TABLE OF CONTENTS
- 1. Is summer, 2019, 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?
As good a time as any. The cost of flats, apartments and houses has been increasing for several years and I see nothing to break this trend for fours reasons: limited supply, high demand, surging rents, and cheap mortgages.
a) Supply. The most effective way to reduce prices is to build new housing. Space in Barcelona, however, is limited. New apartment blocks and other types of housing are under construction in Barcelona, and the towns nearby, but not enough to reduce prices.
b) Demand. There is a constant, steady demand for housing in Barcelona. People want to live here for several reasons: the climate, the beach, no car needed, highly-rated schools and universities, the diversity of people, lack of crime, range of activities, etc.
c) Surging Rents. Rents in the city are increasing quickly and this trend will continue due to high demand. Plus a lot of housing is devoted to tourists limiting supply even more.
d) Cheap money. Mortgage rates are quite low at app 2.5% fixed for a 25-year loan and banks lend from 50% to 80% of the property's price. There is, however, a 10% sales tax on the purchase so a lot of cash is needed to buy. Nonetheless, a monthly mortgage payment is generally lower than monthly rent.
Compared to other major European cities, flat prices in Barcelona are competitive. They're about the same as in Madrid and Milan, and below Paris, Amsterdam, Berlin, Rome and London. One event that could break the trend of rising prices is an international crisis such as that suffered in 2008. But otherwise, prices will continue to increase. If you can afford to buy, it’s as good a time as ever.
A Spanish resident needs about 33% of the purchase price and a non-resident needs about 50%. (For a definition of Spanish resident see this link). A Spanish resident can get up to 80% financing from a bank, while a non-resident is normally capped at 60%. 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.
It’s not easy because there is no standard or ‘market’ value for property in Barcelona. Each flat or house is too unique; the price of two flats in the same building may vary depending on size, condition, layout, noise level, etc. Further, a history of the prices of recently sold property is not public. As a result, sellers list for the price they want and hope for the best. We judge a property’s price based on what other clients have paid, feedback from owners and agents working in the market and prices on the market now. There are also some online services that provide information.
4. Why should I hire a Buyer’s Agent?
For independent advice and guidance throughout the process. The real estate agents are paid by the seller. The seller pays them a percentage of the property’s sales price, normally from 2 to 6%. The agents form a close relationship with their client, the seller, and it’s part of their job to maximize the sale’s price of their property. The agents also know the property, and its defects, and possess the important property documents. Further, there is very little duty to disclose property defects in Barcelona, in general the buyer buys as is.
A buyer’s agent will correctly investigate the property, its structure and zoning laws to uncover any defects. I normally advise hiring an architect to view the property. A buyer’s agent will also analyze the property documents and explain them to you. Finally, your agent can advise on the property’s price and try to negotiate it down. No guarantees can be made about this, as some sellers refuse to negotiate, but having someone with experience doing this in Barcelona might save you money.
Finally, I’ve found that non-Spaniards are at a natural disadvantage in Spain. First is the language barrier. It’s important that you understand everything that’s going on. Second, the laws governing real estate sales and purchases are quite lax compared to other countries. It’s easy to get confused and taken advantage of.
5. What’s the best way to find an affordable flat?
Find it before it goes online. The best deals are not advertised or are only online a few days. Most people search online portals, such as Idealista and Habitaclia. The problem is everyone else is looking there too so the best deals only last for about a week or less. A more effective way is to go door to door to the agencies. Once you know where you want to live, visit agencies in the area and see what they have for sale, and ask for unlisted properties and leave your name so they can call you if something comes in. Try to find small agencies as they want to save money by selling a property before they have to list it. When searching online you’re competing with the rest of the market, plus you have to call the agent, get an appointment, etc. I offer a search service where I go door to door and call search services, owners and other contacts in the market.
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 flats 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 normally 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 own 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