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PROPERTY

Property in Spain: What’s it like to build your own house?

Many people move to Spain in the hopes of buying property, but what about those who have decided to build their dream house here instead? We spoke to one reader who has done just that and asked him all about his experience.

Property in Spain: What's it like to build your own house?
What's it like building your own house in Spin? Photo: Jerome Cathaud

Jerome Cathaud undertook the mammoth project of buying a piece of land and building his own house in Spain. He decided on a small town around a 25-minute drive outside of Barcelona because of “its proximity to the city, natural spaces and affordable plots to buy”.

Approximately how long did it take to complete the project?

If I start from the time when I started seriously searching for a plot of land, until the completion of the house to a level where it was liveable, then the project took approximately 2.5 years.

The plot search took around two to six months, followed by six months of negotiations and paperwork until the land was mine. Then it took a further six months to draw up plans for the house and apply for the permit.

Construction took nine months as it was constructed using pre-built wood panels. This wasn’t bad at all, considering a lot of it was done in 2020 during Covid.

Property in Spain: The different ways to buy a home (and their pros and cons)

Did anything surprise you about the process of building a house in Spain?

Many things! Firstly, you cannot get a mortgage for the ‘full project’, meaning if you plan on buying a plot and building a house, the bank will only lend you about 80 percent of the cost of the construction, but nothing for the plot itself.

You should have enough liquidity to buy the plot and then enough to kick start the construction. The positive side of this is that it drives the prices of the plots down, as fewer people can afford a house construction project.

What’s it like to build your own house in Spain? Photo: Jerome Cathaud

In Spain, it also is mandatory to hire an architect to build your house, and their fee will range from €10,000 to €30,000, depending on who you are talking to (and where). It is a significant part of the budget for your project.

A lot of plots defined as residential plots (terreno urbano) where you can apply for a permit and build a house, aren’t actually able to be used. This is because your Town Hall may not currently be granting building licences at this time.

You need to triple-check with the local authorities if they are granting construction permits at the time you want to build or if these permits are ‘frozen’.

READ ALSO: The real cost of buying a house in Spain as a foreigner

Pretty much every professional you talk to will send you a quote without the sales tax included (IVA).

It is very frustrating because you need to add either 21 percent (all the consulting fees, such as the architect), or 10 percent for the construction itself (new constructions only have a 10 percent sales tax, which is quite welcome when you launch a project like this).

What were the most difficult/frustrating things involved in building your own house?

Probably the most frustrating thing, and they were many, was the administrative side of things.

Getting all the permits and licences to build the house was very stressful and slow due to the opacity of the system in Spain. Every town has its own way of dealing with it, and the timing of response is very unpredictable.  

READ ALSO – Property in Spain: What I wish I’d known before buying a rural retreat to renovate

Communication was also difficult between the architect in charge of my project and the Town Hall (Ayuntamiento), everything takes a long time and there is a lot of back and forth between the parties involved because there always is some missing documents or small mistakes from the architects which are holding up the process.

‘Your architect may have great ideas, but it’s your house, not theirs’. Photo: Jerome Cathaud

Applying for a building licence is very paperwork-heavy. Our project (proyecto ejecutivo) was about 400 pages, to give you an idea. On one hand, it is very exhaustive and solid, on the other, it is too complicated and heavy for a simple family house. Thankfully, the architect is the one who is in charge of producing this document.

Therefore not knowing when you will be able to start construction on the house and being kept in the dark by the town administration (and sometimes your own architect) is definitely the most frustrating thing.

What tips and advice would you give to others wanting to build a house in Spain?

  • Do a lot of research on the overall process before starting it, and make sure you have your finances in order.
  • Double-check that you can build on the plot and also check costs related to it (road traffic, landscaping, sewage system, water, electricity lines and internet cables etc.)
  • Negotiate everything and always make sure that contracts/quotes are “definitive” (presupuesto cerrado).

