Housing in Spain: Should You Rent or Buy?

The amount of foreigners buying property in Spain has tripled in only ten years. 12.6 percent of homes in the country are now estimated to be foreign-owned. But if you are planning on moving to the country, how do you know if it is best to buy or rent?

Both need careful consideration but help is at hand. Read on as we discuss housing in Spain and help you decide if you should buy or rent.

Advantages of Renting in Spain

The Spanish are a nation of people who prefer to own their homes. This means the rental market is fairly sedate. However, this is often offset by the demand for short-term tourist property in the country.

Try Before Buying

Renting a house in Spain lets you try living in the country before you make a long-term investment. Buying a property is a big commitment and you need to know you enjoy the country. Renting for the short term allows you to decide if you do want to stay there.

With relatively few strings attached, you can leave easily if you decide it is not for you. You will have spent little on your outlay and won’t lose money.

Location Flexibility

Not only do you have the option to decide if you want to live in Spain, but you can also try locations. You may decide to visit the bustling cities like Madrid or Barcelona or opt for a country retreat in the Basque. There are also beautiful coastal options on offer.

Spain does have something for everyone. Once you know what type of environment you want to live in, you can visit different areas and settle on a place before investing.

Property Flexibility

As well as locations, Spain property offers a lot of options regarding the type of property you choose. You may decide to go for an apartment in Spain or a villa. This will depend on your preference and needs, but renting will give you the option to try them out beforehand.

Disadvantages of Renting in Spain

Renting in Spain has several disadvantages. However, these are not that dissimilar from the drawbacks that would come with renting anywhere else.

Lack of Stability

Renting does not give you long-term stability. Though there are laws in place to protect renters, with the proper notice the landlord can ask you to leave a property whenever they wish.

Fewer Properties

As Spain is a country of homeowners, you may find fewer properties to rent in certain areas. Many are also taken up by tourists letting in the coastal resorts. If you want to stay here, you may have to take short-term rentals and pay seasonal prices.

Set Time Periods

When you rent a property, you will have a contractual obligation to be in the property for the specified time. Rental contracts will have a minimum duration of one year. The maximum is five.

When the contract duration is up, you must speak to your landlord about getting a renewal. However, they have no legal obligation to grant you one so you should not make long-term plans.

Advantages of Buying in Spain

There are several advantages to buying in Spain. With the property market in the country currently very active it may be better to buy sooner rather than later. The main benefits are listed below.

Investment Potential

When buying a home in Spain you are investing. Even if bought using a loan and you have to pay interest, you will gain equity through appreciation. Once paid off, you have a solid asset to live in without a mortgage, that you can also sell off or rent out.

If you buy a property to rent out, then you can benefit from the large tourism sector in the country. Short-term rentals can provide a very good return on investment. When a company manages this for you, you will have very little to do except collect your money.

Better Living Situation

Many people buy a home to make their own. You can add to it and renovate it in ways you want. This is not possible when you rent a property and the house will always remain someone else’s even though you occupy it.

Buying Is Simple

The process for buying a home is relatively straightforward. If you are not well versed in buying property, this can be a great help. The government encourages foreign investment and a lot of the red tape you may find when buying elsewhere does not exist here.

Excellent Value Properties

Spain has some excellent value properties available, but it won’t stay that way for long. Prices dipped after the global recession but the COVID pandemic saw them rise again. The property market is currently ablaze, so you need to move quickly to get the best value properties.

Disadvantages of Buying in Spain

Many of the disadvantages of buying in Spain depend on your choices and personal circumstances. Where possible we have tried to note who they will apply to within the list below.

Additional Costs

Buying a property anywhere comes with a host of fees and buying a home in Spain is no different. A real estate agent will charge around about a 10% commission fee. 7% in stamp duty needs to be paid along with capital gains tax if you decide to sell.

Prices Are Varied

Prices on property across Spain can have huge variations. Smaller towns and villages have properties that are cheap fix-up homes. Cities and coastal towns can have luxury abodes that start in the million-euro price bracket.

For buyers, this can make it hard to understand what your budget can stretch to. This is where a great real estate agent can step in to help you.

Tax Is Calculated on Worldwide Income

Taxes are inevitable wherever you decide to buy a property. However, the annual tax you pay in Spain is dictated by your worldwide income. If you are earning from multiple locations and travelling between countries, it could end up putting you in a higher tax band.

Considerations to Make

Now you know the advantages and disadvantages, there are a few considerations to make. Each will help you decide on if you should buy or rent in the country.

How Much Do You Have Saved?

If you don’t have the money to buy outright, then you will need to get a loan. In Spain, you can lend around 70 to 80% of the property value. The rest will have to be made up of your savings.

On top of this, you will need around 10 to 15% for taxes. Combined, this means you could need a total of 45% of the property value before taking out a loan. This is a large amount so if you don’t have it, renting may be the only option.

How Long Do You Plan to Stay?

Many people move to Spain for retirement purposes and plan on being in the country for a long time. These instances warrant buying a property for security and investment purposes.

When you are just coming for work, it may be best to rent. If the job does not work out or you don’t like the lifestyle you will not be tied into a long-term property. Of course, you could always rent this out.

Making a Property Offer in Spain

Once you find a property you want, you need to contact the seller’s estate agency. If your offer is accepted, you then enter into a preliminary contract and you will be expected to pay a 10 percent downpayment. Expats can buy any type of property but you need a financial number from the local police station first.

There are also several legal requirements. The buyer is also responsible for many of the preliminary costs.

  • The seller is responsible for any defects in the property even if they are not aware of them.
  • The buyer is responsible for registering the property
  • A notary is not legally required but advised

Other costs applicable to the buyer are dependent upon the region of Spain you buy in. A good estate agent will be able to advise you of these when they show you a property.

There is a range of Spanish banks and lenders that offer mortgages. It helps to shop around beforehand to see who has the best rates and offers.

Finding Housing in Spain

Now you know about buying and renting housing in Spain, you can make an informed decision. In either eventuality, you get the joy of exploring this magnificent country and deciding if you want to make a new life here.

Your first stop for property in Spain should be Five Star Urbanisations. We have a wide range of luxury properties for sale. Contact one of our expert staff here and let us help you settle in this amazing country.



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