Buying a property in spain for dummies

Table of ContentsIntroduction ...1 About This Book ...1 Conventions Used in This Book ...2 Foolish Assumptions ...2 How to Use This Book ...3 How This Book Is Organised...3 Part I: Prepa

Buying a Property

in Spain

FOR

Buying a Property in Spain For Dummies®

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About the Author

Colin Barrow has an extensive background in European property

and works across a diverse range of related industries He hasresearched most international property markets and has first handexperience of buying, building, developing, and selling over twohundred properties in overseas markets He has written a score ofbooks on property and other wealth creation matters including the

bestselling Starting a Business For Dummies.

Author’s Acknowledgements

I would like to thank Jason Dunne, Samantha Clapp, Daniel Mersey,and Steven Edwards for the opportunity to write this book – as well

as their help, encouragement, guidance, and sound advice on what

to omit as much as what to include They, and everyone else whoworks behind the scenes at Wiley, have both my gratitude andadmiration for their tireless work and for their efforts in making thisbook possible as well as punctual

Outside of the team at Wiley, Colette Holden did the rewriting anddevelopment that contributed much to bringing some dry facts tolife The technical reviewer kept me up to the mark He has mythanks and ultimately yours too for ensuring the accuracy of thethousands of facts that go to making up and appreciation of thismarket

I would like to thank my sons, Luke and Joshua, for putting up with

a version of the Spanish Inquisition when I diverted their variousGCSE Spanish course work projects to coincide with my propertyresearch interests, and to Luke particularly for his help with theappendix

Not withstanding the many people who deserve and have my tude, any faults or failings in the text remain mine and mine alone

grati-I would certainly appreciate your feedback as you travel the paththat I have taken around Spain Any tips, pointers, and advice thatcan be incorporated into future editions would be a service tofuture readers [colin_barrow@msn.com]

