Buying a New Spanish Property

By far the largest number of property sales to foreigners in Spain are sold off the plan or are under construction. Today they are well designed, better built and have fewer legality and planning problems than older resales. Furthermore the design and installation of the services are up to the latest EU building standards.

There are 12 important aspects to enquire about when buying a new property for your own use,

  • The solvency of the builder.
  • The legality of the development.
  • Does what is actually being built conform to the planning permission granted?
  • Does what is actually being built conform to the building specification in the sales brochure?
  • Is the completion date quoted on the contract?
  • Does the contract conform to Spanish Law?
  • Does the builder carry the required insurances against earthquake and bankruptcy?
  • Will the builder give a ten year guarantee?.
  • What are the stage payments?
  • If a stage payment is due, has the work due to be done actually been done?
  • On larger projects where owners have completed prior to the whole project being finished, who will be responsible for the maintenance of common areas during the remainder of the construction. To whom will you pay the community fees and whom will be forming the urbanisation management committee when the scheme is actually finished.
  • Will the builder be organising the water and electricity connections, who will pay for these?

Investment Property.

There is much tax free money to be made on investing in speculative property in Spain. There are a number of different ways this can work,

  1. Some builders offer deals where as yet there is no planning pemission granted. A scheme has been designed and is going through the approval process. This can take several years. You are invited to join in the speculation process by paying a returnable deposit (It varies from scheme to scheme) which in the event of no permission being forthcoming will be returned in full with interest (normally between 4 and 6 percent)
  2. To encourage a number of quick sales for a new scheme the first properties are offerred at special prices. Pick out the best properties such as the penthouses or front corners and wait until building starts. This can take as long as three to four years. Then when building starts put the property up for sale at the current market price (It can be between 30% and 100% higher). As the property has not been completed there is no actual transaction involving deeds and tax payments. You can pocket your profit and leave the buyer to complete the final payment and conveyancing.

Clearly there is an element of risk in these schemes so it is best to get an independent lawyer to check out the builder and the legality of the proposed development before parting with any cash.