Annual costs for running a typical 2 bedroom villa in Spain
are considerably lower than in the UK
Our research has shown that average annual
running costs for a property costing about £70,000
would be as follows
House & Contents Insurance £200.00
Community Fees £
Property values in Spain are continuing
to rise ahead of inflation. According to the company Salvago
Tres, when you analyse the rise in terms of size of the plot
occupied, the cost per each square metre rose by 134.4 euros
(22,364 pesetas) throughout 2001 compared with 101 euros (16,836
pesetas) in 2000.
The highest rise was in the city
of Malaga, where the figure went from 1,039.4 (172,946 pesetas)
per constructed square metre to 1,232.5 euros (205,074 pesetas),
an increase of 18.5 per cent. The figure for Torremolinos,
was similar and five percentage points above the average for
the whole of the province of Malaga, with a figure of 13.4
this year are that prices will continue to rise.
Stamp Duty - there is no stamp duty threshold
as in England and you will be required to pay at the appropriate
rate based on the price of the property.
7% VAT (IVA) is payable on the declared
value of Spanish property purchases.
- This tax is paid to
the local authority and is a form of Capital Gains Tax payable
on the increase in value of the land ( not any buildings erected
on it) since the last purchase.
The obligation to pay
this tax falls on the vendor but he may try to make the Purchaser
pay it. Be careful if the contract refers to the purchaser
paying “ todos los gastos” ( all the expenses of transaction)
in Spain with common elements shared with other properties
are owned outright through a system of co-ownership. Almost
all properties that are part of a development (urbanizacion)
are community properties. Owners of community properties not
only own their own homes, but also own a share of the common
elements of a building or development including foyers, hallways,
passages, lifts, patios, gardens, roads, swimming pools &
other leisure facilities.
Your legal adviser will ensure your community
fees are at the going rate.
- in recent years Spanish
mortgages have been amongst the most competitive in Europe
and interest rates are currently around 4%.
To obtain a mortgage from a Spanish bank
you must usually provide proof of your monthly income
& outgoings such as mortgage payments, rents &
other loans or commitments.
mortgages can be arranged for acquisition, renovation &
construction. Due to the nature of financing new properties
a "letter of intent" is issued by lenders rather
than a mortgage offer until the property is completed. All
mortgages should be fully repaid by the age of 70. Spanish
Banks will happily offer a mortgage of up to 70% of the purchase
price of the property, though 50% and 60% are standard. Repayment
periods are 5, 10 or 15 years as standard.
If you have equity in an existing property,
either in Spain or elsewhere, then it may be more cost effective
to remortgage on that property, rather than take out a new
mortgage for a second home in Spain. It involves less paperwork
and therefore lower legal fees.
Whether you need a mortgage or not, you
will certainly need a bank account to receive and transfer
funds on effecting the purchase of your property and later
on to pay the usual rates and bills. Direct debits are widely
used to pay such outgoings.