Publisher’s Acknowledgements

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Contents at a Glance

Introduction 1

Part I: Preparing for Your Spanish Buying Adventure 7

Chapter 1: Making the Big Decision 9

Chapter 2: Considering the Cost of Spanish Buying 19

Chapter 3: Assembling Your Team 35

Chapter 4: Finding Your Dream Home 51

Chapter 5: Not Ready to Commit? Finding a Property to Rent 77

Part II: Cruising Around Spain: Choosing Where to Buy 91

Chapter 6: Living La Vida Ciudad: Buying in the Big City 93

Chapter 7: Buying a Place in the Sun: Coastal Living 111

Chapter 8: Buying Inland: A Quiet Country Life 123

Chapter 9: A Home on La Isla Bonita: Life in the Islands 137

Part III: Buying into the Dream 151

Chapter 10: Funding Your Dream Home 153

Chapter 11: Understanding the Art of Price Negotiation 169

Chapter 12: Making Sure You Get What You Think You’re Getting 177

Part IV: Settling into Spanish Life 191

Chapter 13: Permission to Come Abroad 193

Chapter 14: Making Money in Spain 207

Chapter 15: The Nitty-gritty of Life in Spain as an Expat 223

Part V: The Part of Tens 237

Chapter 16: Ten Troublesome Property Issues to Consider 239

Chapter 17: Ten Top Destinations 245

Chapter 18: Ten Reasons to Move to Spain 255

Appendix: Spanish–English Glossary of Property Terms 261

Index 269

Table of Contents

Introduction 1

About This Book 1

Conventions Used in This Book 2

Foolish Assumptions 2

How to Use This Book 3

How This Book Is Organised 3

Part I: Preparing for Your Spanish Buying Adventure 4

Part II: Cruising Around Spain: Choosing Where to Buy 4

Part III: Buying into the Dream 4

Part IV: Settling into Spanish Life 5

Part V: The Part of Tens 5

Icons Used in This Book 5

Where to Go from Here 6

Part I: Preparing for Your Spanish Buying Adventure 7

Chapter 1: Making the Big Decision 9

Deciding to Move to Spain 9

Where to Go 11

Working Out What You Can Afford 11

Adding up your assets 12

Finding out how much you can borrow 12

Setting your budget 13

Putting Your Money Where Your Mouth Is: The Buying Process 13

Unearthing your expert team 14

Working your way through the process 14

Getting what you pay for 15

Making Money from Your Property 16

Merging your home and workplace 16

Selling your property for profit 16

Renting in and renting out 16

Living and Working in Spain 17

I don’t think we’re in Kansas (or Kent) any more 17

Hi-ho, hi-ho, it’s off to work 18

Chapter 2: Considering the Cost of Spanish Buying 19

Making Sense of the Market in Spain: Prices and Properties 19

Pushing up the market 20

Looking to the future 21

Estimating Your Buying Costs 22

Putting down the deposit 23

Paying the professionals 24

Affording a Fixer-Upper or New-Build 25

Finding a plot 25

Getting permission 26

Appointing an architect 28

Bringing in a builder 29

Factoring in Property Taxes 30

Taxing the purchase 30

Taxing construction 32

Taxing year-round 32

Taxing your departure 33

Dealing with British taxes 34

Chapter 3: Assembling Your Team 35

Working Out Your Starting Line-Up 35

Unearthing an Estate Agent 36

Getting an estate agent on your side 36

Knowing what to expect for your (their) money 37

Finding an estate agent 38

Locating a Lawyer 42

Nabbing a notary 43

Finding the best 44

Figuring out the fees 44

Granting power of attorney 44

Signing Up a Surveyor 45

Deciding what to survey 46

Seeking out a surveyor 47

Lost in Translation: Taking On a Translator 47

Looking for a linguist 48

Counting the costs 49

Chapter 4: Finding Your Dream Home 51

Travelling to Spain 51

Flying high 52

Keeping up to date with air travel information 53

Crossing by sea 54

Driving all the way 54

Letting the train take the strain 55

Travelling within Spain 56

Flying around Spain 57

Taking the train 57

Getting around by bus 58

Cruising in a car 58

Choosing Where to Look 60

Bright lights, big city – or just plain country? 60

Beaches or mountains – or something in the middle? 61

Weather matters: Spain’s climate 62

Beginning Your Search 64

Picking property types 64

Opting for old or new 65

Sussing out shows: Overseas property exhibitions 66

Doing it yourself: Newspapers, magazines, and Web sites 67

Taking the scenic route: Finding a property by word of mouth 71

Hiring a house-hunter 73

Deciding What You’re Willing to Pay For 74

Chapter 5: Not Ready to Commit? Finding a Property to Rent 77

Answering the Big Question: Long-term or Short-term? 77

Finding a Place to Stay 79

Looking while you’re still in the UK 79

Keeping it local 80

Having a go at house-sitting 81

Swapping homes 82

Huddling in a hotel 84

Signing on the Dotted Line 86

Understanding the rental agreement 86

Figuring out the deposit 87

Taking the inventory 88

Money Makes the World Go Round 88

Paying the rent 89

Estimating the extras 90

Part II: Cruising Around Spain: Choosing Where to Buy 91

Chapter 6: Living La Vida Ciudad: Buying in the Big City 93

Touring the Big Six from B to Z 94

Barcelona 95

Bilbao 97

Madrid 98

Seville 100

Valencia 101

Zaragoza 102

Working Out the Real Cost of City Living 103

Paying a premium for city property 103

Getting the low-down on living on the outskirts: How far is too far? 104

Homing in on house prices 104

Picking from the Popular Property Types 106

Appreciating the advantages of apartment living 106

Plumping for the perfect townhouse 106

Community living in a comunidad de proprietarios 107

Chapter 7: Buying a Place in the Sun: Coastal Living 111

Discovering the Basics of Coastal Living 111

Deciding What’s Best – East or West 112

Alighting on the Atlantic 113

Meditating on the Mediterranean 115

Affording a Home by the Sea 116

Buying within reach of the beach 116

Calculating house prices 117

Heading Off to a Beach House 118

Hitting on a hacienda 118

Angling for an ático 119

Considering community properties 119

Buying off-plan 120

Chapter 8: Buying Inland: A Quiet Country Life 123

Exploring Your Options for Buying Inland 124

Moving up to a mountain hideaway 125

Settling on farmland 126

Living by a lake 128

Residing by a river 129

Pondering the prices 129

Picking the Property Type You Want 131

Faring on a farm 131

Finding your very own village house 132

Living it up on a country estate 133

Resorting to a ruin 134

Chapter 9: A Home on La Isla Bonita: Life in the Islands 137

Buying in the Balearics 138

Finding out about Formentera 138

Investigating Ibiza 139

Making for Majorca 140

Musing over Minorca 140

Looking at life in the Balearics 142

Coveting the Canaries 143

Prospecting for Island Property 146

Sussing out seaside apartments 146

Homing in on hilltop villas 147

Buying building plots 148

Checking out the prices 149

Part III: Buying into the Dream 151

Chapter 10: Funding Your Dream Home 153

Calculating the Cost of Owning a Home in Spain 153

Managing mortgage payments 154

Incorporating insurance costs 155

Monitoring maintenance costs 158

Getting ready for repairs and renovation 158

Exploring the Different Ways of Purchasing 159

Getting a Mortgage 161

Re-mortgaging your home 162

Taking on a mortgage at home 163

Handling a hipoteca 163

Bagging the best buys 164

Anticipating potential problems 165

Opening Your First Banco Account in Spain 166

Establishing your identity 166

Setting up an account 166

Accruing a credit record 167

Getting a Spanish credit card 168

Chapter 11: Understanding the Art of Price Negotiation 169

Tuning Up Your Negotiating Tactics 169

Finalising your facts 170

Assessing your negotiating power 171

Understanding the power of silence 172

Making Your Offer 173

Picking your price range 173

Handling a bidding war 174

Preparing to walk away 175

Declaring the Price 175

Chapter 12: Making Sure You Get

