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BUYERS' MARKET IN SPAIN


BUYERS' MARKET IN SPAIN

Want to try for a repossession? Read BANK REPOSSESSIONS in Fascinating Features. Bargains to be had on our INSPECTION TOURS (we promise the widest range on the Costas - new, resales & repos')!


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Your Questions Answered

Everything you needed to know but were afraid to ask

 

 

HAS THERE BEEN A CRASH IN THE PROPERTY MARKET IN SPAIN?

In 2007, a share price correction of property companies quoted on the Madrid stock exchange led to a nervous property market after construction stocks were dumped. But this was largely a local problem in the expensive and overbuilt areas of the Costa del Sol. A fall in stock market confidence and property share prices is not the same as a crash in the housing market. This panned out into a buyers’ market right along the Costas before the effects of the 'credit crunch', started in the USA, panned out across Europe to spark a 'crash'. Most commentators expect the market to recover and property prices to rise in line with Spanish inflation. Spain remains a very good place to buy property because of the many cheap and frequent flights to major airports at Alicante, Murcia and Malaga.

 

WHEN DO YOU HOLD ROADSHOWS AND HOW SUCCESSFUL ARE THEY?

Very. Let's Live Abroad! hold up to seven shows every week. This gives you a chance to speak to someone face to face about living abroad. (Alternatively, call us on 0845 22 55 777, or drop in to our office). Some of our agents are from the country you are seeking to buy property; have bought property themselves, or are well versed in the challenges you will face owning a home abroad. Let’s Live Abroad! is an overseas member of the National Association of Estate Agents (NAEA).

 

WHAT IS THE MOST POPULAR PLACE TO BUY A PROPERTY ABROAD?

Costa Blanca. Not so much the north, as south of Benidorm; a region that includes the cities of Alicante, Elche, Torrevieja and Murcia. There are direct flights from regional airports across the UK to Alicante and Murcia. Murcia is getting a new international airport which will almost certainly impact on property prices in the region as the whole of Costa Calida is opened up. Property is not only cheaper than Costa del Sol in the south of Spain, but there are more flights and they are cheaper. You have probably watched any one of a number of TV programmes showing British couples doing up remarkably cheap properties here for an increased valuation. It is not always clear how far inland these properties are. Coastal properties are more popular, and consequently, more expensive. In most cases, the best place to buy a properly licensed property is within easy reach of an airport like at Alicante (Costa Blanca South and North), Murcia (Costa Calida) or Malaga (Costa Tropical).

Properties located within 10 miles of an airport are nearly 40% more valuable than those further away and have 30% higher average rents. With a good infrastructure, everyday matters like shopping, going to the doctors or visiting new friends becomes a whole lot easier

 

WOULD HAVING A HOME ON THE COSTAS DO ME ANY GOOD?

Are you not tempted by the sunshine? Summers that really are summers; 320 days of sunshine a year and an average temperature of around 18°c? The Mediterranean diet is renowned for its health benefits and, as any stroll along the market stalls will tell you, considerably cheaper than in the UK. Don’t be surprised to walk out of a restaurant after paying around £8 for a meal for two with a bottle of wine! This is one of the world's healthiest places to live. The Roman spas are a testimony to its early discovery. With the dry air, healthy diet and outdoor lifestyle, many people who live here only wish they'd done it sooner. The climate offers many benefits to those who live with arthritis, rheumatism, osteoporosis and asthma. Your pension can be easily transferred to your Spanish bank account. All this and its less than three hours away!

 

WHAT'S ALL THIS ABOUT 'LAND GRAB'?

If you are buying property on 'agricultural' land, as opposed to 'urbanised' land - that is to say land granted permission for building on - we will certainly advise you of any risks. On new developments, our agencies ensure any building complies with European legislation and has an El Impuesto de Actividades Economicas, (IAE) certificate showing the builder has permission to build in an area; that the builder has the Title Deeds showing they own the land they are building on and that all taxes have been paid to the local authority for the project to go ahead. Agencies also ensure that a client will get all their money back should a builder go out of business, that they have an Escritura de Obra Nueva, a full 10-year structural guarantee and a Certificado de Primero Ocupacion stating that the property is habitable and is connected for water and electricity.

 

WHAT SHOULD I DO IF I'M SICK?

