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Buying a Holiday Home in Spain
Buying a second property abroad can offer the chance to escape the stresses of modern life whenever you want. A favourite spot is Spain, thanks to good year-round weather, golden beaches, and more culture than you can shake a maraca at.
If you’re looking to buy a holiday home in Spain, this guide is for you. Here you will learn which areas are great for buying property and what to consider before making your final decision. We will also discuss the costs of buying a holiday home in Spain.
Why buy a holiday home in Spain?
As mentioned above, there are several reasons why Spain is so popular with holidaymakers and second-home buyers. For one, it offers a relaxed lifestyle with many more hours of sun than the UK. It’s also a short flight away and provides far cheaper properties than on home soil.
Looking for an investment opportunity? A Spanish property can allow you to house holidaymakers when you’re not using the property. From this perspective, you can build an extra income stream and pay off your mortgage with the proceeds.
Best places to buy a holiday home in Spain
Spain is a vast country with various climates and exciting locations to buy property. From the party atmosphere of Ibiza to the arty scene of Barcelona, there’s no shortage of idyllic areas.
Ibiza serves several purposes, offering both vibrant nightlife and the rural countryside. If you’ve got a taste for the former, you may want to opt for a villa close to Ibiza Town, near the party areas of Playa d’en Bossa or San Antonio. Areas like Santa Gertrudis, Santa Eularia, and the village of Sant Josep are more serene options. Barcelona is another famous Spanish destination that combines city life with seaside bliss. This region is ideal for culture, great food, shopping, and beach days.
Alicante is another popular destination. It is in the southeast of Spain on Costa Blanca. With 320 days of sunshine a year, it is no surprise that Alicante is high up on many Spanish house hunters’ wish lists. It has some of the best beaches and boasts everything from large towns to fishing villages. Plus, if you’re a golf fanatic, several championship courses and resorts are dotted around the area.
The Costa del Sol is a hub for families. It has fantastic beaches, but it is also packed with waterparks, adventure parks, cinemas, children’s camps, golf courses, and more. The area is specifically targeted towards tourists, so expect no shortage of things to do!
Last, but by no means least, is Lanzarote. Famed for its lunar-like landscape and uninterrupted views, the island has several spectacular volcanic landscapes, including Timanfaya National Park, used as a training base for Nasa’s Apollo 17 crew. However, the main draw is its year-round sun—expect mid-twenties sunshine whenever you go!
Things to consider when buying a holiday home in Spain
Several factors will determine where and what kind of holiday home you choose. So, first, you may want to decide the purpose of your property.
Is it mainly for you and family? Or is it primarily an investment weighted towards earning rental income? Budget will also play a big part in determining your chosen region. For example, a large villa in the hills of Ibiza is likely to cost more than a townhouse in Alicante, for instance. Specific rules and regulations are also a barrier to buying in certain areas, so it’s worth doing your research before making a final decision.
You will also need an N.I.E—identification for foreign buyers that acts as your tax number. It is mandatory to have an N.I.E number when buying a property in Spain, as without it, the local authorities can’t process annual tax.
The process of buying a holiday home in Spain
You may need professional advice when buying your holiday home. For instance, a financial or mortgage advisor can explain what property types you can buy based on your income, savings, and outgoings. They can also assist you with choosing the right mortgage.
When buying a holiday home to let out, it is essential to understand your rights as a landlord and responsibilities to tenants. Buying a holiday let is very different from purchasing a home. The legal requirements aren’t the same, so you may need to have an experienced solicitor on-hand to offer guidance.
It may also be a good idea to arrange a property survey. It’s not a legal requirement; however, it could prove invaluable if there are structural issues (which can particularly be an issue with older properties). If you find issues, you can either renegotiate the price or ensure that the current owner fixes the problem before purchasing.
Costs of buying a holiday home in Spain
It’s never as simple as just buying a property in Spain, as there are additional costs to factor into your budget. They include:
- Property transfer tax at 6-10% for existing properties or VAT at 10% for new properties.
- There are also notary costs, title deed tax, and land registration fees at 1-2.5%.
- Legal fees fluctuate between 1-2% (including VAT).
- Other charges, such as payment for lawyers or estate agents, vary from area to area. In Spain, estate agents usually charge their fees based on the final purchase price—typically around 3%.
*Tax rates correct at time of publication, May 2022
Other payments include monthly mortgage fees and any charge imposed from a surveyor or valuer. The average cost is around €300 for a studio and €800 for a villa. Please be mindful, though, that structural or building surveys may cost €2000 or more. Holiday home insurance can typically set you back between €75 and €100 annually for basic policies, and can rise to €125-€200 for all-risk coverage. 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 on 0345 111 0680 or get a quote below.