What You Think You’re Getting 177

Inspecting Inside 177

Studying the structure 178

Examining electrics and plumbing 179

Measuring the metres 180

Bringing in a builder 181

Investigating the rest of the interior 181

Checking out the heating 181

Exploring Outdoors 183

Perusing the perimeter 183

Assessing access 184

Considering car parking 184

Surveying the swimming pool 185

Siting septic tanks 185

Unearthing Utility Issues 186

Grappling with gas supplies 186

Watching out for water 186

Wiring up 187

Dialling up 188

Getting online 188

Carrying out a Survey 188

Knowing what a basic survey covers 189

Going the full monty 189

Earning peace of mind from your survey 190

Deciphering and translating surveys 190

Part IV: Settling into Spanish Life 191

Chapter 13: Permission to Come Abroad 193

Applying for Permits and Visas, and Other Bureaucracy 193

Just visiting: What you need for a short-term stay 193

Staying forever 194

Dodging the queues by using a gestor 195

Finding out what you can take to Spain 195

Dealing with Long-Term Residency 196

Ruling on residency 196

Taxing decisions 197

Doubling your tax troubles 200

Owning up to ownership 201

Wangling a Work Permit 202

Finance without Frontiers: Moving Your Money Around 203

Checking cheques 203

Crediting and debiting from UK cards 204

Transferring the international route 204

Telegraphing cash 204

Calling in the specialists 205

Converting your pension into euros 205

Paying bills in the UK 206

Chapter 14: Making Money in Spain 207

Tapping into Tourists 207

Renting out your property 207

Homing in on hospitality 212

Running through the red tape 217

Advertising your wares 218

Jousting for a Job 219

Finding work from the UK 220

Using local job centres 221

Chapter 15: The Nitty-gritty of Life in Spain as an Expat 223

Receiving Health Care 223

Signing up to the system 224

Dealing with dentists 224

Going private 224

Choosing insurance 225

Handling emergencies 226

Finding a pharmacy 226

Having a baby 226

Moving into residential care 227

Coping with bereavement 227

Going home, sick 228

Educating the Kids 229

Selecting state education in Spain 230

Going beyond compulsory education 230

Paying for private education 231

Picking Up Your Pension from the UK 232

More than just a change of address 232

Claiming winter fuel allowance 233

Habla Ingles? Learning the Lingo 234

Afore ye go: Learning Spanish in Britain 234

Once you’re there: Speaking Spanish in Spain 235

Taking the plunge: Learning by immersion 235

Part V: The Part of Tens 237

Chapter 16: Ten Troublesome Property Issues to Consider 239

Accepting Advice with Care 239

Breaking the Law 240

Dredging up Deposits 240

Eluding Land Grabbers 241

Fathoming Forms 242

Getting Wired 242

Linking to Land-lines 243

Setting Up Searches 243

Tracking Down the Title 243

Watching Out for Water 244

Chapter 17: Ten Top Destinations 245

Andalusia 245

Andorra 246

Balearic Islands 247

Canary Islands 248

Castilla y León 249

Catalonia 250

Gibraltar 250

Madrid and Central Spain 251

Murcia 252

Valencia 253

Chapter 18: Ten Reasons to Move to Spain 255

Bagging a House Bargain 255

Cruising the Coastline 256

Going ‘Fore’ Golf 256

Hankering After History 256

Living for Less 257

Paying Less Tax (Potentially) 257

Savouring Siestas 258

Tasting the Tapas 258

Visiting Vineyards 259

Weathering the Heat 259

Appendix: Spanish–English Glossary of Property Terms 261

Index 269

Buying a property in Spain has been the shrewdest investmentdecision over the last ten years for more than 900,000 Brits,

so you probably won’t be surprised to find the Spanish market

on the radar of many discerning buyers Spain is also one of thefriendliest and most relaxing countries in the world, with thou-sands of property gems still waiting to be discovered

Many property guidebooks just dump information in your lap andexpect you to find the hidden nuggets yourself I’ve researched thewhole European property market for decades, during which I’vebought and sold more than 50 houses, apartments, and plots ofland I’ve also educated two children and dealt with their variousmedical crises abroad

I know where the bodies are (as they say in detective stories), andI’ve done all the essential homework for a hassle-free and prof-itable overseas property purchase I’ve listed the problems, oppor-tunities, and reference sources that I’ve found invaluable in helping

my fellow property geeks and me to make an honest buck and stillhave an awful lot of fun buying and selling property

Buying a Property in Spain For Dummies contains easy-to-understand

information and practical advice about the scope of the Spanishproperty market and about settling in and enjoying Spain to thefull So dig in, get on, and enjoy the ride

About This Book

Buying a Property in Spain For Dummies is a ready reference for

people interested in the Spanish property market You don’t have

to plough through all the chapters from front to back: The book isarranged so that you can pick up at any section or chapter withoutworrying about losing out on information placed elsewhere in thebook

Note: Property information is subject to change at any time This is

especially true of prices, which continue to undergo adjustments

as Europe goes through various stages of the economic cycle So,

as you use this book, I suggest you carry out research yourself andcheck that laws, rules, and regulations haven’t changed As much

as we’ve invested in the creation of this property guide, the author,

editors, and publisher cannot be held responsible for the ences of readers while buying property or travelling Your safetyand satisfaction are important, however, so above all I encourageyou to stay alert and pay attention And remember: In Spain, just

experi-as at home, no one is out to do you any favours when it comes

to buying a property Keep in mind the caution I heard from oneestate agent summarising his experience of overseas propertybuyers: ‘An awful lot of people leave their brains at the airport.They make decisions and take risks they would never take at home.’

Conventions Used in This Book

To keep things as straightforward as possible, I’ve used a few ventions throughout this book to help you get by:

con-
Spanish words and phrases and technical terms are italicised.

Web addresses appear in monofontto help you isolate theURL quickly and easily from the surrounding text

I’ve presented prices in euros (€), which are the currency of Spain,

or UK sterling (£) These prices were correct at the time of writing,but inevitably they will go up or down over time – so treat thempurely as guidelines Make sure you check the current exchangerate and overall costs before taking the plunge!

I’ve tackled the potentially tricky area of language as simply as Ican Place names are given in their English forms, which are morefamiliar to most Britons than the Spanish equivalents; and at theback of the book, you’ll find an appendix listing Spanish phrasesthat will come in handy when purchasing property

All the timetables, costs for transport, and related information I’vegiven are correct at the time of writing, but be sure to check beforeyou travel!

Foolish Assumptions

As I wrote this book, I made a few assumptions about you and whatyour needs as a property buyer may be Here’s what I assumeabout you:

You’re inexperienced in the whys and wherefores of theSpanish property world and are looking for guidance whendeciding whether to buy a property in Spain and how to planfor it

You’re an experienced property buyer, but you don’t havemonths or years to devote to researching the Spanish prop-erty market and you want to hit the ground running You wantexpert advice on how to maximise your time and enjoy ahassle-free property purchase.

