How to Buy Property in Spain: What foreign nationals need to know

There’s no denying that there is something special about Spain.  Expats have been relocating to the country for years for the vibrant culture, temperate climate, long sandy beaches and low cost of living.

In fact, Spain has become such a popular haven for expats that in the first half of 2023, 21.4% of property sold was snapped up by foreign nationals.

Buying property in Spain is not for the faint-hearted, however, especially when you are trying to tackle it remotely. 

Read on for tips on how to secure your dream property in Spain. 

Table of Contents

1. Choosing the right location
2. Selecting the right property
3. What is an NIE and how do I get one?
4. Can foreigners get mortgages in Spain?
5. What are the additional costs of buying a property in Spain?
6. Why it is important to seek legal advice when buying property in Spain?
7. What is the role of a Notary?
8. Community of Property Owners regulations and what to watch out for
9. Understnading the Spanish rental landscape
10. What are Golden Visas and how do I get one?

Let’s dive in!

1. Choosing the right location

Spain offers diverse regions, each with its own culture, lifestyle, and property market. When deciding on a region, consider factors like:

• Purpose; are you seeking property for investment, vacation, retirement, or full-time residence? Different goals may lead you to prioritize certain features and locations.

• Accessibility; how easy is it going to be to reach from your home country?

• Amenities; research the availability of essential amenities like supermarkets, medical facilities, schools, and recreational options.

• Climate; Spain offers a variety of climates, from Mediterranean to coastal to mountainous. Choose a climate that aligns with your preferences and lifestyle.

• Property prices and market trends; Analyze the property prices and market trends in your location. Compare these with other regions to gauge affordability and investment potential.

You can find more about locations in Spain suited to expats here.

2. Selecting the right property

You will most likely be overwhelmed by the large selection of properties to choose from so it helps to use a checklist to narrow down a shortlist.  Things you might like to include on your checklist are:

• Property type (apartment, villa, country house etc.)

• Property condition (are you looking for something to renovate or do you want everything done?)

• Property style (heritage, modern etc.)

• Number of bedrooms and bathrooms

• Amenities (swimming pool, garage, a lift etc.)

• Outdoor space (balcony, garden, terrace etc.)

• Outlook and streetscape

If you want to save yourself some time, consider using a local property finder.  Property finders know the local market so are better placed to find a property that meets your requirements. They also have access to ‘off market’ opportunities that you won’t see listed on the major real estate portals which is an added bonus. 

3. What is an NIE and how do I get one?

The NIE (Número de Identificación de Extranjero) is an identification number for foreigners and you will need this number to buy property in Spain and set up a bank account. Depending on where you apply for it, the process can take up to 6 weeks so leave yourself plenty of time.

If you are outside of Spain, you can apply for the NIE at the Consular Office in your country of residence. Note that not all Consular Offices process NIE applications so it is a good idea to check with the office closest to you first.

If you are already in Spain, you can apply in person at the General Directorate of the Police, but only if it has a department for foreigners (extranjeros). These offices are dedicated to managing all matters related to the status of foreigners in Spain, among them, the application for the NIE. 

Whether you are applying within Spain or in your home country, in both instances, the request must be made in person or through an accredited representative who you have given a Power of Attorney. 

To apply for the NIE you will need to complete an EX-15 Form (in Spanish!).  Once you have completed the form you will need to take the original and one copy to either the Consular Office of the General Directorate of the Police if you are applying in Spain and sign the form in front of the official.

Along with the EX-15 Form, the Form 790, code 12 has to be completed online and then printed. This form is a standard form used for paying lots of different taxes and fees so on the form make sure you tick the NIE section (Asignación de Numero de Identidad de Extranjero).

Keep in mind that while the NIE identifies the bearer to all levels of the Spanish public administration, it does not entitle the holder to reside in Spain or prove residence there. 

Foreigners who wish to become residents in Spain must obtain the appropriate visa beforehand. Citizens of the European Union, once established in Spain, must register at the Central Registry of Foreign Nationals.  

4. Can foreigners get mortgages in Spain?

The good news is ‘yes’!  Spanish financial institutions will lend funds to approved foreign nationals but they will only lend up to 70% of the value of the property. You will need to set aside your own funds for the deposit and the other costs associated with acquiring the property. 

While banks are willing to lend to foreign nationals, keep in mind that they will assess your application based on the currency of the income you are generating.  It is easier to get a loan across the line if you are earning Euro’s, GBP’s or US$’s.

The term of a loan with a Spanish financial institution will be shorter for foreigners than Spanish nationals – the maximum period for which you can borrow is normally around 20 – 25 years.  Spanish citizens, on the other hand, can take out loans for up to 40 years.

Spanish banks offer three types of mortgage options – fixed interest, variable interest and a combination of both.  There are no ‘interest only’ loans available in Spain.  The most popular type of loan for foreigners is a fixed rate mortgage. 

