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Property in Spain: How to save money buying a home on the Costa del Sol

Buying a home on the Costa del Sol represents a significant investment, perhaps one of the largest you’ll ever make.

Published: 28 October 2020 09:46 CET
Property in Spain: How to save money buying a home on the Costa del Sol
Photo: AFP

We aren’t just talking about the price of the actual property. Buying Spanish real estate also involves paying taxes and fees, between 8 and 15 percent depending on the price of the property.

Given the size of the investment, it makes sound financial sense to look at how to cut down your expenses.

In this article Celeste Alonso, manager of The Property Agent and an expert on real estate on the Costa del Sol, suggests seven ways to save money when buying a home on the Costa del Sol. 

Between them, they can potentially save you thousands of euros.

1- Tap into expert advice


Photo: AFP

Your first step to save money when buying a home on the Costa del Sol is to take advice from experts in the area. They include:

An estate agent with established roots and experience in your chosen location. Local expertise is vital, especially when it comes to understanding market prices – only a seasoned real estate agent will be able to tell you if a property is really worth its asking price. A good agent will also be useful when it comes to negotiating the price (see below).

A lawyer who speaks your language and defends your interests. Expert legal advice will check your chosen property for charges and planning illegalities, problems that can cost you money, time and stress later on.

Bottom line? Choose an agent who listens and cares about your purchase. This attention to detail will not only ensure you get the home you’re looking for but could save you money during the process.

READ ALSO: 


Photo: AFP

 

2- Negotiate the price

In Spain, haggling forms part of the culture, so there’s always wiggle room on a property price. However, there’s also a fine line between paying less and offending the owner. Go too low, and you risk the seller walking away from the table.

So, before you suggest a sum, tap into some expert advice from your estate agent to help answer the following questions:

Is the property priced to the current market?

A reputable local estate agent should be your first stop for advice on the price. They will be able to guide you on market values and tell you if your chosen property has a fair price. Ask also for examples of recent sales of similar properties. A seller may be more likely to accept a lower price if you can show that comparative homes have gone for less.


Photo by Euan Cameron on Unsplash

 

How motivated is the seller?

Your agent may also be able to give you some background on the seller. Why are they selling? How keen or desperate are they for a quick sale? Circumstances working against the owner, e.g. divorce, debt or mortgage problems, can shift the balance to the buyer’s favour.

How much would a cash purchase lower the price?

Cash is always king and can help you save money when buying a home on the Costa del Sol. If you are a cash buyer (or can be one), see if you can negotiate a lower price in exchange for a quick sale. A seller in a hurry may be willing to knock off a few thousand euros if it means you buy sooner.

Bottom line? Before you go to the negotiating table, decide how high you are prepared to go for the property. If the seller will only accept more than you can afford, be ready to walk away.

3- Bag some extras

Another way to save money when buying a home on the Costa del Sol is to purchase a property with as many extras as possible. They include:

  • Furniture and appliances – even if the furniture isn’t quite your style, you’ll be able to move in straight away and save on initial purchases.
  • Soft furnishings – curtains and blinds can be expensive, particularly if they’re custom made. You could save money if you negotiate their inclusion in the price or make a separate offer for them.
  • Garden furniture and fittings – most properties on the Costa del Sol come with an outdoor space, and you’ll save money if the terrace tables and chairs, pool loungers, barbecue… come included

Bottom line? Extras are only worthwhile if they’re quality. Sub-standard items with high wear and tear will cost you money to get rid of.

4- Get a survey


Photo: AFP

This tip for saving money when buying property on the Costa del Sol might seem contradictory because, after all, a survey costs money. However, the initial outlay can save you a lot of money later on.

Bear in mind that home staging and a fresh coat of paint make a home look fantastic, but they could be hiding a wealth of problems underneath. This is particularly true if you’re interested in an older or rural property. Bring in a surveyor to alert you to possible issues and defects so that you can negotiate a reduction in price with the seller or ask them to fix the fault before they sell.

