Buying a Holiday Home in Spain

Owning a holiday home in Spain is a popular choice for UK buyers, whether for short breaks, long stays, or investment. With great weather and stunning locations, it’s easy to see the appeal. However, buying a property in Spain is different from buying one in the UK. There are legal and financial factors to consider, as well as ongoing costs and responsibilities. This guide covers key locations, important steps in the buying process, and what to keep in mind before making a decision

Why buy a holiday home in Spain?

Spain has always been a popular choice for holidaymakers and second-home buyers. Here’s why people elope to Spain:

• Warmer climate: Spain enjoys far more hours of sunshine than the UK. Some areas get over 3,200 hours of sunshine per year, compared to around 1,400 hours in London.
• Easy access: With regular short-haul flights from the UK, it’s convenient for both short visits and longer stays.
• Property affordability: In many areas, house prices can be lower than in the UK.
• Rental income potential: Letting the property to holidaymakers when not in use could provide an extra income stream.
• Investment opportunity: A second property may help with long-term financial planning, whether for personal use or future resale.

Best places to buy a holiday home in Spain

Whether you’re looking for vibrant nightlife, cultural hotspots, or peaceful retreats, Spain has something for everyone:

• Ibiza: A mix of lively nightlife and quiet countryside.
  • For nightlife, consider areas near Ibiza Town, Playa d’en Bossa, or San Antonio.
  • For a more relaxed setting, Santa Gertrudis, Santa Eularia, and Sant Josep offer a quieter pace of life.
• Barcelona: A city that blends culture with seaside relaxation.
  • Ideal for those who enjoy a mix of art, food, shopping, and beach life.
  • Offers strong transport links and a vibrant atmosphere.
• Alicante: A sun-soaked coastal region on the Costa Blanca.
  • Enjoys 320 days of sunshine a year.
  • Known for stunning beaches, fishing villages, and championship golf courses.
• Costa del Sol: A family-friendly hotspot with entertainment for all ages.
  • Home to beaches, waterparks, golf courses, adventure parks, and cinemas.
  • A well-developed tourist area with plenty of activities.
• Lanzarote: A striking island with a unique volcanic landscape.
  • Famous for Timanfaya National Park and its year-round warm climate.
  • Offers uninterrupted views and a relaxed island lifestyle.

How To Find A Holiday Home In Spain

There are several ways to search for a holiday home in Spain:

• Property websites: Platforms like Idealista, Fotocasa, and Habitaclia list properties across Spain, making it easier to browse options and compare prices.
• Expat-focused websites: Sites such as ThinkSpain and Spainhouses.net cater to international buyers, often providing listings in English.
• Estate agents in Spain: Local agents can offer valuable insight into the market, help with negotiations, and guide you through the legal process.

The Process Of Buying A Holiday Home In Spain

Understanding the process of buying a property in Spain can help you plan ahead, avoid unexpected costs, and ensure a smooth moving process. Here’s an outline of what to expect:

• Research and budget planning: Determine your preferred location and set a realistic budget, factoring in additional costs such as taxes and legal fees.
• Get your NIE: A Número de Identidad de Extranjero (NIE) is a personal identification number required for any fiscal transaction in Spain, including opening a bank account and purchasing property.
• Search for properties: Use online platforms, estate agents, or local contacts to find suitable properties.
• Ask to see the Nota Simple: This legal document outlines key details of the property, including:
  • Details of ownership
  • Outstanding debts on the property
  • Boundaries of the property
  • Designated use of the property
  • Rights on the property held by others
  • Community costs
• Get a survey: A structural survey can highlight any potential issues before you commit to the purchase.
• Hire a solicitor or notary: Choose an independent professional who specialises in Spanish land law. The property conveyancing system in Spain differs from the UK, so it’s important to work with someone experienced in handling local transactions.
• Consider opening a Spanish bank account: This may make it easier to complete the property transaction, pay taxes, and set up utilities.
• Make an offer: If you find a property that meets your requirements, submit an offer through the seller or their estate agent.
• Reservation agreement: If your offer is accepted, you’ll sign a preliminary agreement and pay a deposit to secure the property.
• Sign the purchase contract: Once all checks are completed, both parties sign the official purchase contract.
• Exchange of documents: Ensure all necessary documents are provided and verified before completing the transaction.
• Payment of the property: Make the final payment as agreed in the contract.
• Notary deed: Both the buyer and seller must attend the notary office to sign the final deed of sale (Escritura de Compraventa). Notary fees must also be paid at this stage.
• Register the property: The new ownership details must be registered with the Spanish Land Registry.
• Pay taxes and fees: Expect to pay Property Transfer Tax (ITP) for resale properties or VAT (IVA) for new builds. Additional costs include notary fees, registration fees, and legal representation.
• Set up your utility bills: Arrange contracts for electricity, water, and other essential services.
• Set up your insurance: You may want to consider buying holiday home insurance to help protect your property from risks such as damage, theft, and loss of rent.

  If you’re looking for holiday home insurance in Spain, Intasure can help. We can provide insurance for unoccupied properties and help protect your home from other risks, including if it’s used as a holiday let. Get a quote here or give us a call on 0345 111 0680.

Costs Of Buying A Holiday Home In Spain

Buying a holiday home in Spain comes with additional costs beyond the property price. It’s important to factor these into your budget to avoid unexpected expenses.

• Property price: The cost of properties varies by location, size, and demand.
• Notary and registration fees: Expect to pay 1-2.5% of the property price for notary services, title deed tax, and land registration fees.
• Taxes:
  • Property Transfer Tax (ITP): 6-10% for resale properties.
  • VAT (IVA): 10% for newly built properties.
• Legal fees: Lawyer fees typically range from 1-2% of the purchase price, including VAT.
• Bank and miscellaneous fees: Additional costs may include mortgage arrangement fees, bank transfer charges, and currency exchange costs.
• Estate agent fees: In Spain, estate agents usually charge a commission based on the final purchase price, typically around 3%.

Requirements When Buying A Holiday Home In Spain

Before you buy a property in Spain, make sure you’ve considered the following legal requirements:

• NIE (Número de Identidad de Extranjero): This personal identification number is essential for foreign buyers. It serves as a tax number and is required for purchasing property, opening a bank account, and setting up utilities. Without an NIE, local authorities cannot process annual property taxes.
• Spanish bank account (optional but recommended): While not mandatory, a local bank account makes it easier to manage payments for taxes, utilities, and mortgage instalments.

It's also important to research location-specific regulations, particularly if you plan to rent out the property. Some areas have restrictions on short-term rentals, which could impact your investment plans.

What Is The Property Market Like In Spain?

The Spanish property market has grown over the past year, with house prices rising due to strong demand. Coastal regions and major cities remain particularly popular among both local and international buyers.

• House prices have increased: Many areas have seen steady price growth, particularly in sought-after locations such as Madrid, Barcelona, the Costa del Sol, and the Balearic Islands.
• Demand remains strong: Both domestic and international buyers continue to invest in Spanish property, particularly in regions popular for holiday homes.
• Rental demand is also rising: With Spain being a top tourist destination, short-term rental markets in coastal and urban areas remain active, though local regulations may apply.

Market conditions can vary depending on the region, so researching local trends before buying is essential.

Understanding Spanish Insurance Taxes

When insuring your holiday home in Spain, it’s important to be aware of the country’s unique tax structure for insurance policies. Unlike in the UK, where the standard premium tax is 12%, Spain applies an 8% premium tax¹ to property insurance—this lower rate may offer some relief to your budget.   All insurance policies in Spain are subject to contributions toward the Consorcio de Compensacion de Seguros (CCS)², a public organisation that provides compensation for losses arising from natural disasters (like floods or earthquakes) and socio-political risks (such as terrorism). This levy is minimal at just 0.007% of your gross premium, but it’s mandatory.   A separate mandatory charge of 0.15% is also applied to the gross premium of most insurance policies, excluding life insurance and a few other exceptions³. These taxes are built into your premium but are good to know upfront when comparing insurance providers or estimating ongoing costs.