The most useful tip is to avoid the midday sun and drink plenty of liquid. If you are in Spain for less than three months a year, the E111 form from the Post Office has been replaced by a plastic card which you can take with you to Spain. This will ensure that if you need health care; you'll get it. You'll still have to pay for medication (which is the cheapest in Europe), but you can claim the cost back when you return to the UK. If you are spending longer than three months, complete form E121 from the DHSS office, take it to the local DHSS in Spain along with a form you'll need from the local town hall to show you've registered youself as a local resident. It is called Empadron Ayuntamiento. It is not the same as registering for Spanish residency but it's still pretty useful. You will be given a medical card as you would in the UK.

 

WHAT IF WE HAVE ALREADY BOOKED A TRIP TO SPAIN?

You can still see properties through our agencies . Just call (lo-call) 0845 22 55 777 and we will send you an introductory letter and map so you can call into any one of the Spanish offices and be taken out for a free tour of properties in the area. Or how about taking a 'mini inspection trip'? To save you time, we can provide you with one night's hotel accommodation and the one-to-one service of one of our consultants.

 

HOW DO YOU PAY FOR A PROPERTY IN SPAIN?

If you are buying off-plan, the first payment you are likely to make will be the deposit of £2,000 by cash, cheque, travellers cheque, bank draft or credit card. This will take the property off the market. It will also fix the price in Euros for you. Your next payment, usually after 30 days, is the balance of 15%, 35%, 40% or 50% of the purchase price, depending what is required by the builder. Finally, upon completion of your property purchase, you pay the remaining balance. If you require a mortgage, we can arrange for you to see an independent financial advisor and even organise a mortgage for you in Spain. Transferring your monies needn't be a hassle either; we can work with Global Currency Exchange Network (GCEN) to take care of this for you.

 

CAN I GET A MORTGAGE IN SPAIN?

Depending on your financial circumstances you normally have to put down 20% and repayment loans can be over 40 years, or 15 years for an interest-only mortgage. Residential and buy-to-let mortgages are also available. Many UK High Street banks have a presence in Spain. Spanish mortgages can turn out to be very good value too, so let our Spanish bank partners help you.

 

HOW LONG DO YOU WAIT FOR A NEW HOME?

With Let's Live Abroad! You can buy property off-plan with long completion dates, some ready in a few months, some ready in 18 months, some 'key-ready' (that's right away) or even take advantage of the odd cancellation! New homes carry a 10-year structural guarantee. When you buy off-plan, you have the advantage of buying it cheaper and making a few changes here and there such as a few extra power points in the kitchen or an archway instead of a doorway. Remember we will need to get your changes in writing so we can notify the building surveyor (Arquitecto Tecnico). The best units are sold off-plan and good developments will be sold before completion so it's worth the wait. The builders look at cashflow and budgets on each project and set prices accordingly on a stage payment basis while the develomment is constructed. Price increases can be frequent if the properties sell well. There has been an average capital appreciation factor of 25% to 40% per annum although that has slowed down.

 

SO I BUY A HOME. THEN WHAT...?

With Let’s Live Abroad! you have a contact in the UK and a full aftersales service. Your lawyer will explain the process of buying to you and what charges to expect. You will need an NIE number (Del Numero de Identificacion de Extranjeros). This is your non-resident number which will be organised by your lawyer. You will also need your passport and a couple of passport-sized photographs. We can help you open a bank account, (it’s useful to have one with Internet or phone banking as standing orders need to be set up for water, electricity, rates and community charges). If your property is a new-build, you sign a contract with the builder after paying a deposit. At this point you agree what dates you have to make further payments. At this point we’d recommend you pick your tiles, suggest where you want new electricity sockets and additional lighting. The normal electricity supply is 3.8w but if you’re having air conditioning installed, you can get this upgraded to 5.5w. You will have to visit a Notary (again, we arrange this for you) who checks that everything is legal under Spanish law. Exchange of contracts, registering wills or giving power of attorney to the lawyer is all done through a Notary.

 

WHAT IS AN NIE NUMBER?

If you own a property in Spain, you need an NIE number. It's very much like a National Insurance number. You can apply for one when you come out to complete your purchase or before. If you are buying a property with a Spanish mortgage you will need this number prior to completion. Don't worry... Let's Live Abroad! will ensure this is taken care of! We will need from you two passport-sized photos, your passport and a photocopy of your passport.

 

WHAT DO WE HAVE TO SIGN?

