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About Spain | Key Property Facts

Types of tenure


Most French property is owned on a freehold basis. Leasehold is available but is less common.

Forms of ownership


It is possible to own property in Spain as a sole owner or as a co-owner where several people share ownership rights of real estate whilst at the same time being entitled to a share (pro indiviso) of the undivided real estate. So-called “joint ownership” (pro diviso), whereby owners hold property jointly without any entitlement to a specific share of the whole, does not exist under Spanish law.

A common form of co-ownership is purchasing property through a company, which can provide tax benefits. It’s possible to set up a limited company (Sociedad Limitada, SL) or a public one (Sociedad Anonima, SA) in Spain to buy and own real estate. If the company is not trading according to certain requirements it is considered a property investment company (sociedad de mera tenencia de bienes) and is subject to a special tax regime affecting the individual resident shareholders. The company can be registered in the UK or offshore.

Fractional ownership schemes such as timesharing are well established in Spain, with many reputable agents in the market place. However, there are also many unscrupulous companies making false promises. You should therefore treat such “unmissable” deals with caution.

Condominiums are treated as “horizontal property” where communal and privately owned elements exist side by side.

Restrictions


There are no special restrictions for foreigners owning property in Spain. The right to own and use real estate in Spain is limited by easements (the right to do or prevent something of third parties), respective rights of occupiers in neighbouring properties, rights of pre-emption of third parties (i.e. first refusal to buy the property if it ever comes up for sale) or charges on the property, such as a mortgage. A “horizontal property” system of rules (where there are communally owned and privately owned elements of a building side by side as in a condominium) may stipulate restrictions affecting how the owners use their individual properties.

There are various restrictions under family law and the matrimonial property regime. In some areas, there are also limitations aimed at protecting the environment, cultural heritage or setting land aside for military use.

Property rights


The right of ownership is guaranteed in Article 33 of the Spanish Constitution. Spain scores 70% in the Heritage Foundation’s assessment of the security of its property rights. Valencia’s controversial “land grab” law has received much media coverage. However, after intervention from the EU this is in the process of being reformed (see Issues and risks section below for details).

Mortgage finance


The Spanish domestic mortgage market is well established and competitive. Normally, banks will finance between 60% and 80% of the assessed value of the real estate. Fixed and variable rates are available. Euro mortgages tend to be subject to a lower base rate of interest than sterling. Loans normally have a term of 5 to 30 years and most Spanish banks will assume the your mortgage will be repaid by the time your are 70.


Issues and risks


There is a common local practice in Spain where vendors accept part of the sales price “under the table”, undisclosed in the escritura. This is a tax avoidance scam and is illegal, with strict penalties. Furthermore, if you are buying in this way, you could end up having to pay a much higher Capital Gains Tax bill on resale when a significant proportion of this should have been paid by the person from whom you bought your new home.

Regulations


Third-party claims on the property must be honoured and unpaid taxes must be paid before the sale/purchase can go ahead. There are several provisions that protect the environment and cultural heritage in Spanish law which must be observed. There are no extra obligations for foreigners purchasing real estate in Spain.

Popular Property Markets



Costa del Sol


While it is one of the most expensive buying regions in Spain, the Costa del Sol is one of Spain’s most popular second home destinations due to its glorious climate, fine sandy beaches and wide range of first class amenities. With many superb golf courses in the region and a year-round climate, it has attracted the affluent golfing fraternity to some very high-quality developments. The marina at Puerto Banus is another haunt of the wealthy. There are however plenty of choices for those with a more modest budget. Flights to Malaga are easy to find from all over the UK thanks to competition from numerous low-cost airlines, making it possible to enjoy a weekend home there relatively inexpensively. Price stagnation in the Spanish market means sellers may currently be prepared to negotiate to offload their properties, meaning potential bargains for some lucky buyers.

Costa Blanca


The coast of Alicante province has been a UK holidaymaker’s mecca for a few decades now, with Benidorm one of the best known (some might say infamous) of all Spanish beach resorts. Away from the region’s many splendid Blue Flag beaches, golf is a major draw along the whole coast, with numerous high-quality courses from the north (Denia and Javea) to the south (Vega Baja). It’s easy to get to and with some 320 sunshine days a year, it is a great choice for a year-round getaway.

Balearic Islands


Lying off the coast of Catalonia, to the northeast of Spain, the four Balearic Islands each offer its own distinctive character, both in terms of its atmosphere and the properties available. They are all generally upmarket destinations with prices that reflect demand from discerning buyers. Mallorca can boast a number of A-list holiday home owners including the Spanish royal family. British and German buyers in particular have been buying there for years. Ibiza has a bohemian appeal that has also brought in a fair number of celebrity buyers and offers a stark contrast between some throbbing 24-hour party resorts and blissfully tranquil rural estates. Menorca is a quiet island with many beautiful beaches that are practically deserted. Tiny Formentera is not really developed for tourism. It is only accessible via boat from Ibiza and is really only a summer destination. Popular with naturists, its striking beaches and remote charm can be enjoyed even if you prefer to keep your trunks on.

Balearic Islands


Lying off the coast of Catalonia, to the northeast of Spain, the four Balearic Islands each offer its own distinctive character, both in terms of its atmosphere and the properties available. They are all generally upmarket destinations with prices that reflect demand from discerning buyers. Mallorca can boast a number of A-list holiday home owners including the Spanish royal family. British and German buyers in particular have been buying there for years. Ibiza has a bohemian appeal that has also brought in a fair number of celebrity buyers and offers a stark contrast between some throbbing 24-hour party resorts and blissfully tranquil rural estates. Menorca is a quiet island with many beautiful beaches that are practically deserted. Tiny Formentera is not really developed for tourism. It is only accessible via boat from Ibiza and is really only a summer destination. Popular with naturists, its striking beaches and remote charm can be enjoyed even if you prefer to keep your trunks on.
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