Bottom line? Only a surveyor will be able to tell you the true nature of those cracks, the state of the roof, the age of the plumbing and electrical installations…

5- Shop around for a mortgage

If you’re buying on the Costa del Sol with a mortgage, spending some time researching what’s available has the potential to save you thousands. To help you see what’s available, use an online comparison tool and take note of the best mortgage deals suggested. Then contact the banks in question and find out what they can offer you.

Bear in mind:

  • The pros and cons of variable and fixed-rate mortgages.
  • Bank commissions for early cancellation, switching to a variable from fixed etc. Read the small print carefully and make sure you understand every clause.
  • Other commitments such as compulsory house and/or life insurance.

All the above can cost you money, so it’s worth spending some time doing the Maths.

Bottom line? With the Euribor in the negative territory now is an excellent time to take a mortgage on the Costa del Sol. 

READ MORE Spanish mortgages: Ten things foreigners should know before getting one

6- Use a currency transfer specialist

If you’re buying on the Costa del Sol with funds from a non-euro currency, transferring the money to Spain from pounds sterling or Swedish krona, for example, can cost you thousands in bank fees. To avoid extortionate bank charges, use a specialist currency firm to transfer funds for your purchase. Not only will you get a better exchange rate than at a bank, but you will also avoid a high commission. Transferwise is a great online tool that converts currencies at the market rate without all the extra costs charged by banks.

Bottom line? Consider looking into an exchange rate. While no one has a crystal ball and can predict what currency rates will do, there are general trends. Committing to a fixed rate for the time it takes you to buy can save you a lot of money.

7- Buying new build or off-plan on the Costa del Sol.

Photo: Niklas Schoenberger 

 

Purchasing a new property on the Costa del Sol is a popular option, and there are currently some excellent new developments under construction. At The Property Agent, we specialise in this type of property and just like resales; you can save money when buying a new home on the Costa del Sol.

Here’s how:

  • Buy offseason

The winter months are the least busy time of the year for off-plan property buying on the Costa del Sol. By extension, this is when you’re most likely to find better discounts. January is a quiet time of the year and a good month to approach the sales office.

  • Negotiate the price

Just like regular homeowners, developers are often open to discussing a price. Even if they refuse to budge on the final price, you may be able to get a special deal on the mortgage or an extra included for the same original price.

  • Change your requirements

If you have your heart set on a particular new development on the Costa del Sol, but your dream home is out of your budget, consider buying a smaller property or one with a different orientation. Slightly smaller floorplans, apartments looking west instead of south or with views over the hills instead of the sea are almost always cheaper.

  • Upgrade the finishes

Even if you can’t negotiate a lower price for your new build, the developer may be open to giving you better fittings and fixtures. You could get quartz worktops instead of granite, Bosch appliances rather than Balay or the air conditioning fully functional instead of the pre-installation. All these upgrades are worth money and add value to your home on the Costa del Sol.

Bottom line? The property market on the Costa del Sol is currently slanted towards the buyer, so there’s plenty of room for negotiation. And of course, if you don’t ask, you don’t get!

Contact the experts

This article has been written by Celeste Alonso, who runs The Property Agent specializing in real estate on the Costa del Sol. If you are looking for property on the Costa del Sol contact her for HERE. 

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PROPERTY

Q&A: What to do if you buy a property built illegally in Spain

Buying an illegally built property in Spain is fairly common but can have several consequences down the line. Here's what you need to know, how to make it legal, whether you can sell it, and the benefits of doing so.

Published: 25 April 2024 09:35 CEST
Q&A: What to do if you buy a property built illegally in Spain

Unfortunately, over the years, many properties have been built illegally in Spain, not adhering to local rules and regulations. Foreigners who don’t know the legislation can easily fall into the trap of buying one of these properties, only to find out later down the line.

Maybe it’s when they come to sell or perhaps it’s when they want to do works or improvements on the property.

