A Guide to Purchasing a Holiday Home in Spain
Spain - A Top Destination for House Hunters
Spain is one of the top locations for those seeking a holiday home. Its warm climate, rich cultural heritage, and laid-back lifestyle make it a desirable location for second homes. Whether you're drawn to the sun-drenched coasts of Costa del Sol, the vibrant cities of Madrid or Barcelona, or the tranquil countryside, purchasing a holiday home in Spain can be a fantastic investment—both for personal enjoyment and potential rental income.
In this blog, we’ll explore the key considerations when buying a holiday home in Spain!
Why Are You Buying?
When buying abroad, start by asking yourself why. Is it for regular holidays, a long-term investment, or a semi-permanent home? Will you need to rent it out to cover costs?
Next, consider rural vs. urban, new vs. old, and whether you prefer privacy or a community setting. Proximity to airports, beaches, supermarkets, and restaurants is key—many buyers want to be within walking distance of cafes to avoid relying on a car.
If relocating with a family, research schooling early, and retirees should check medical facilities. For rentals, think about property size, outdoor space, and popular locations for potential renters.
Popular Regions of Spain
- Costa del Sol: A favourite with property hunters across Europe, the Costa del Sol is one of the continent’s best established summer playgrounds. With its balmy winters and highly developed infrastructure, it’s become increasingly a year-round destination too.
- Costa Blanca: On the Spanish mainland, the Costa Blanca is the most popular place for British property hunters seeking an affordable home in sun. Three of our top five most popular Spanish locations in terms of searches and enquiries are in the Costa Blanca: Torrevieja, Villamartin and Ciudad Quesada.
- Murcia: Murcia, and its coast known as the Costa Cálida, “warm coast”, is becoming more well known as its year-round warmth, affordable property, attractive coves and generally relaxed vibe wins fans among holiday home-hunters.
- Balearics: The Balearics never seem to go out of fashion. With a flight time of a little over two hours from the UK, this stunning clutch of Mediterranean islands are easy to get to, celebrity magnets and are firm favourites with second-home owners from across the world.
- Canaries: If a committee had been set up to design a holiday home paradise, they would probably have invented the Canaries. An archipelago of islands with varying size and geography: sand dunes for some, tropical forests for another, waterfalls for the next, others with all three!
A Snippet of the Spanish Property Market
Following the Covid-19 lockdowns, Spain saw a surge in demand for homes, with foreign buyers purchasing 100,000 properties in the first nine months of 2022—a 44% increase over 2021. The demand for country houses and more space drove prices up, especially in high-demand areas like the Balearics, where prices rose 9%.
While some regions, like Murcia and Almeria, still offer good value, rising mortgage rates and energy costs have introduced uncertainty in 2023, but Spain remains a top choice for buyers seeking investment and a better lifestyle.
The Buying Process
Once you have found your property, the purchase process begins with a reservation agreement. This is a contract that freezes the purchase price and takes property off the market for, usually, 30 days on payment of a fee between €3,000 and €12,000. The deposit is usually held by your lawyer or your agent in a client or escrow account.
Within 10 days of signing the reservation agreement, the full private purchase contract (contrato de arras) is signed between the buyer and the seller. This is similar to exchanging contracts in the UK buying process. Within this time your lawyer should complete all the searches on the property - confirming that the seller own the property being sold, there are no mortgages or charges and that planning consents are in order.
Once both parties sign the main contract, it is binding. The arras contract or full private contract will usually require a 10 to 20 per cent deposit to be paid. The buyer is then committed to pay the balance of the price, and the seller (once the money has been paid) must transfer ownership to the buyer. If the seller pulls out of the transaction, they must return double the amount of the deposit received by way of compensation. If the buyer pulls out, they will lose the deposit paid.
The property sale is formally completed when the title deed (“Escriturade Compraventa”) is signed before a public official called a Public Notary, or Notario. This will happen at their office and be accompanied by the agreed final payment and all the relevant purchase taxes. The Escritura is then presented by the Notary to the Land Registry for registration and the property is passed to the new owner. Final registration of the title deed can take several months.
With a new-build property, obviously completion can take a lot longer, and the payments are split over stages of the build process, and the developer should provide bank guarantees against each payment. This protects your payments in the event the developer fails to complete the property or goes bust. Finally, make sure that you have insurance for your property, ensure all service contracts are in your name(telephone, water, electrics etc.)and register your ownership of the property with your local Town Hall (Ayuntamiento) – all of which your lawyer or agent can help you do!
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