Are foreign buyers returning to the Spanish property market?

As a consequence of the eurozone financial crisis real estate in Spain is now more affordable than ever with the number of people looking to snap up a bargain increasing, it is claimed. The volume of foreigners buying property in Spain has increased by 18% from last year, according to online Spanish news portal Invertia, and agents are also dealing with more foreign buyers.

‘Improvement of sales in the Spanish property market has primarily come from developments in coastal areas such as Andalucía, with buyer’s request´s to live in close proximity to a beach coming top of the list followed closely by a golf course,’ said Marc Pritchard, sales and marketing manager for Taylor Wimpey España, adding, ‘In November 2012 alone we saw sales increase 144% compared to October. Here at Taylor Wimpey España we are able to meet the needs of customers not only because many of our properties are located in these popular areas but because we can deliver high quality properties for every budget’.

According to the Kyero Spanish House Price Index, for the first half of 2012, Alicante and the Costa Blanca continue to be the most attractive areas for foreign buyers with Malaga following closely behind, generating almost 20% of enquiries.  The most popular properties enquired about were apartments (35%) followed by villas (30%) and in terms of size, both three bed properties and two bed properties were of equal appeal to foreign buyers, each with 32% of total enquiries.

Spanish notaries have forecast a late flurry of home sales in the coming weeks as buyers take advantage of tax breaks that will disappear at the end of the year. Mortgage tax relief ends on 31 December and VAT on new homes increases from 4% to 10% on 01 January 2013. The Spanish government has announced new plans to make buying property more attractive to investors. It is set to abolish a special tax on real estate ownership through foreign companies, with the exception of companies based in tax havens.

As from next year, foreign companies that own property in Spain will no longer have to pay an extra 3% tax on the value of their Spanish property under new rules making their way through the system. The special tax of 3% was originally introduced to discourage people from buying property in Spain through foreign companies but now the government wants to attract more foreign money.

Quote from PropertyCommunity.com : “Is there such a thing as a LEGAL property in Spain?

We have to get a mortgage to buy our dream home in Spain. We are only looking in the area up to Nerja.

So far we have paid three lots of survey fees, only to be told that the property is not registered as it should be. We have enlisted the services of a solicitor, originally in Fuengirola, recommended by a friend, who stopped us from putting a deposit on a couple of places, then a lady in Nerja who has finally got through to the El Borge town hall to find that there are files open on the seller of our latest fiasco which we have been following up for almost three months only to find that we cannot get a mortgage.”

‘Without this tax it can be easier and cheaper to buy, sell, and inherit property in Spain through a foreign company, rather than face the cost and hassle of doing the transaction in Spain. It is particularly useful for people who want to avoid problems with Spain’s inheritance laws, but is only really worthwhile for more expensive properties,’ said Spanish property expert Mark Stucklin of Spanish Property Insight.

‘Foreign company ownership still has other costs like company administration expenses, but this move should bring down overall costs dramatically. It will be particularly welcome news for wealthy foreign buyers looking to take advantage of Spain’s real estate bust,’ he added. The Spanish government is also introducing changes to rental laws and taxation on Spain’s answer to real estate investment trusts, known as Socimi, which will leave these assets highly attractive to foreign investors.