Can I Rent Out My Property In Spain?

Renting out your holiday home in Spain is a great way to earn extra income. Before you do, make sure you’ve considered local rules and tax obligations:

• Local regulations: Spain has strict laws for short-term rentals, and requirements vary by region. Some areas have restrictions or licensing requirements for properties rented to tourists.
• Tourist rental licence: In popular tourist destinations, you may need to apply for a tourist rental licence before legally renting out your property. Failure to comply with local regulations can lead to fines.
• Tax obligations: Non-resident property owners must pay tax on rental income, and these must be declared quarterly to avoid penalties:
  • EU residents: Taxed at 19%, with deductions for expenses⁴.
  • Non-EU residents: Taxed at 24%, with no deductions.

If you plan to rent out your holiday home, having holiday let insurance can help protect your property from risks, such as loss of rent, damage, and unoccupancy. This helps to ease the financial burden if something goes wrong while you have paying guests in your holiday home.

FAQs

What Taxes Do You Need To Pay When Buying A Holiday Home In Spain?

When purchasing a property in Spain, the taxes you pay depend on whether it's a new or resale property:

• New properties: Subject to a 10% Value Added Tax (VAT) and a Stamp Duty (AJD) of up to 1.5%, depending on the region.
• Resale properties: Incurs a Property Transfer Tax (ITP), typically ranging from 6% to 10%, depending on the autonomous community.

Can I Buy A House In Spain As A Non-Resident?

Yes, non-residents can purchase property in Spain. However, you'll need to obtain a Número de Identificación de Extranjero (NIE), which is a tax identification number required for property transactions.

How Long Can You Stay In Spain If You Buy A Property There?

Owning property in Spain does not automatically grant residency rights. Non-EU citizens, including those from the UK post-Brexit, can stay in Spain for up to 90 days within any 180-day period without a visa.

What Are The Drawbacks Of Buying A Property In Spain?

Potential challenges include:

• High upfront costs: Beyond the property price, buyers face taxes, notary fees, and legal expenses. These can be between 10% and 12% of the property's value.
• Deposit requirements: Non-resident buyers often need a deposit of 30% of the property's purchase price.

How Much Deposit Do I Need To Buy A House In Spain?

The required deposit varies:

• Residents: Typically need at least 20% of the property's price, plus additional costs for taxes and fees.
• Non-residents: Generally require a minimum deposit of 30% of the property's purchase price.

Make sure you factor in other costs such as notary fees, registration fees, taxes, and legal fees when planning your budget. - * Tax rates correct at time of publication, May 2025. Other payments include monthly mortgage fees and any charge imposed from a surveyor or valuer. The average cost is around €219,000 for a studio and €200,000 for a villa^11,12. Please be mindful, though, that structural or building surveys may cost €1000 or more¹³. Holiday home insurance can typically set you back between €200 annually for basic policies, and can rise to €1000 or more for all-risk coverage or properties with additional features like pools¹³. This premium may be more if you’re insuring valuable items. Finally, there are costs incurred with international bank transfer fees and exchange rate fluctuations. The price you pay for your home and the cost of mortgage payments will partially depend on the current exchange rates. So, if the value of sterling goes down, you will pay more for your holiday home. Ongoing maintenance costs are another factor to consider when purchasing a holiday home. If you have any further questions regarding our holiday home insurance in Spain, contact our dedicated customer service team or get a quote below.   The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited trading as Intasure accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein. If you have any further questions regarding our holiday home insurance in Spain, contact our dedicated customer service team on 0345 111 0680 or get a quote below.