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Clarifying your needs makes your property search easier and reduces the chance of you buying a property that doesn't suit you.
The sorts of questions you need to ask yourself are as follows:
Will this be a holiday home for a few weeks a year, or will it be a main residence for spending all or part of the year?
A holiday home means you probably will not be there for large parts of the year. Therefore you will need a property that doesn't require a great deal of attention on a regular basis. The last thing you want is for your holiday home to become a burden that interferes with your life. Apartments or villas on urbanisations (urbanizaciones in Spanish) are the best option in this respect as security and maintenance tend to be easier for these types of properties. Perhaps look for something with good rental potential to earn income and avoid leaving the property empty most of the year.
A more permanent home requires greater thought. You plan to spend large parts of the year living there, so you need to be somewhere that offers you the best quality of life. This means considering the local infrastructure and facilities, community, security, accessibility, and so on.
What do the family need?
Generally speaking, if you have young or teenage kids, your life will be a lot easier if you a buy property that allows them to have fun without you having to drive them everywhere. Residential estates that attract families are ideal, as both parents and kids are happy.
Is investment a primary or secondary concern?
Many people have bought Spanish property in recent years primarily as an investment, both in terms of rental income and capital gains. If you are buying as an investment then you have to focus on the type of property with the greatest potential in these terms. A good property agent will be able to advise you on the factors that drive property investment returns, along with the tools to help you analyse them. If you are buying primarily as property for living in and enjoying, then you will find you have a wider choice of properties.
How much effort do you want to put into maintaining the property?
Essentially it is just the end of the beginning when you complete the purchase. Property in Spain, as anywhere, doesn't look after itself, and maintaining property in a foreign country can be more of a challenge than at home. Depending upon what you buy, you may find yourself having to deal with local government, local builders, cleaners, plumbers, gardeners, and what have you, and all in Spanish.
What sort of maintenance budget do you have?
You need to be clear about the maintenance costs that different properties involve, and budget for them before you purchase. Otherwise you may find yourself owning a property that is too expensive for you to maintain. A good agent will give you a guide to the maintenance costs of different properties. For more detail on the sorts of costs you will face see the 'Owning a property' section of this guide.
What sized property do you need?
Be realistic about the size of property you need. Don't buy a property on the assumption that extended family will always be staying, as you may end up with something too big for you. Focus on your own requirements.
What kind of property do you need?
Different kinds of property (for example new build/resale, villa/apartment, on- estate/off-estate) suit different needs, and it is important that you are aware of their relative merits before deciding what to buy. This is one of the most important questions that you need to answer.
Which regions best suit your needs?
Whereabouts in Spain to buy is another important question. You may have personal reasons for choosing one region, such as family or friends located there. However bear in mind that each coastal region of Spain has a different set of advantages and disadvantages, and it helps to know which one best suits your needs. The vast majority of real estate agents are locally focused which means they know very little about the other regions of Spain, and will be determined to sell you a property in their area. If you have no strong personal reasons for choosing one area, then it is in your interests to know about the merits of all areas. You may be surprised to find that some of the lesser known areas are the most attractive. The only way to find out is to visit and research the area.
How important is accessibility?
Convenient access will be important to you if you wish to travel regularly. As an expatriate you will probably find that you need good access, both for you and for the convenience of family and friends who may wish to visit. Good access means a choice of international airports that can be reached within an hour or two by car. It could also mean proximity to a TGV/fast train terminal.
What kind of community would you like to be living in?
Some people may prefer the solitude that comes with a house in the woods far from anywhere. Others may like the idea of a vibrant international community that you find on many of the best residential estates. Think about what you would like from a social life if you are going to spend a lot of time in Spain.
What will you need from the property in 5 years time? In 10 years?
Never forget how quickly the years pass by. If you are buying a property for the long term then bear in mind how it will suit your needs as they change over time. As always a good agent should be able to advise you on this matter.
Due diligence on Spanish property
Before signing any contracts that commit you to buying property it is important to confirm that the property belongs to the seller in its totality, and that it is free of debts and charges (in Spain mortgages, tax obligations, and other charges are ascribed to property rather than individuals). It may also be prudent to carry out a number of other checks related to land classification, urban development plans, the condition of the property, maintenance costs, and community obligations.
Your agent and lawyer can advise you on the appropriate level of due diligence in any particular case. However never accept advice to forego due diligence entirely, especially not when purchasing resale from a private individual.
Due diligence can involve some or all of the following checks:
Property Registry Report
Obtained from the Property Registry (Registro de Propiedad) for a small fee this certificate - know as a Nota Simple Informativa - states who owns the property and indicates if there are any debts and/or charges, such as a mortgage, attached to the property.
Title Deeds
Check that the seller has the title deeds, know as the Escritura Publica.
Official Plan of the Property
It may be prudent to confirm exactly what is included in the property, and the urban classification of the land. An official plan of the property is contained in the zoning plans (plan urbanistico) which can be obtained from the planning department (Departamento de Urbanismo) of the town hall.
The plan urbanistico also shows the development plans for the land around a property. When buying out of town property that is not part of a planned residential estate (urbanizacion) it is important to know what will be built around you in the coming years.
Property Survey
There is always the option of having a chartered surveyor evaluate the property. This is advisable if there are any doubts as to the condition of the property. A survey can also be carried out on new build property to confirm that it is delivered in the condition promised.
Tax Check
The seller can be asked for the latest municipal tax certificate to demonstrate that there are no unpaid municipal taxes associated with the property which would become a problem for the buyer. The municipal tax is known as the Impuesto sobre Bienes Inmuebles, or IBI for short.
For resale property a check can also be made on the local capital gains tax (Plusvalía) that will become due when the property changes hands. In theory this tax is paid by the seller, however sometimes it is assumed by the buyer. It is important to know how much it is and who will pay it before committing.
Utilities
When buying resale property it may be prudent to ask the seller to demonstrate that all utility bills are up to date, and to specify in the deposit or private contract (if you enter into any such contracts) that they will be up to date at the time of granting of the public deed of sale.
Community by-laws and fees
When buying property that is part of a community of owners (Comunidad de Propietarios) it is important to know what the by-laws governing the workings of the community are, and what the financial obligations are per period. A copy of the community by-laws can be obtained from the land registry. It may also be necessary, in the case of resale, to obtain confirmation from the president or secretary of the community that the previous owner is up to date with community bills.
Developer insurance
Developers that sell property under construction are legally required to have a bank guarantee or insurance policy that protects any payments you make to the developer before the property is completed. This ensures that you get your money back if for whatever reason the developer fails before completion. If there are any doubts about the developer it may be necessary to see proof that the appropriate insurance is in place. Note that developers are also required by law to hold an insurance policy which guarantees for 10 years eventual damages occurring due to defects affecting ground work, supports, beams, reinforcement bars, retaining walls, or other structural elements.
As has already been stated, each due diligence should be considered on a case by case basis, and should be managed by a lawyer. Depending upon the circumstances some or all of the checks may be required, along with further checks in special cases. Your lawyer will advise you as to what is appropriate in your case.
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