You’re looking for a book that gives information on everyaspect of the property transaction and gives you the low-down on getting plugged in to life in Spain

If you fit any of the above, Buying a Property in Spain For Dummies

gives you the information you’re looking for

How to Use This Book

Buying a Property in Spain For Dummies aims to help you succeed,

no matter where you start If you have a great property in mind,you may want to plug in straight away to finding out how to raisefinance or handle the price negotiations If you’re still at the dream-ing stage, you can ramble around the country and find the regionand type of property best suited to your wallet and your needs.Once you’ve done that, you can find out how to handle the legalaspects of the deal Depending on your situation, you can dip inand out of this book in a number of ways:

If you’ve never bought a property abroad, you may want tostart at the beginning and work your way through the book

If you’re more experienced, you can start by selecting theareas you’re less knowledgeable about and work outwardsfrom there

If you’re quite confident as far as the Spanish property world

is concerned, you can use the book as a guide and mentorwhen you’re reviewing a particular topic

If you relate to the experiences of others, flip through thebook, using the True Story icon as your guide This takes youstraight to a ‘from the horse’s mouth’ (or, as this is a book onSpain, make that ‘from the straw donkey’s mouth’!) example

of how a fellow Spanish property buyer has tackled the areayou’re most interested in, be it finding a property or a job orgetting to grips with the legal ins and outs of buying

How This Book Is Organised

Buying a Property in Spain For Dummies is divided into five parts It

starts by looking at ways to research the property market in Spain

and follows the key steps in the process, through choosing theideal area, sorting out the finances, to settling down and making afew quid in your new home and country The book flows naturallyfrom one topic to the next, but feel free to jump from section tosection and from chapter to chapter, picking and choosing whatreally interests you and matters most to you.

Part I: Preparing for Your Spanish Buying Adventure

This part of the book helps you set some financial parameters foryour property quest Spain is a big place, and without a few groundrules you could spend a lot of time on a wild goose chase In one ofthe chapters, you work out your budget to allow for all the coststhat are bound to sneak up on you In another chapter, you find outabout pulling together allies and spreading the workload You alsofind out about every conceivable type of property, without leavingthe shores of the UK This part ends with a chapter covering ways

to stay in Spain long-term, short-term, and even for free, just incase you plan to take a while over making your decisions

Part II: Cruising Around Spain:

Choosing Where to Buy

The chapters in this part help you with the difficult choices aboutwhere to buy in Spain With an ocean, a sea, a dozen islands, ascore of Costas, 50 or so cities and major towns, 2,000 miles ofcoastline, 581,000 square kilometres of open space, and a near-desert or two mingled with some ski slopes, the only certain thing

is that you’re spoiled for choice Climate, cost, travel links, and ture are just a handful of the umpteen things you’ll have to juggle

cul-to come up with a perfect location in which cul-to settle down cul-to life inSpain

Part III: Buying into the Dream

Here you get down to business Finding where to live and preparing

a shortlist of ideal properties is one side of the coin The other isworking out how to pay for it all and making absolutely certain thatwhat you see is what you get The Spanish property world is as full

as any other business of smart operators who are out to help selves to as much of your dosh for as little as they can get awaywith giving in return In this part, I arm you with what it takes to win

them-at negotithem-ating the best possible deal while avoiding the tax, ship, and land-grab snares ready to trip you up

owner-Part IV: Settling into Spanish Life

This part is all about getting your feet under the table You havemoving to do, from money to motors, from furniture to furryfriends Spain is a lot of fun, but you have a whole lot of paperwork

to get through before you can enjoy the good life Before cracking

open that bottle of Álvaro Palacios (Spain’s top red wine of 2005 –

which it should be, at €398 a bottle!), you need to get a número de

identificacion de extranjeros (NIE, or foreigner’s ID number), open a

bank account, sign in to the Spanish national health service, havingremembered to pick up your European Health Insurance Card (EHIC)before you leave the UK, and do about a zillion other equally mind-numbing but essential tasks Fortunately, the Spanish have invented

a professional, the gestor, whose main purpose is to help you with

Spanish bureaucracy

This part also covers making money from your property in Spain Ifyou’d like to get your new property to pay its way and perhaps pro-vide for a few extra luxuries to make the sweet life even sweeter,this part is for you

Part V: The Part of Tens

In the three chapters in this part, I signal the problems you’re mostlikely to meet in your property dealings in Spain and what action totake I highlight the ten areas that appeal most to expat propertybuyers And I summarise the main advantages of life in Spain.And finally, don’t forget the appendix at the end of the book – aglossary of all the key words and terms you’re likely to need to feel

at ease finding and buying a property in Spain

Icons Used in This Book

To help you pinpoint vital information and make the best use ofyour time, I’ve placed the following icons throughout the text tosteer you towards nuggets of knowledge:

This icon highlights specific information that may help you makesome extra money from your property

This is a friendly reminder that the topic in hand is importantenough to make a note of it for future reference

This introduces you to specialised property, legal, economic, andfinancial facts and data that are interesting but not essential foryou to know You can skip paragraphs marked with this icon with-out missing the point, but having this information at your finger-tips may help you build credibility with the professionals you getinvolved with as you go about finding and buying a property inSpain.

This calls your attention to particularly important topics andoffers advice on practical topics

These anecdotes give practical examples of how other people havetackled particular aspects of buying a property or settling down inSpain

If you see this icon, be alert to potential danger Proceed with tion! Look left and right before crossing In fact, think carefullyabout every aspect of this topic before making any move at all

cau-Where to Go from Here

Now you’re ready to take the plunge and find the property in Spainthat suits you best Your next move is easy Take a minute to thumbthrough the table of contents and get comfortable with the topicscovered in this book Pick a chapter that strikes a particular chordwith you and see where that leads you Do some backgroundresearch on the Internet and attend a couple of property exhibitions

in the UK, using Chapter 4 as a starting point Visit travel agents,research Spain, and plan your first (or next) inspection trip But atthe same time, relax! Organising your buying trip doesn’t have to

be a hassle Daydreaming about all the perfect properties you’ll

see, the celebrated Riojas you’ll drink, and the tantalising tapas

you’ll consume can be fun – although not as much fun as sitting in

a T-shirt by your own swimming pool and having dinner in thebalmy Spanish midnight air