What do you need to know when building your own home in Spain? Photo: Jerome Cathaud
  • Minimise the number of entities involved in the project construction. A construction company that offers llave en mano (key in hand) might be the ideal way forward, however, you will generally pay an extra 20 percent for this.
  • Be very careful about your architect’s design and ideas. You can have a great architect, but never forget that it is your house, not theirs. You are the one who needs to pay for it and you will be the one living in it. Often they might be interested in adding a cool project to their portfolio, but you might not be able to afford it, even though they reassure you by saying it fits in your budget. When it comes to choosing an architect, make sure it’s someone who understands you and the budget you have, and ask to talk to a few of their former clients – if they refuse, run!

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PROPERTY

How to contest the cadastral value of your Spanish property

The cadastral value and cadastral reference of a property in Spain affect various factors including how much yearly property tax and inheritance tax you'll pay. Here's how to change the valuation Spanish authorities give your home.

How to contest the cadastral value of your Spanish property

When it comes to taxes, everyone wants to know if there are ways to pay less. While it’s not always possible, there are certain factors that affect particularly taxes associated with your Spanish property – namely the cadastral value and the cadastral reference. But, can they be changed or rectified?

What is the cadastral value?

The cadastral value is applied to all properties in Spain. It’s the value applied to your property by the Ministry of Finance or Hacienda and serves as a tax base to determine how much IBI tax or Impuesto sobre Bienes Inmuebles you pay for example. This is a yearly tax for all those who own property in Spain.

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

The value will depend on the size of your property, the condition it’s in, the year it was built and the cost of construction, among other factors.

It differs from the cadastral reference, which is an estimate of the market value of a property and is used as a reference for the real estate market. It is also used as a tax base for inheritance and property transfer tax.  

How is it determined?

At the beginning of each year, the cadastral value of homes is reviewed, and as a result, it can increase or decrease. This is why your IBI bill can increase or decrease too. As a general rule, the cadastral value is usually much lower than the market price, but this is not always the case.

How do I find out the cadastral value? 

To know the cadastral value of a property, you must first know the cadastral reference. Then you can find the value in the corresponding public records online. You can find this reference on your IBI bills, as well as on your property deeds.

Once you have this you can go to the electronic headquarters of the Cadastre, and click on ‘reference value’. There you will find all the information about the cadastral reference and the corresponding cadastral value.

Even if you’re not the owner of a property, but want to find out the cadastral value of a property you’re considering buying, you can find it out here.

Can I change the cadastral value of my home?

Yes, it is in fact possible to change the value. If you believe that the cadastral value of your property is too high with respect to the market price of your home, you can request that it be reduced.

You may want to do this in order to lower your IBI bill or if you want to sell your property at a lower price than the market value.

How do I lower the value?

If you believe that you have a case for changing it, you can make a claim to the General Directorate of Cadastre, overseen by the Ministry of Finance. There are two different claims you can make:

  • The procedure for correcting discrepancies
  • The procedure for rectification of material and arithmetic errors.

Procedure for correcting discrepancies

This option is typically used when there is a large difference between the market price and the cadastral value of a property, as well as when there are errors or false data about the characteristics of your home.

To do this, you must go to the Cadastre office in your municipality or apply online at the Cadastre Electronic Headquarters.

Procedure for rectification of material and arithmetic errors

The second option is used when there are errors or incorrect urban planning information, which affects your home. Again you can do this in person or online. In this case, it will have a retroactive effect. If you have paid too much IBI in the past, then it should be returned to you if the application goes in your favour.

Can I change the cadastral reference of my home?

If the reference value of your home is higher than the market value, then you may be wondering if you can change the reference in order to lower your tax base.

Unfortunately, you cannot request changing this in the same way as you can with the cadastral value. But, the good news is that there is a way to challenge it indirectly.

To do this you will need to request an appraisal from a company approved by the Bank of Spain. If the result of this turns out to be lower than the reference, you can try to rectify your self-assessment tax return, providing the appraisal as evidence that you should be on a lower tax base. As mentioned above, this will only affect certain taxes like inheritance or property transfer. 

In order to approve this, the tax office will need a report from the General Directorate of the Cadastre who may be able to rectify the reference and provide a report to settle the matter.

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