There are several reasons a home could have been built illegally in Spain. Firstly, it could have been built on the wrong type of land. This is it could have been built on suelo rústico, rural land where residential properties are prohibited, also called no urbanizable. 

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It could have also been built too near the coast. This is down to the Ley de Costas or Coastal Law, which was brought into force in December 1989 in order to protect the costas from overdevelopment and high rises spoiling the landscape. 

The law defines different areas of the beach and dictates which is public land, owned by the state and which parts can be owned privately and built on.

If you buy or own a house in one of these non-buildable zones, there are many problems you could face down the line, often sooner rather than later. This is because there are several rules you have to abide by concerning works, reforms and extensions. In some cases, they may not be allowed at all and everything must be approved first by the local government by providing a detailed project.

Because of coastal erosion, this issue is getting worse as some shoreside homes that were once built outside of these areas are finding that they’re now illegal.

READ ALSO: 

The house may have also had extensions made to it that were built without a license, meaning that the extra parts are illegal.

Q: How do I know if my home is legal or not?

A: Unfortunately it can be difficult to know if your property is legal or not. You could have bought and signed for it with a notary and it could be inscribed on the Property Registry, but this still doesn’t mean it was built to the correct specification and on the right land.

The only way to truly tell is to find out if your home ever had a Licencia de Primera Ocupación or First Occupation license, also referred to as a Cédula de Habitabilidad or Certificate of Habitability. This means that according to the authorities, it is suitable to live in and has the correct licenses.

READ ALSO: How to get Spain’s certificate of liveability for properties

Q: What happens if my property doesn’t have a habitability certificate?

A: If your property has never had a Certificate of Habitability, you must regularise the legal situation. First you’ll need to start a legalisation file (expediente de legalización) and contact the town hall. Depending on the seriousness of the case (ie. where exactly it was built, if there’s any structural danger, whether the entire property is illegal or just an extension) the cost of making an illegal property legal can be considerable. As such, each case must be studied individually with the help of an expert to determine whether it is even feasible or worth the investment.

The next step is to bring in an architect and check whether the property complies with all the building regulations. If it does, you simply need present the expediente de legalización to your local town hall, who will confirm whether or not the property adheres to building regulations and can be made legal.

If it doesn’t, you’ll need to consider whether it will comply with the regulations after some renovations. If that’s the case, you’ll need to draw up a renovations project document (proyecto de reforma) outlining the proposed changes and how they will adhere to building regulations. It must be presented to the town hall along with your expediente de legalización.

According to law firm Acal, the legalisation process can be broken down into steps as follows:

  • Contact the town hall.
  • Begin with the expediente de legalización when the town hall confirm whether or not the property can be made legal.
  • Pay the corresponding fees and taxes (in this case it will be IBI) depending on your municipality and region.
  • If you need to make renovations, obtain the proyecto de reforma and hire an architect.
  • Obtain a building permit from the town hall.
  • Once completed, register the property in the Land Registry.

READ ALSO: What is Spain’s IBI tax and how do I pay it?

Q: Do I really need to make my property legal?

A: Yes, because it will benefit you in the long run. It doesn’t matter what the previous owner told you when you were originally buying the property, owning a property that isn’t fully legal (or legal at all) can create problems and even lead to fines worth up to 20 percent of the property’s value in extreme cases.

By going through the legalisation process and making the relevant renovations, if necessary, you gain a legal property for all purposes and with all the benefits that entails.

You will not have problems setting up, paying, or cancelling electricity, water or gas utility services. You won’t have to undertake reforms and renovation work unofficially, avoiding the eyes of the authorities. Instead you’ll be able to register your property in the Land Registry, which will make things much easier when you decide to sell it or pass it on.

In terms of selling it, perhaps that is the biggest benefit of legalising your illegal property: by registering it properly, you will be able to benefit from its full value when selling it. When a property is illegal, the appraised value will probably be no more than 40-45 percent of its real value at best.

The renovations needed to get your property in shape to meet the building regulations could be costly, but will they cost you half of the total value of your property? 

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