What are the pitfalls of buying property in Spain? Starting a new life in Spain and buying a property should be an exciting experience and can be a great investment, but more often than not, buyers find the process can be overwhelming, mainly since everything is in a different language and buying processes and the legal system in Spain are different. There are many pros and cons of buying property in Spain: with turbulent house prices in Spain to the COVID-19 pandemic and some market uncertainty, 2021 could be the perfect opportunity to invest in Spain and get a bargain, while others have doubts about buying a property in Spain after Brexit.
If you choose to buy a property in Spain in 2021, it is extremely important to get to grips with the fundamental differences between buying property in Spain and other countries, something that it vital for helping foreign buyers avoid potential problems and mistakes. Let's have a look at some of the most common pitfalls of buying property in Spain for expats and things to know when buying property in Spain.
Not preparing the necessary documents in advance
There are certain documents that you will need to buy a property in Spain and that are necessary to open a bank account, for example. The first thing you need to do before even thinking of buying a property in Spain is get a NIE which is required for basically any big transaction or official procedure in Spain. A NIE is your foreign ID number and getting one is fairly simple if you know how. Check out our guide on how to get a NIE in Spain. Not that if you are from the UK, you will have to apply for a TIE since the UK has now left the EU.
Once you have your foreign ID number, then you will be able to open a bank account which is also essential for buying a house in Spain. Without one, you won't be able to set up a mortgage or pay the necessary fees for buying a house in Spain. We highly encourage you to carry out these 2 registrations as early as possible so that you can start the buying process in Spain as soon as possible.
Not taking extra costs into account
When buying a property in Spain, you need to keep in mind that you won't simply pay the price that the property is advertised for. Although you've found a property that sounds cheap, be aware of hidden charges and taxes that you will also have to pay. Check out our guide to all of the additional taxes and fees that have to be paid when buying a property in Spain: take note that these also change depending on where you plan to buy the property in Spain with different rates in different regions.
People also often tend to forget about mortgage fees and while mortgage interest rates are at historic lows in Spain, there are also some extra fees that you have to consider. The majority of banks in Spain also require you to take out at least one type of insurance with your mortgage, while you should also keep in mind that the amount of money that banks in Spain will lend you depends on a series of factors. Less financing is available for non-residents and if you are buying a second home. It's therefore highly important to do your research so that you don't get caught out, and our experts at idealista/hipotecas will be able to help.
Not doing your research
As well as doing your research for mortgages in Spain, it's highly important to do detailed market research, including the area you're searching in, the property, how long it takes to buy a property in Spain, house prices in Spain and so on. Many foreign buyers, for example, tend to focus their property search in popular expat or tourist areas with elevated prices, and by looking just 10 minutes down the road, you could get much more for your money. Regarding the property, make use of all the resources available such as videos and virtual tours, and if possible, visit the property, talk to the neighbours and inspect the place from top to toe.
Avoiding real estate agencies
Expat buyers in Spain are often put off buying a property that is advertised by a real estate agency due to more fees and paperwork. However, by avoiding agencies, you may miss out on the property of your dreams in Spain, not to mention the fact that agencies can be very helpful when it comes to price negotiating and getting your way round all the legal documents you’ll need to purchase property, especially if it's your first time buying property in Spain and don't speak Spanish. Trusting an estate agent in Spain can give you key market insight and will help you avoid the most common mistakes made when buying property in Spain.
Not seeking professional help
Buying a property is a considerable investment and so that you don't end up losing money, you need to make sure that you understand everything that is involved, including the legal side of things. As well as seeking the help of a real estate agent, who will give you key property market insights, it's also advisable to seek the help of a legal professional to assist you when it comes to contracts and the conditions of the sale. A lawyer will help you sign all the relevant documents, especially if you don’t speak fluent Spanish, while there are many lawyers in Spain specialising in helping expats buy property and many who speak English. They will help you through the web of bureaucracy that is involved in buying a house in Spain.