Buying property in Spain

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Buying property in Spain can still both be a dream and a minefield for people from UK. The Spanish climate will always be enticing and the pricing frequently extremely competitive, but not always.

Whilst UK has a very well organised and competitive estate agency network, Spain still does not. Yes, there are a large number of estate agents (inmobilarias) and property networks operating on the internet but there is no actual requirement to be professional or qualified in anyway. Frequently an agent will be unable to give a realistic idea of what your resale price should be or what the value of your property might be, and it is still a mystery to me as to how a mortgage lender might go about assessing the actual value of a property. Consequently one can frequently see a huge range of prices for properties of similar style in similar areas. Very often the vendor is left to decide what price they would like for their property without actually knowing whether they have any prospect of selling or whether they are selling too cheap.

This also gives a great opportunity to agents whereby, in the absence of a generally accepted fee structure, it has often been the case that an agent could load the price of an undervalued property and make a large killing on the sale.

It is also quite common to find that Agents don't actually operate by area and can be selling property great distances from where the agent is actually located and therefore have little prospect of knowing the market in that area.

I have performed studies of property values in particular locations for Spanish friends relating prices back to the economic status of the particular area. Sadly, this has often provided some disappointing information but which has proved to be quite realistic. Solid information regarding sales is generally difficult to qualify as there is no system for comparables operating. Government statistics may be unreliable as the black economy is still rife and purchasers are often asked to pay a significant amount of the price in cash so as to avoid payment of taxes on resales.

There is also no regularised system for conveyancing and, indeed, debatable benefits in using a solicitor in the transaction. Once again, anyone can set up to advise clients on this process. There are no regular local authority searches, no system for purchase enquiries, one can also not guarantee that any title deed for the property will exist or, necessarily, be declared. Property law is also not necessarily national law and so much information is based on hearsay and often nullified by the rapidly changing approach to property throught the country. The rule is very much caveat emptor, let the buyer beware.

As a result there are actually very many fabulous opportunities for buying a great property at a great price but also very many for finding oneself with a complete dog. Spain has a huge glut of unsold new build property, the property building boom having been one of the great failures of Spanish economic management and which can only serve to depress the second hand market even further. The wary buyer may pick themselves a bargain but the unwary may find they have a lot to lose. To find that bargain one has to spend a considerable amount of time researching the market and it's debatable whether one can actually do that from abroad. As I am considering selling and moving to a new area I am personally back into research mode and assessing the status of the market.

Finally, a brief comment on the subject of climate and inland property. It's very easy to retain the picture of sun kissed beaches all year round and there can be an element of truth to this image. However, don't assume that this applies for the whole of Spain. Travel 5 minutes from the coastal areas can see you into the mountains and a completely different winter climate and set of heating bills.Travel 45 minutes from the Andalucian coast can get you to Spain's most southerly ski resort (great if you like both skiing and sunbathing).

I am not a property or mortgage professional in Spain (was a mortgage professional in UK) and all comments are based on my own personal research and experience. However, I am generally happy to answer questions and may be prepared to offer services by special arrangement within Andalucia.

Written Oct 2009
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