that decision.
It is estimated that within the next ten years there will be an additional 2 million Brits living in Spain. Whereas Spain has always been a popular destination for people who decide to spend their retirement in a warmer climate, now the trend is moving towards people who are moving here to live and work. Spain is also experiencing a north to south migration, similar to what the southern states of America went through in the late 80s to early 90s. As the northern, colder industrial states became more affluent, the population migrated south for the warmer climate. Consequently, businesses and commerce migrated south and with both the good climate and work opportunities in those states, the states of Georgia, Florida and Texas became more powerful and equal rivals to their northern counterparts. The same is happening now in Spain. The cities of Madrid and Barcelona particularly are experiencing a shift in population to the Andalucia region. Businesses have started to notice this trend and are starting to set up headquarters in the cities of Granada, Malaga and Valencia.
As far as buying for investment, it is still by far the number one destination for British second home buyers. Recently there has been a surge in the emerging markets in countries such as Bulgaria and Croatia, and the Spanish market has slowed down. However, for the long term Spain is still the best place to buy in Europe due its to political stability, infrastructure, return on investment and facilities that have built up over the years
Once you have decided on an area and the property that you want to purchase, there are a few key points to keep in mind as you go through the process:
- Before you start to view properties with an agent or developers, decide how much you want to spend, you will get a better list of properties if you know exactly what your top budget is.
- Decide on the basics of the property you are looking for. How many bedrooms will you need, do you want a garden, a pool, town or country? Know what you want, and the agent will be able to show you properties that fit those needs.
- Be realistic. A property in need of renovation may seem an attractive prospect, but make sure you have the patience to deal with a renovation project before you purchase. A restored property may be more expensive, but all you will have to do is move in.
- Think about how you will be using the property in the future, How remote do you want to be? Do you want to be near banks, schools, supermarkets. How far is the nearest airport?
- Do not spend three years looking for the perfect dream property. Obviously you should do your homework and buy a property that you are happy with, but you must be realistic. Prices are rising and any property could be completely out of your reach if you wait too long.
- When buying a property still under construction, the developer is legally required to provide an insurance policy, or bank guarantee which will protect your payments in the event of the work not being completed.
- Always bear in mind the investment you are making and that one day you may wish to realise this investment. It is therefore important to look at the re-sale value of the property.
- All legal matters should be discussed fully with a lawyer - either your own appointed lawyer or one recommended to you by your agent. Never be afraid to ask questions and never sign anything unless you fully understand it.
Buying a property in Spain is as safe as purchasing a home in the UK, provided you have legal assistance. Here are a few tips to keep in mind:
- Once you have made your decision and you and your solicitor are happy with the agreed terms and conditions, it is time to pay a holding deposit on the property so that it is taken off the market. Usually it is 3000 on a small property and 6000 on a larger property.
- After the property is taken off the market, it is time to enter into a private contract. This is the most important stage in the whole process, because it is at this point that both parties agree to compensate the other (usually 10 percent of the purchase price) if either party pulls out. The deposit should be held by the seller΄s solicitor. It is also at this point that both parties agree a date to complete.
- The final stage in buying a home in Spain is the public contract. Both parties must attend (unless you have given your solicitor power of attorney) to sign for the new title deeds. The signing of the deed is done at the notary and the balance of the purchase price is paid on that day
- Always use a solicitor, there are absolutely no exceptions! There are several very reputable solicitors, who are fluent in English that can help you with the purchase of your home. They will handle all searches, payments and will sign for you if you are unable to attend on completion day.
- The NIE (Foreigners Identity Number) is given to all non-residents who are buying property in Spain. Due to recent changes in Spanish law, all foreigners must now apply in person for their identity number in person. Again your solicitor will be able to guide on this procedure.
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