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Spanish property news: Co-ownership, best mortgages and ‘barrios’ where prices have fallen most

Stay up-to-date on the latest Spanish property news with The Local's weekly roundup. This week we cover how you can co-own a luxury property, the neighbourhoods (barrios) in Spain where prices have dropped the most and what Spaniards are looking for in a new home.

Published: 3 December 2021 10:06 CET
Castellón de la Plana, Spain
Castellón de la Plana in the Valencia region has the neighbourhood where prices dropped the most in Spain. Photo: Joanbanjo / Wikimedia Commons

How to co-own a luxury property in Spain (and is it the same as timesharing?)

Owning a luxury home at a quarter of its market price may seem like an impossible dream, but it can become a reality through co-ownership.

Secconda is a new company that offers the chance to co-own a luxury home and be able to use it throughout the year. So far, the company operates in Spain and the Dominican Republic.

It works by offering customers between one and four shares of the property (which is usually divided into eight shares). This is so that you cannot own more than 50 percent of the home. It’s similar to a timeshare, however there are fewer owners and you own a greater percentage of the property, so that you’re able to use it more than just one or two weeks a year.

The number of days you can use the property is directly related to how much of the property you own, so for example, if you own one share of the property you can use it for 40 days a year and if you own two shares, you can use it for 80. This may be a good option for Brits who want to live in Spain and stay under the 90 days, but who don’t want to deal with the problems of what to do with the house for the rest of the year.  

READ ALSO: Reader question: Can Britons living in EU spend more than 90 days in another Schengen country?

The neighbourhoods in Spain where prices have dropped most

According to property giant Idealista La Zona Auditorio in Castellón de la Plana (Valencia region) is the neighbourhood in Spain where property prices have fallen the most from September 2019 to September 2021. Here, prices have dropped by -28.7 percent.

The Reyes Católicos – Paseo de San Antonio area of in beautiful Cuenca in central Spain comes in second place with decreases of -26.5 percent, followed by Diagonal Mar and el Front Marítim del Poblenou in Barcelona with decreases of -22.4 percent.

However, Diagonal Mar and el Front Marítim del Poblenou were still listed by property agency FotoCasa as one of the 10 most expensive neighbourhoods in Spain this year with property prices of €6,976 per metre squared.

The list of the cheapest neighbourhoods to buy in Spain was topped by Arrayanes-Belén in the municipality of Linares in Jaén (Andalusia) at just €445 / m2 in September 2021. El Baladre, in the Port of Sagunto in Valencia comes in second place at €448 / m2 and Colonia Requena-Virgen del Carmen in Alicante comes in third place at €493 / m2).

September saw the biggest monthly property boom since 2008

With 1,780 houses sold per day, September saw the biggest property boom in Spain since the economic crisis of 2008. The end of the summer was one of the most popular times to buy property and agencies have been seeing a strong increase in interest since the most severe Covid lockdowns at the beginning of 2019.

Accumulated savings, favorable interest rate conditions and changes in life and work habits all contributed to the rise in property purchases in Spain. The ninth month of 2021 saw a total of 53,410 houses sold, which represents an average of 1,780 per day, according to data published this Monday by Spain’s National Institute of Statistics (INE).

The figure reflects an increase of 40.6 percent compared to the same period in 2020, taking into account that at that time the market was still assimilating the impact of Covid-19. The regions with the highest annual increases in home sales in September were Navarra (68.3 percent), the Basque Country (55.9 percent) and Andalusia (54.9 percent). The only region which didn’t see an increase was Extremadura with (-2.4 percent), while Asturias (1.4 percent) and Murcia (19.7 percent) registered the lowest increases.

READ ALSO – KEY POINTS: What to know before buying a property at auction in Spain

Which Spanish banks offer the best mortgages now?

Last September, according to the latest data from the Bank of Spain, the average price of mortgages stood at 1.57 percent APR, the second-lowest value ever recorded. Despite these low-interest rates, there is still a big difference depending on which banks you get your mortgage with, so which are the best?

According to the banking comparison website HelpMyCash.com, BBVA and ABANCA offer the lowest interest rates. BBVA’s fixed mortgage has a lower interest rate for the average client.

This is one percent for up to 15 years, 1.20 percent if you pay the money back in 20 years and 1.30 if it is repaid in 25 years. The variable mortgage with the lowest interest rate is from ABANCA. Its rate is Euribor (the basic rate of interest in the EU) plus 0.85 percent.

During the first year, a fixed interest of 0.85 percent is applied, whereas most banks apply an initial fixed rate of more than 1.50 percent.  

What Spaniards are looking for in a home?

76 percent of Spaniards consider that buying a home is the best way to invest for the future and, of those, 50 percent consider that this option has been strengthened after the outbreak of Covid-19, according to data from a survey conducted by the Vía Célere Housing Observatory.

42 percent of Spaniards plan on moving home in the next five years to find a better property, while those wishing to move to a new neighbourhood to better suit their needs has increased from 22 to 35 percent. 15 percent said that the home confinement and lockdown during the first wave of Covid-19 caused them to discover what they needed from their neighbourhood. 

Those surveyed who prefer a new home to a second-hand one also increased. In 2021, 74 percent of Spaniards preferred new-build homes over second-hand ones, compared to 67 percent who preferred them in 2020.  

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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. 

READ ALSO:

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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