Part I

Preparing for Your Spanish Buying

Adventure

In this part

Before setting off on your first Spanish

property-buying trip, you need to do some careful backgroundresearch The more preparation you do at this stage, thesmoother and easier the whole process is likely to be This part helps you find out about the people who canmake your journey straightforward I help you locate unbi-ased professionals, such as surveyors, lawyers, estateagents, and translators You can also check out the bestroutes to and from Spain and how to find out about all thedifferent types of property on offer After you do yourgroundwork, you can start to turn your dreams into a con-crete plan of action

Chapter 1

Making the Big Decision

In This Chapter

Limbering up to Spain

Doing the buying sums

Looking at legal procedures

Making money, one way or another

Around 5,000 years ago, before recorded history – a tribe fromAsia calling themselves the Iberians settled in Spain Waveafter wave of invaders came later, made their mark, and left Firstcame the Phoenicians, followed by the Greeks, Carthaginians,Romans, Moors, Vandals, and Visigoths, to name but a few Skip tothe 21st century, and Spain faces another invasion, this time bypeople carrying nothing more sinister than a tube of sun cream.The package-holiday revolution has brought over a billion people

to Spain Some 2 million of these tourists have stayed behind andbought homes At the last count, 900,000 of those were Brits – andthat number grows at the rate of 150,000–200,000 a year In fact,one in every two UK citizens who chooses to live abroad goes toSpain

If you’ve picked up this book, chances are you’re consideringowning property outside the UK and that one of your options is aproperty in Spain This chapter gets those market research juicesflowing and gives you a taste of what to expect in the rest of thebook

Deciding to Move to Spain

The reasons so many of your fellow Brits settle in Spain fit neatlyunder the headings of the six Cs:

 Capital appreciation: Buying a property in Spain is much

cheaper than in the UK You can still find habitable Spanishhouses for less than €35,000 Spanish homes appreciate year

on year at an average rate of 14.5 per cent, compared with theUK’s 12 per cent In Chapters 6–9 I review the different levels

of rent and capital appreciation you can reasonably expect ineach region of Spain over the longer term

 Climate: Spain is hot for much of the year, making alfresco

living a joy Most people feel better after a couple of weeks ofsunshine, and after 44 weeks of it (or 52, if you settle in theCanaries), you’ll probably feel completely rejuvenated

 Commercial value: Spanish is the world’s number two

busi-ness language Nearly as many people speak Spanish asEnglish You may have to put some effort in to learn the lingo,but you’ll be repaid by turning your new skill to your commer-cial advantage In Chapter 16 I cover the many ways in whichyou can gain anything from a smattering of vocabulary to fullfluency in Spanish

 Cost of living: Despite the inflationary effects of the euro,

living in Spain is still less expensive than living in the UK –about 15 per cent cheaper according to European Union (EU)statistics Two people can live reasonably well on around

€1,500 a month in Spain, and even in Madrid you can getdinner out with wine for less than €15 A glass of beer or wine

in a bar costs from €1.50, tapas €2 (often free with a drink),

and a three-course lunch menu of the day (menu del día)

€5–10 Prices vary from shop to shop, region to region, andcity to city, so take these figures as a rough guide only Checkout the SpainExpat Web site (www.spainexpat.com/spain/information/cost_of_living_in_spain) to find the latestinformation direct from Spain on costs of a range of everydayitems from haircuts and cinema tickets to telephone bills,nurseries, gyms, and car parking

 Cuisine: Spaniards are passionate about their food and wine,

and Spain has a number of distinctive national and regionalcuisines The Moors introduced the Middle Eastern ingredi-ents of rice and saffron, laying the ground for dishes such aspaella, a rice-based seafood dish In Catalonia, a Mediterraneandiet rich in olive oil, garlic, tomatoes, and peppers is the order

of the day The Basque Country is renowned for fish but also

produces dishes such as setas a la plancha (grilled wild rooms) and queso de Idiazabal con nueces (local blue cheese

mush-with walnuts) Central Spain favours roasted meats, while

Andalusia’s jamón serrano (cured ham) is one of Spain’s true

delicacies To wash it all down are fantastic Riojas, sweet reddessert wines such as Marques de Badajoz Dulce, and cidersgalore

If you can’t wait to try the cuisine, visit some Spanish catessen Web sites, such as www.delicioso.co.uk, www.donquijoteltd.comand www.iberianfoods-shop.co.uk,and shop online for the finest Spanish food and wine.

deli- Culture: After conquering half the world, the Spanish brought

home lots of goodies Their museums and galleries are ably world-famous Spain abounds with Romanesque andGothic masterpieces, but the art of Spain’s Golden Age – the17th century – and of the 20th century are what most visitorscome to see Culture isn’t confined to museums though Fiestastake place throughout the year in every village and town,where the locals celebrate events as diverse as Wellington’scapture of San Sebastian and Columbus’s landing in America

of themselves as Spaniards – and they may be unable or unwilling

to speak with you if you try to chat in Spanish In the cities, you’llfind as sophisticated a range of products as in London, Paris, andNew York In the country, it can take two hours to get to a villagestore, and the locals you pass may use donkeys for transport.Large parts of Spain are closer to Africa than to the rest of Europe,both physically and culturally Spain even has a homegrown taxhaven perched on a mountaintop that’s easiest to reach by skiing

If your only experience of Spain is a holiday on the Costas, thinkabout taking a look at the rest of this amazingly diverse country.But move too far away from the rest of the Brits, and you’ll need tothink seriously about learning Spanish In Part II of this book, I takeyou on a whirlwind tour of Spain showing you the many differenttypes of properties worthy of your attention In Chapter 3 I offersome insights into the professionals who can help you find thebest-value property in your chosen region

