Wednesday, June 19, 2024

What should you pay attention to when buying a Spanish country house?

More and more Belgians are thinking about a country house in Spain. What rules of thumb should you respect when buying?

In 2023, Belgians bought 4,649 homes in Spain. That is a small increase, of 0.31 per cent, compared to 2022. Spain, both the mainland and the Canary Islands, thus remains sought-after as a destination for a holiday home, even though property prices there rose sharply in recent years. The main reasons for buying in Spain remain the better weather and the relatively lower cost of living. In the new-build segment, which often involves buying on plan, it is regularly the more wealthy compatriots who go for it.

"We often see over-55s particularly interested in owning their own property, on the coast, preferably with a sea view. Often these are self-employed people, but also people from the sports milieu, such as cyclists and footballers," says Filip Berger of Antwerp-based real estate agency Nieuwbouw in Spanje. "For many, it's about a third home. They often already have a second residence on the coast in Belgium in addition to their main residence and are happy to buy a house or flat in a more sun-soaked destination on top of that."

According to Berger, these are not just slightly older customers. "There are also buyers among them with busy jobs, who want a short break now and then and move to their Spanish country home a few days a month." Popular regions on the Spanish mainland are Costa Blanca and Costa del Sol.

Large price differences

In Spain, price differences between regions are very large. "In the interior, as in Italy, there are villages that empty out and where you can pick up a property for as little as 25,000 euros," says Carl Vorsselmans, founder of New Construction in Spain and sister office New Construction Tenerife. Equally well, on the Costa del Sol in Marbella and the surrounding area, you have to reckon with prices of around 1 million euros for those wanting a new-build flat with sea views. The supply of such frontline projects is limited.

So it can be a lot of money and so you have to be careful who you deal with. The quality of property information offered is very diverse. Many local real estate websites, such as Idealista, are unregulated. As a result, the same property may be listed several times at different prices. For example, because the property is offered at a favorable price, as a lure, with no guarantee that the provider has a mandate to sell the property at that price effectively.

Be careful with advances

The real estate profession is not regulated in Spain, which means that almost anyone can start a real estate agency there. The role of the notary is also different than in Belgium. For instance, a Spanish notary is not going to check if there are unpaid bills with the selling party. And was property tax paid in the past? A decent real estate agency or a lawyer can find out for you.

Those buying new construction should also check whether the down payments they have to make are insured through an insurer or covered by a bank guarantee. Furthermore, in some regions, in addition to a risk of failure on the part of the contractor or property developer, there is also a social risk: will the promised building permit be in order and not challenged? Certainly in Tenerife, it recently emerged that certain new construction projects are under fire and may not receive planning permission or only receive it with long delays.

Letting licence needed?

Important to check: are you buying the holiday property in a residential area or in a non-residential area? In a residential area, you can live permanently and can also rent out the property freely. Those who want to rent out must apply for a rental licence to do so. Please note: in some areas, such as the Balearic Islands, there is a stop on rental licences.

In a non-residential area, you are allowed to stay by yourself for a maximum of six months a year; it cannot be your permanent residence. In some tourist regions, hotel flats are sold that you can only stay in by yourself for one to three months a year. The rest of the period, your room or flat is rented out by a central organisation. That formula has been making inroads in Tenerife in recent years. Rental income there is subject to a 19 per cent tax.

Also good to know: in Spain, there is little exclusivity when offering property. Consequence: property sellers there tend to get a client's signature as quickly as possible. Carl Vorsselmans, who in a previous life was head of the special units section at the federal police, advocates a different approach: the client gives a mandate to search for the most suitable property together with the real estate agency over a certain period of time. "That way, you decide on an informed basis," he says.

Belgian tax authorities

If you buy a property in Spain, you need to disclose it to the tax administration in Belgium. The tax authorities will apply a cadastral income to it, which plays into determining the tax bracket you fall into for your overall income. Many wealthy buyers are already in the highest bracket.

Those who want to sell the Spanish property afterwards will pay a capital gains tax of 19 per cent. Renovation invoices can be brought in. In Belgium, you sell after five years without capital gains tax, but this is not the case in Spain.

Source: De Standaard