The Spanish property market is enjoying yet another successful month, after eight consecutive quarters of house price growth. This indisputably positive trend is making Spanish property an attractive investment option once again.
As such, Spanish law specialist Fuster & Associates is on hand to offer legal and tax services to overseas property buyers. With offices in Alicante, Cadiz and Murcia, the firm has successfully helped over 15,000 international clients, ensuring a constant level of customer satisfaction through their expertise and commitment.
The firm’s founder, David Fuster, has answered key questions on Spain’s property market:
Q: Have you seen an increase in overseas buyers returning to Spain?
A: As a region, the Costa Blanca was hit extremely hard when the Spanish property bubble burst in 2007, and prices fell further than in many other areas of Spain. Second homebuyers seemed to disappear and the large amount of stock built during the boom created an oversupply problem. However, fast forward to 2016 and the situation has changed dramatically; the coast now looks in good shape once again, with the number of new build developments multiplying and prices having already increased significantly from their recent lows.
Q: Are any particular areas proving popular with overseas buyers?
A: The Mediterranean coast has been one of the principal beneficiaries of the upturn in sales, and the Costa Blanca South is now buoyant, with sales also recovering on the Costa Blanca North. Costa del Sol has also recovered.
Q: What will prospective buyers need before they start their overseas property search?
A: Before they start their overseas property search, buyers need to know what their rights are and what will be needed from them during the sales process. They need to know about all costs and taxes related to the property purchase, as well as social security rights, personal tax implications, education rights (if they have children) and employment rights.
Q: What is the most important question to ask when viewing an overseas property?
A: I would ask about the community charge; maintenance costs must be considered, especially when buying within resorts. Also, I would ask about the property developer and their portfolio. Even if you are buying a resale property, you will be able to access more information about the quality of the developer’s work.
Q: What are the warning signs to avoid when viewing overseas properties?
A: One, the conditions of the community – When buying a property within a community, even more important than the condition of the property itself is the condition of the communal areas. A healthy community will always keep the value of your property, while an unhealthy community could decrease the value of your property significantly.
Two, off-plan properties – Always ask for the background of the developer and view the show house. Would you buy a car from a manufacturer that has never made one?
Three, don’t be rushed into the buying process – Be alert! For example, when the developer won’t even hold the property as reserved for one day, take that as a warning sign.
Q: What is the most common mistake that buyers make?
A: From a legal perspective, the most common mistake buyers can make is to not seek legal advice about the purchase process before signing a contract. Even though it is a very fast-moving market, it is important to know the legal implications before signing any document.
From a property perspective, I think often the most common mistakes are:
One, buying on impulse – Falling in love with a property and buying it without assessing the pros and cons, simply because it was a great day.
Two, not knowing the area – Many buyers of second homes know nobody in the area except for the seller of the property or the estate agent.
Three, forgetting about the community charge – Maintenance costs that must be considered even though buyers may not be there for most of the year.
Four, going somewhere too remote – During the pre-crash years, it became fashionable to purchase second homes far away from established urban areas. They were promoted as places close to the airport and were sold at reasonable prices in comparison to what was being sold on the Spanish Costas. Taking a plane and renting a car for a few days might seem entertaining on paper, but could soon become tiresome after the third trip. Many people stop using a second home when getting there becomes a hassle.
Q. Once you’ve found your dream property, what’s the next step in the buying process?
A. Once you have found the property you want to buy, I would recommend appointing a solicitor to represent you in the conveyancing process, letting him/her know the conditions you have agreed, e.g. property, price, completion date. A solicitor will then liaise with all the different parties involved (agents, vendors, developers). As it is a very fast-paced market, our clients normally grant power of attorney as soon as they have decided on a property. We, then, can sign all legal documents on their behalf.
Q. Approximately how long will the buying process take to complete?
A. The process of buying a resale property takes between four to six weeks, and off-plan property depends on the stage of the construction; it could be between six to 12 months.
Q. Is there any new legislation to consider for buyers set on Spain?
A. Years of depression in the Spanish property market ended in a recent landmark judgement, with the Spanish Supreme Court ruling that banks are responsible, together with property developers, to refund any amounts provided by homebuyers in cases where these amounts were not then guaranteed. As a result of possible banking lobby pressures, the law has changed, cutting buyers’ rights and making banks only responsible for those payments when a building license is in place. It is now more important than ever to make sure a building license has been granted before making any payments for off-plan properties.
Q. What advice would you give to those starting their overseas property search now?
A. From a legal perspective, do your homework before starting the search – what is involved in preparing for the purchase, completing and after the purchase – so that when you find the property you like, you just have to make that final decision. From a property perspective, get to know the area first by doing some research. Think about the type of property, the location, price per square metre. Research first to ensure it is the best choice for you.
Are you considering an overseas property investment in Spain? Follow this advice to make the purchase as smooth as possible.
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