Working Out What You Can Afford

So you’re sold on Spain But before you think seriously aboutbuying a property, you need to set your budget You can waste anawful lot of time racing around the country looking at properties

that cost more than you’re prepared to spend Even searching onthe Internet can be frustrating Until you limit your price range towithin around €10,000 of your budget, you may be so overwhelmed

by details of properties that you can’t even begin to prepare aviewing shortlist

Adding up your assets

The average cost of a house in the UK is €257,000; the average inSpain is €130,000 In theory, if you decide to sell up and move toSpain, you should have plenty of money to spare However, even

if you do the sums carefully, you may not have quite as much asyou would expect The €127,000 you thought you would have as aresult of selling in the UK and buying in Spain is likely to be closer

to €100,000, as I explain in Table 1-1

Table 1-1 The True Cost of Buying a Property in Spain

Transaction Cost of Transaction Balance

Sell UK home for €257,000 €7,710 (3% agent commission) €249,290Buy in Spain for €130,000 €130,000 + €14,300 €104,990

(11% agent commission of around 5% and legal and other costs of up to a further 6%)

After doing the sums in Table 1-1, you still get a pretty good around on your investment Even if you’re seriously cautious when

turn-it comes to money, you can expect to earn the interest on the

€99,990 difference between selling in the UK and buying in Spain.This amounts to around €3,000 a year – not a bad fistful of change

Finding out how much you can borrow

Selling up in the UK and buying a similar property in Spain meansyou probably won’t need to borrow any money However, if youhave the income to support a loan, you could upgrade the wholescenario I look into mortgages in more detail in Chapter 10

If you think you can afford or can generate from your Spanish and

UK properties about £9,000 of extra income, then you should havelittle difficulty in raising all the money you need to keep your home

in the UK and buy a house in Spain By not getting out of the UKproperty market, you’ll also be giving yourself the flexibility toreturn to the UK at a later date

Setting your budget

Now for the $64,000 question: How much should you set aside foryour move to Spain? The answer depends on your age, objectives,and appetite for risk Think about the following points:

 If you’re older than 50, risk-averse, and planning to live inSpain for the rest of your life, then you might be wise to sell

up in the UK, buy in Spain for less, and bank the difference

 If you’re under 50, want to keep open your UK options, anddon’t want to take much of a risk, you could downsize yourproperty in the UK, buy an average house in Spain, and takeout just enough of a mortgage to fund the deal

 If you’re under 50, want to keep open the option to returnhome, and are happy to take a fair amount of risk, you couldrent out your UK house and buy a house in Spain, taking out

a sizeable mortgage

When you’ve decided on your strategy and set a budget, stick to it!However appealing a property is, don’t exceed your budget unlessyou can see a way to increase some other aspect of the equation,such as being able to rent out the property for part of the year orearning money in some other way

Putting Your Money Where Your Mouth Is: The Buying Process

Plenty of people can help you put your money where their mouths

are The trick is to be completely satisfied that what they offer iswhat they say it is, what you want, and what you think is goodvalue for your money Specialists and professionals can be expen-sive, but you still need to check out a whole heap of things yourselfbefore you get the experts in Once you’re satisfied that the deallooks good, certainly get the professionals to do the rest

Language is a big issue when buying a property, so if you don’tspeak Spanish, get someone alongside you who does

Unearthing your expert team

Almost certainly you’ll need help to alleviate some of the strain ofproperty-hunting in Spain, even if you happen to be fluent in thelanguage and a qualified surveyor The first people you meet arelikely to be in the business of helping themselves rather than you:think estate agents, property developers, and anyone else showingoff their wares at one of the 1,000 or so property exhibitions in the

UK each year You do need these folks, and you need them on yourside, but don’t take everything they say as the truth Treat theirwords as you would those of a politician at election time, and youwon’t go too far wrong Bring in some real experts The followingare the key people whose expertise and knowledge you need to tapinto:

 A gestor is a uniquely Spanish professional – part lawyer, part

accountant, and wholly a fixer – dedicated principally to ing you with Spanish bureaucracy

help- A lawyer keeps you on the straight and narrow and makes

sure you end up owning the property and not just a snazzypiece of paper You can use a Spanish or British lawyer, butshe must understand Spanish property law and speak reason-able English

 A linguist/translator helps you fully understand the

discus-sions and documents involved in the transaction

 A notario is the local legal eagle who ensures that all the

paperwork is correct and property taxes are paid

 A surveyor is essential if you’re considering buying an old

property A surveyor is also useful if you’re buying a newproperty and want to be sure that the structural work hasbeen done correctly and that the building guarantees aresolid

Check out Chapters 3, 13, and 16 for lots of info on finding the bestexperts and getting them on your side

Working your way through the process

Buying a property in Spain is similar to buying in the UK, with one key difference: Many operators in the property business seeforeigners – which is what you are in Spain – as fair game From themoment you express the slightest interest in a property until you

get into your lawyer’s office to close the deal, chances are one will try to get you to do something that you’d never considerdoing in the UK and which may even be illegal.

some-Local property touts are always on the lookout in hotels and side estate agents’ offices to lure the unwary to properties that are

out-so dodgy or overpriced that they can’t be out-sold any other way.Estate agents, in person and through their Web sites, may inviteyou to part with £1,000 or so to secure a bargain property in adevelopment that’s selling like hotcakes Even if you skirt aroundthese minefields, you may find a financial time bomb waiting foryou at the end The seller may ask you to under-declare the sellingprice to lower both her and your taxes and legal fees Under-declaring is illegal, and the Spanish authorities are becoming lessand less likely to turn a blind eye to it You could also be storing up

a thumping great capital gains tax liability for yourself when youcome to sell up I cover the ins and outs of this particular knottyissue in Chapter 11

