Print-friendly version
First Steps
Is buying a property overseas a good idea?
For many of our clients this has been one of the best decisions of their life. The person buying a holiday home sees a huge lifestyle benefit and they often become so comfortable in the area that they later decide to retire there. They usually also see it increase enormously in value over the years. The person retiring finds a better climate, a lower cost of living and, often, a far more active social life than they enjoyed at home. The investor who buys well and takes good advice sees an asset that often performs far better than the stock exchange – and often with less risk.
Buying a property overseas is not for everyone, but it suits a very large number of people. There are now over 800,000 British households that own a property overseas (Source: MINTEL).
Will Spain do well for you? Well, we don't have a crystal ball, but we do have over 20 years experience and regularly advise clients who want to put together a portfolio (large or small) of overseas property investments around the world and who are confused by the huge amount of choice now available to them. Contact us or download our 'Buying Property as an Investment" booklet for more details.
Is the way you buy a house in Spain the same as at home?
No. The systems abroad are very, very different from the English, Irish or US way of doing things.
Generally speaking, however, provided that the appropriate checks are carried out, in most countries there is hardly any more need to worry than there is when buying at home.
Unfortunately, very often people buying property overseas take little or no legal advice and are far too "casual" about the purchase and about the signing of legal documents. If they go about things in this way it can turn out badly. They may find there is no title to the property, that it was built without planning permission. . . or that it does not even exist! DO NOT DO THIS. For your own safety, insist on taking proper, independent, legal advice.
Can you make all the same checks that you would make in Britain?
No. As we have already said, the systems are very different. We can only do what is normal in the country where you are buying the property. We cannot turn this into an 'English' transaction.
Sometimes the local procedure is not as safe as our system. Sometimes it is better. It is always different!
Remember, though, that every year thousands of local people successfully and safely buy houses and apartments.
That is what we set out to do for you.
The role of the estate agent (US: realtor)
Most UK, Irish and US buyers use the services of an estate agent to help them find a property.
Most (but not all) estate agents are, of course, honest, but however honest and helpful they may be you must remember that they are only paid if the property is sold and that they are not able to give you independent legal advice.
Once you have found a property that you would like to buy you will almost certainly be asked to sign some form of reservation or preliminary/promissory purchase contract. It is far better to sign NOTHING until it has been checked by your lawyer. This can, usually, be done quickly – see below.
Be very careful before using the services of the estate agent's "own" lawyers. Are they looking after your interests or the interests of the agent who is providing all their work?
Sales direct from a seller or developer
Increasingly, our clients are buying directly from a seller or developer, without the intervention of an estate agent.
You still need to take all the same precautions.
EVEN SOME MAJOR DEVELOPERS SELL PROPERTY THAT IS ILLEGALLY CONSTRUCTED OR NOT SAFE TO BUY.
The Role of the Notary (Notario)
In most countries in the world the Notary (Notario) plays a major part in the process of buying and selling real estate.
The Notary is an official who is there to put on the public record the fact that the formal documents recording the sale/purchase have been signed in his or her presence and understood by the parties concerned.
The Notary also carries out a number of checks as to the status of the property and/or the buyer and seller. The Notary may act for both buyer and seller.
The Notary will, however, almost always know NOTHING about UK, Irish or US law and, often, has limited English. The use of the Notary is, therefore, no substitute for your own independent legal advice.
Loans & mortgages
Financing the purchase of the property may take several forms. For example:
· a first (or second) mortgage from a UK/Irish/US lender, secured on your existing UK/Irish/US property
· a mortgage on your new Spanish property from a lender in Spain (or, occasionally, elsewhere)
Spanish mortgages are different from UK/Irish/US mortgages.
Mortgages are freely available in Spain. You will, of course, have to meet the bank's eligibility criteria.
At the time of writing typical interest rates are about 1.75 above LIBOR/0.75 above EURIBOR% and a normal Loan to Value ration is about 80%. Most mortgages do not exceed a term of 40 years or age 80 years. Interest only mortgages are generally available.
You should bear in mind that the range of mortgage products on offer to you will not be as wide or as flexible as you are used to in the UK, Ireland or the US.
Choosing the wrong mortgage is an expensive mistake.
Many of our clients discuss their position with us so that they can decide whether a local or an overseas mortgage will suit them best. We can then, if they wish, introduce them to specialist mortgage brokers in their own country or in Spain so that they can arrange the best mortgage for their individual needs.
Structural surveys
As is the case with the purchase of a property anywhere, it is often prudent to have the property you intend to buy surveyed (US: inspected). We strongly recommend a survey, especially in the case of older or unusual properties or in the case of properties that have been extended or modified. Structural surveys typically take 7 - 10 days. The time and cost varies from place to place.
|