Questions and Answers
Spain Advisors helps non-Spaniards locate and purchase property in the Barcelona area. Below are common questions about the process.
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TABLE OF CONTENTS
- 1. Is 2021 a good time to buy property in Barcelona?
- 2. How much money do I need in savings to buy a flat or house in Barcelona?
- 3. How do I know if the price I see online is fair?
- 4. Why should I hire a Buyer’s Agent?
- 5. What’s the best way to find an affordable flat?
- 6. Where can I find an affordable flat?
- 7. Who pays the real estate agent?
- 8. How much of a mortgage can I get?
- 9. What’s the best way to find a mortgage?
- 10. Should I transfer money from my home country?
1. Is 2021 a good time to buy property in Barcelona?
Yes. International buyers purchase a large percentage of property in Barcelona, especially in and near the city center. This demand is currently suppressed by COVID travel restrictions. Thus, property prices have leveled off and even dropped in several areas. However, once COVID passes, prices will probably shoot upwards. So if you're thinking about buying, now is as good as any time in the past three or four years.
Here are three other reasons to buy now: good mortgages, prices have room to grow and supply, and surging rents.
a) Cheap money. *Mortgage rates are low. My clients who file an income return in Spain have recently received mortgages between 1.4% to 2.4% fixed over 30 years, with 80% financing. A monthly mortgage payment is generally lower than monthly rent. These rates won't last long as inflation is predicted. *The rate you qualify for will depend on several factors.
b) Price Growth. Compared to other major European cities, property prices in Barcelona are very competitive. They're about the same as in Madrid and Milan, and below Paris, Amsterdam, Berlin, Rome, and London.
c) Surging Rents. They're going up, and this trend will continue in response to high demand and reduced supply due to the number of flats devoted to tourists.
If you can afford to buy, it’s as good a time as ever. The Calatan independence movement barely had an effect on prices.
A Spanish resident needs about 33% of the purchase price and a non-resident about 50%. A Spanish resident can get up to 90% financing from a bank, while a non-resident is normally capped at 60 to 70%. See below for a definition of Spanish resident.
Below is the math for a flat that costs 200k€.
Resident. Flat cost: 200k€ - 160k€ paid by mortgage (80%) = 40k€ + 10% tax (20k€) + **5k€ (closing fees) = 65k€ or app 33% of the price (200k€).
Non-resident. 200k€ - 120k€ paid by mortgage (60%) = 80k€ + 10% tax (20k€) + **5k€ (closing fees) = 105k€ or 52% of the price (200k€).
There’s a 10% tax on the purchase price. It’s 5% if you’re 32 or younger and meet other requirements.
**This is an estimate of the notary fees, deed registration, and legal assistance.
Spanish Resident Defined. A Spanish resident must declare their worldwide income, file an annual income tax return and pay taxes in Spain annually. You are a Spanish resident IF
- You live in Spain for 183 days or more per year
- You live in Spain for less than 183 days, but your 'principal' residence is in Spain
- You earn most of your annual income in Spain
- Your spouse or a child live in Spain. Then a presumption arises that you too are a resident. You can rebut this with evidence that you live and pay taxes elsewhere. However, if your spouse is a resident, you might be forced to pay taxes in Spain regardless of your personal situation.
3. How do I know if the price I see online is fair?
It’s not easy because there is no standard or ‘market’ value for property in Barcelona as each flat or house is too unique. Price depends on the area, size, condition, layout, noise, etc. Further, a list of recently-sold property prices is not public. As a result, sellers list for the price they want and hope for the best. We judge a property’s worth based on condition, area prices, what other clients have paid, and feedback from owners and agents working in the market. Some online services also provide information.
4. Why should I hire a Buyer’s Agent?
For independent advice and guidance through the process. The seller pays the real estate agents, normally 3 to 6% of the property’s sales price, and forms a close relationship with them. Obviously, their goal is to maximize the sale’s price.
Further, the law is very lax regarding the agent's duty to disclose property defects. They do not have to tell the buyer important negative aspects about the property. It's the buyer's job to uncover them.
Thus, a buyer’s agent should thoroughly investigate the property's documentation and zoning laws to uncover any defects. For structural inspections, they should recommend an architect. We work with one.
Moreover, your agent must be on the other side of the table from the agent negotiating the price. No guarantees can be made as some sellers refuse to negotiate, but having someone with experience doing this could save you money.
Finally, non-Spaniards are at a natural disadvantage when buying property in Spain. First, there is the language barrier. You have to know what's going on at all times. Second, the laws governing real estate transactions are quite lax compared to other countries. It’s easy to get confused or taken advantage of.
5. What’s the best way to find an affordable flat?
Find it before it goes online. It’s hard to find a good deal on websites like Idealista because everyone else is looking there too. Remember that some of the best deals never make it online. They get sold beforehand to people like our clients. We go door to door to agents asking for their listed and unlisted properties. We also contact shoppers, owners, and developers to see what they have. We offer a search service where we send you properties we uncover, and you ask us to visit them. See this link.
6. Where can I find an affordable flat?
There are several neighborhoods in Barcelona with affordable, medium-sized flats in decent condition located away from the city center. My clients, for example, have found such apartments in Badalona, Sant Andreu, Sants, Hospitalet, and Esplugues. Second, consider buying a flat that needs work. You can save a lot of money buying cheap, then fixing it up yourself. Be sure to hire an architect to see the flat before you buy.
7. Who pays the real estate agent?
The seller of the property. The seller pays the agent a commission on the sale. It ranges from 3 to 6%. Some agents, however, also charge the buyer, and this cost is not included in the property’s price.
8. How much of a mortgage can I get?
A Spanish resident can get up to 80% of the purchase price or the assessed value, while a non-resident is generally capped at 60%. For mortgage purposes, a Spanish resident has a resident NIE and files an annual tax return in Spain (or is exempt from doing so).
9. What’s the best way to find a mortgage?
First, look at flats online to get an idea of their size and their prices in the various areas of Barcelona. Then go to the neighborhood where you want to buy and talk to some agents. If you have enough saved, start looking for a mortgage. Talk to your bank, then shop around. But beware, the mortgage business can be complicated and is loaded with hidden costs (life insurance, opening fees, etc.). I always recommend Mortgage Direct, an intermediate who specializes in mortgages. They can explain things, get pre-approval, and normally get better rates. Contact Mortgage Direct Here
10. Should I transfer money from my home country?
Understand the tax consequences first. If you send a lot of money into Spain, you might have to explain where it came from and pay taxes on it in Spain. Always talk to a Spanish tax attorney (abogado fiscal) before you make the transfer. I work with one. And never transfer bank to bank; you’ll get a terrible exchange rate. Use an exchange broker to save money. I recommend Smart Currency Exchange because they’re secure and specialize in large transfers. Contact Smart Here