In Chapters 11 and 13, I explain how to avoid these and other falls and to follow the right legal path to end up with proper title toyour Spanish home

pit-Getting what you pay for

Properties you see in the brochures or on the Web site may or maynot be all they’re cracked up to be You have to look after your owninterests to make sure the property you choose is what you wantand that everything works In Spain, just because you have a tapand a telephone point doesn’t necessarily mean you have a watersupply and access to the telephone network

If you find three or four properties that meet your requirements,surveys at £500 a shot with legal costs on top will soon eat intoyour budget Think about doing your own basic property healthcheck first, and then pay for a surveyor or lawyer only after you’veconcluded negotiations on price and are sure the house is whatyou want

I look at finding out the critical details about the physical structure

of your property in Chapter 12 With a bit of foresight and effort,

you can identify before you sign on the dotted line most of the

things that can go wrong or reduce the value of your asset Whatyou can’t do is leave the professionals to sort out these matters

as you might do in the UK Remember: You’re the gringo in this situation

Making Money from Your Property

Buying a property needn’t just be an outlay You can make yourproperty pay its way in dozens of different ways At the most basiclevel, you can let out your house when you’re away Taking thingsfurther, you can use your home as a workplace and so operate withminimum overheads

Merging your home and workplace

If you need to make some money to bridge the gap between yourfinancial resources and your Spanish property aspirations, youmay consider making money from your house Tens of thousands

of foreigners run businesses of every shape and size from theirhomes, including B&Bs, hotels, restaurants, bars, vineyards, sta-bles, holiday cottages, language schools, and Web-design compa-nies In Chapter 14, I look at the different ways you can makemoney from your home and the pros and cons of living above theshop

Selling your property for profit

From the moment you buy your first property, you’re potentially

in the business of being a seller – or vendor, to give it its legal title.From a profit-generation perspective, selling a house in Spain ismuch the same as selling in the UK or anywhere else Paradoxically,you’re adding value the moment you buy Overpaying at thebuying stage means you’re pushing water uphill from then on

In Chapter 11, I share some negotiation tips to help you pushdown the purchase price

On average, buyers spend around a fifth of the purchase price onimprovements in the first three years of ownership: Swimmingpools, air-conditioning, extra bedrooms, patios, and barbequeareas are high on the to-do lists If you spend your money wisely,you can have fun and add value But not all improvements add thesame amount of value – or add value at all

Renting in and renting out

Renting in Spain can buy you time and perhaps even help with cashflow as you search for your dream house and get enough infor- mation to make informed decisions But renting is a contractual

relationship between landlord and tenant that throws up problems

of its own In Chapter 5, I look at finding a suitable property to rent,checking out the lease, and searching for other, less conventional,rental arrangements, such as house-sitting and house-swapping

If you have homes in both Spain and the UK and you don’t intend

to spend the whole year in Spain, you could rent out one or both

of your properties This can be a handy source of income at a timewhen your expenses may be higher than usual In Chapter 14, Ilook at the rental subject in more detail, from finding good tenants,through drawing up leases, to dealing with problem tenants andhandling taxes

Living and Working in Spain

Lots of people move to Spain long before they retire and still need

to earn a living Running a business or working for somebody else

is an excellent way to get established in a new area and makefriends and contacts who may be able to help you settle in to yournew home

I don’t think we’re in Kansas (or Kent) any more

Settling down to day-to-day living in Spain means starting againfrom scratch with all the things you take for granted at home Youneed to open a bank account, which you can’t do until you have

a número de identificación de extranjeros (NIE, or foreigner’s ID

number) Spanish bureaucracy is lightening up a little, and youmay well get by with just a passport and a smattering of Spanish.Unless you want to pay a fortune in currency conversion charges,

you’ll need a credit card (targeta de crédito) I talk about financial

Hi-ho, hi-ho, it’s off to work

Fifteen million people work in Spain In fact, Spain has rocketed upthe economic league table since joining the EU two decades ago

If you’re an EU citizen, you have no serious limitations on lookingfor work in Spain But unemployment in Spain is higher than in the

UK, so you’re likely to find plenty of competition for jobs The bestways to start searching for a job are to register as a jobseeker

(demandante de empleo) at the nearest employment office (oficinas

de empleo) and to trawl through the dozens of Web sites that carry

job details If you can’t wait until you get to Spain, try tapping in tothe European Employment Service (EURES), which operates a data-base of jobs available throughout Europe via the UK Jobcentre Plusnetwork (www.jobcentreplus.gov.uk) and the EURES Web site(http://ec.europa.eu/eures) Check out Chapter 14 for how toget work in Spain

Chapter 2

Considering the Cost

of Spanish Buying

In This Chapter

Understanding what drives property prices up and down

Checking out the costs involved in buying property

Calculating the costs of renovating and building

Appreciating the tax implications of owning property overseas

Buying a property abroad can be fun It can even be financiallyrewarding But you need to take into account a wide range offactors In this chapter, I explain all about checking out prices ofproperties in different parts of Spain and finding out the costs ofprofessional advisors and local and national taxes After readingthis chapter, you’ll know exactly how much you need to budget foryour Spanish property, avoiding costly surprises

Making Sense of the Market in

Spain: Prices and Properties

Competitive prices and an incredible range of properties suitingalmost every taste ensures that each year foreigners buy around150,000 Spanish properties Foreigners own nearly 2 million houses in Spain, or one in seven of all properties in the country.Homeowners from abroad are attracted to Spain’s climate, prop-erty prices, and quality of life Tourists are not the only peoplebuying up the housing stock: Each year, some 50,000 immigrants

go to live and work in Spain and in doing so, buy a property.Britons, Germans, and Dutch make up the lion’s share of EuropeanUnion (EU) nationals buying property in Spain, preferring to look inareas where other nationals of their home countries are already

living The Spanish refer to these areas as colonias, or colonies.