Your purchase contract (Contrato de Compra-Venta). This is between yourself and the builder of your home (unless, of course, it is a re-sale property, in which case it is with the owners). When the house is finished, a Notary (Notario) puts together the title deed (Escritura) and both parties sign this. The Notary is an official who puts on public record the fact that the title deed - recording the sale and purchase - has been signed in his or her presence and is understood by everyone concerned. The title deed proves who is the owner of the property and contains a detailed description of it. You will receive a temporary copy of the title deed (Copia Simple) while the original is dispatched to the Land Registry for entry. After it has been returned to the Notary, he or she will post it to you. Even with your temporary copy, like a car insurance cover note, you can still sell your property if you wish. It is a legal document. We can ensure that an English-speaking solicitor (Abogado) is present when you sign the documents that make your purchase legal. They will make the necessary searches to ensure that the land is debt-free, belongs to the owner and has planning consent. You can have a bank guarantee if your property has not been built. This way, if the builder fails to deliver, the bank will repay all monies paid on account. A Spanish lawyer will organise this for you.

 

HOW DO I SEND MY MONEY ACROSS TO SPAIN?

In 2002, twelve countries in Europe adopted the Euro as their currency. That is now the currency of Spain. When you open your Spanish bank account, your Sterling deposit will be converted into Euros at whatever the current exchange rate is on the day. When you have chosen you home in Spain, you will need to pay in Euros. It is worth having a word with a good foreign exchange specialist before you do. They can advise you on the best time to buy Euros. They can often give you an exchange rate that is better than one offered by your own bank. There are several ways you could do this, for example 'forward buying', which allows you to fix a rate in advance. You can expect all the help and guidance you need on mortgage and equity release when you buy through Let's Live Abroad!

 

WHAT DOES IT COST TO RUN MY HOME?

Not as much at it costs in the UK! The cost of living in Spain is as much as 30% less and running a property, something like a two-bedroom apartment, can cost as little as £700 a year. It would be prudent to set aside an annual payment of approximately €1,000. Here are some typical running costs for a non-resident property owner: -

  • Wealth Tax (0.2% of property value), payable annually.
  • Income Tax (0.5% of property value), payable annually.
  • Local Rates (€42 - €210 per year) payable between August and October.
  • Fiscal Fees (€105) payable annually.
  • Community or 'Urbanisation Fee'. This pays for communal areas, including swimming pool, public lighting, green areas, security etc., and is arranged by the Owners' Association committee. (€350 - €490 depending on size of plot) usually paid annually in one or two payments.
  • Electricity bills (€21 minimum charge) every two months, usually metered. Remember to switch off the aircon!
  • Water bills (€14 minimum charge) every 3 months, usually metered.
  • House Insurance (€420 is typical, depending on size and value of property), payable annually.


WHAT MIGHT I EXPECT TO EARN IF I RENT OUT MY HOME IN SPAIN?

Let's Live Abroad! can recommend a full rental management service for you. There are people who holiday in the Costas, golf, work, or simply want to rent a place while their own property is completed. For example, based on a two-bedroom apartment purchased for £60,000, and assuming you let for a minimum of 12 weeks at high season for £180 per week and seven weeks at low season at £130 per week, you could earn £3,070 annually. This represents a gross return of 5% and leaves you 33 weeks a year to live in Spain yourself or generate additional income. (Don't forget how much you can save by letting our you property to friends and family).

According to The Mail on Sunday, here in the UK, if you invested in a property to let out in 2000, you would, on average be looking at a 133% return by 2007! (By comparism, a savings account might have got you 39% and the stock exchange around 5.8%).

 

WHAT KIND OF STATE WILL I FIND MY NEW HOME WHEN IT'S READY?

All 'snags' are corrected to your satisfaction employing qualified professionals to put things right for you on the spot. This is all part of the free aftersales service.

 

CAN I BRING MY PET?

Cats and dogs need either a tattoo or, more recently, a microchip number or full description including coat colour, markings, weight, breed, sex and a declared age. It is compulsory to have pets over three-months-old vaccinated against Rabies. A Pet Passport is ideal for those returning to the UK at different intervals.

 

WILL I HAVE TO PAY TAX WHEN I SELL MY HOME IN SPAIN?

Yes, if you are not a Spanish resident. You will have to pay 5% of the new value as a retention to the Spanish Tax Office. Keep your accounts in order! That way, you'll get most of it back in a few months. It is also necessary to pay 18% of the capital gains as Income Tax, (capital gains tax has been reduced from 35% for non-Spanish residents). That's 18% of the difference between the price you paid for the property and the price you are selling it for.

© Let’s Live Abroad! 2007