Pushing up the market

Factors influencing the supply and demand in the property market

in Spain are:

 Economic policies: The Spanish Socialist Workers’ Party

(PSOE), which came to power in April 2004, has stuck with the economic policies of its predecessor These policies havedelivered strong growth, although that growth may now havepeaked

 Housing stock: Since 1997, Spain has built new properties at a

rate of 500,000 a year – more than in Britain and France bined, despite Spain having just a third of the population ofBritain or France

com- Speculation: Spain has seen wave after wave of both locally

and internationally led speculative property development,fuelled initially by countries of the EU, and still being powered

by new generations of immigrants in search of a fast buck

 Tourism: Foreigners tend to buy houses in places where they

have holidayed During 2005, 52.8 million foreigners visitedSpain, up 3.1 per cent from 2003 Of tourists travelling toSpain, the UK accounted for a larger proportion than anyother country in the world, with 16.4 million tourists, or 30.6 per cent of the total Next was Germany, with 10 milliontourists going to Spain, followed by France, with 7.4 milliontourists, and Holland and Italy, with 2.3 million tourists each

 Working population: Unemployment in Spain is dropping,

with nearly 2 per cent fewer people looking for work in 2006than in 2005 Over the same period, the economy produced376,000 new jobs Spain now needs to pull in immigrants to fillsome of those jobs – immigrants who in turn are buying localproperties

The Economist’s survey of the international property market in

March 2007 suggested that property prices in Spain have risen by

173 per cent over the previous decade However, that overall riseconceals some wide variations For example, average prices in theMalaga region have risen one-and-a-half times as fast as thosearound Alicante The Spanish company Sociedad de Tasación spe-cialises in valuing property assets and has a neat tool on its Website (http://web.st-tasacion.es) from where you can track themovement of property prices in every Spanish region, includingSpain’s islands, from December 1985 to date You can use theKnight Frank Global House Price Index on the company’s Web site(www.knightfrank.com) to track the performance of Spanishproperty prices compared to prices in some 34 other countriesaround the world

Looking to the future

The $64-million question is ‘What is going to happen to propertyprices in Spain over the next few years?’ Reports suggest that thebiggest boom may be put on hold for a few years In October 2004,the Bank of Spain claimed that Spanish property prices were over-valued by about a fifth A month previously, the InternationalMonetary Fund cited Spain as one of the countries (including also theUK) where house prices were in danger of a correction – bank-speakfor a fall As in the UK, young people in Spain are being priced out

of the housing market, with a colossal 34 per cent of Spaniardsaged over 30 still living with their parents These statistics shouldcome in handy during your price negotiations (see Chapter 11).Not everyone agrees with this pessimistic view Some economistsbelieve that the housing boom is helping drive the strong consumerdemand, allowing Spain’s economy to grow much faster than that

of many other EU countries

One thing, however, is certain: The property market in Spain is

no longer an easy ride Study carefully the area where you are

Keeping away from the froth

Here’s a true story showing the value of researching the area where you’re ing of buying before taking the plunge

think-Every year, on 22 December, El Gordo, or ‘The Fat One’, the largest lottery in theworld, brings Spain to a standstill In 2002, two communities in Almeria, southernSpain, shared the bulk of the booty The remote village of Lubrín (population 600), atortuous 45-minute drive from the coastal resort of Mojácar, was one of the luckywinners After the win, a ruin that would have been lucky to sell for €15,000 was onthe market for €60,000

The Spaniards like to invest in solid assets such as property rather than gant consumables, and El Gordo has helped them to do just that To buy the €20tickets for the lottery, people often form syndicates, and hundreds of people in thesame area may share the spoils A walk around the village streets in a winning areashows exactly how the people have spent their new wealth Builders are hard atwork everywhere, improving wrecks and slapping fresh coats of paint on houses

extrava-as fextrava-ast extrava-as possible

Lubrín and the surrounding area now has 1,500 registered foreign homeowners Asthis number grows, so do the local Spaniards’ bank balances The locals have gar-nered an additional windfall, their winnings having triggered a boom in local houseprices

considering buying property before you purchase I cover thisbriefly in Chapter 4 and in more depth in Part II for each majorregion of Spain.

By taking care, researching both the area and the property, anddoing your sums, you can still find good-value properties through-out Spain Thinking laterally can pay off: For example, mosttourists from EU member states buy property situated along theMediterranean coast, where a small two-bedroom terraced housewith sea views and a shared garden and pool area costs around

€220,000 Just 20 kilometres inland, however, a large detached villawith its own garden and pool costs half or even less than the ter-raced house I look at property prices in detail in Part II

You can track the progress of the property market in Spain yourselfusing the Web sites mentioned above, the TINSA Web site (www.tinsa.es/english/enews.html), and the Web site of UK survey-ors Jones Lang LaSalle (www.research.joneslanglasalle.com),and by keeping an eye on stories in the press

Estimating Your Buying Costs

If you think that buying a house in Spain means paying only for thebuilding plot and materials, you’d better brace yourself for anunpleasant surprise Everyone will want a slice of the action,including, just for starters, a couple of lawyers, a surveyor, and atranslator, unless your grasp of Spanish legal and building terms issound Have a look at Chapter 3 for how to find these professionals.You can also expect the Government and the town hall to grabtheir pound, or rather kilogram, of flesh Add between 15 and 20per cent to your purchase price, and you should have the rightsort of figure If you plan on making alterations and additions tothe property, the bill could be larger still In Chapter 10 I give amore detailed summary of all the separate costs of buying a prop-erty Table 2-1 gives you an idea of the typical buying costs of a

€150,000 property

Table 2-1 Typical Costs of Buying a € 150,000

Property in Spain

UK and Spanish lawyers 2,000