In terms of costs associated with setting up a mortgage, you will usually have to pay the valuation fee, around €300 - €500 and the ‘arrangement’ fee (a one-off fee for mortgage lending) which varies from bank to bank but is normally around 1-1.5% of the mortgage.

Due to a new law passed in 2019, Spanish banks are now responsible for paying other setup fees associated with the mortgage such as the registration fee, AJD tax (mortgage deed tax), stamp duty and notary fees.  Previously these costs were passed onto home buyers

Make sure you leave plenty of time to get your loan across the line. The whole process can take 6-8 weeks depending on the lender and type of property you are purchasing.  Given this, it is a good idea to have your paperwork ready to go well in advance.

The most common documents, in addition to your NIE number, you will need to apply for a mortgage in Spain as a non-resident are as follows:

• Copy of your passport

• Your work contract

• The last 6 pay slips

• 6 months of bank statements for the account where your salary is paid

• Bank statement for the savings account which shows the funds needed to complete the purchase

• Tax returns for the last 2 years

• Credit report from your home country

• Reservation contract for the property you would like to purchase

5. What additional costs should I consider when buying a property in Spain?

On top of the asking price, there are other additional costs that you will need to factor in.  These include notary fees, property registration, legal fees, and taxes. You should budget between 11-16% of the property price for these acquisition fees.

Taxes will vary depending on which autonomous community the property is located in and whether it is a new-built property or an established property.  The autonomous communities with the highest taxes for established properties are Cataluña, Valencia, Cantabria and Galicia, all with a 10% tax.  The Basque Country has the lowest tax at just 4%.

6. Why it is important to seek legal advice when buying property in Spain

Unlike other countries, in Spain there is no requirement to have a lawyer oversee a real estate transaction.  Despite, this is it highly recommended that you use one! 

The Spanish real estate market is unregulated and vendors are not obliged to give you all of the information about a property which can expose you to unnecessary risk.

A qualified lawyer who specializes in Spanish real estate can perform a number of essential tasks including conducting a comprehensive title search to ensure that the seller is the rightful owner of the property, reviewing contracts, and ensuring all legal requirements are met to ensure a smooth transaction. They can also perform thorough due diligence on the property, verifying property boundaries, ensuring all necessary permits are in place and that the property and land details match the registered details at the Land Registry.

Part of a lawyers’ due diligence is to make sure that there are no outstanding debts or liens on a property.  This is important as these debts can pass on to you when you become the new owner of the property so it is good you know what you are signing up for, up front.

7. What is the role of a Notary?

If you have started to research buying a property in Spain, no doubt, you will have come across a reference to a Notary.  This role is not unique to Spain but is not present in many other countries so it may be a term that is unfamiliar to you.

A Notary is a trained lawyer who acts as an independent public official and is responsible for authenticating and legalising contracts and agreements.  They also make sure that taxes get paid and that a property transaction is recorded on the Property Register (Registrio de la Propriedad).

They offer impartial assistance to both the vendor and the buyer and ensure that all parties involved in a property transaction understand the documents that they are signing.

The buyer normally pays for the Notary and the fee is around 0.5 – 1% of the purchase price.

At this point you are probably wondering why you need a lawyer and a Notary.  Lawyers and Notaries serve two different functions.  A lawyer will do all of the due diligence and protect your interests.  The Notary, on the other hand, is an independent neutral party there to ensure that the contracts and deeds are in proper order and that the documents comply with the law.  Whereas a lawyer will be with you the whole way through the purchase process, a Notary generally only gets involved at the end of the property transaction when signing the Title Deed.

8. Community of Property Owners regulations and what to watch out for

If you buy a villa or an apartment that is part of a building complex, in most cases it will be subject to Community of Property Owners’ (Comunidad de Propietarios) regulations and fees. It is advised that you understand these regulations and any associated costs before making a purchase.  Importantly, check that the vendor doesn’t have any outstanding debts.  As the new owner of the property, you take on all of the debts that the previous owner had dating back five years which could make for an unpleasant surprise!

It is also worth looking at the minutes from the last two annual general meetings to understand how the Community of Property Owners work and if there is any major expenditure that is being planned.

Another thing to watch out for are regulations that the Community of Property Owners may have in terms of rentals.  A recent trend in some areas has seen Community of Property Owners ban holiday rentals entirely.  If you are intending to generate extra income when you are not living in the property, this could be a huge blow to your plans.  It may also impact resale value if there are similar properties in the area which can be rented.

9. Understanding the Spanish rental landscape

There are some quirks in the Spanish rental system that you should be aware of if you are considering buying an investment property.

If you buy a property with tenants in it, they potentially have the right to remain for up to 5 years (7 years in the case of a legal entity) if they have a long term rental agreement (Arriendo de Vivienda) in place.  The reason being is that long term rentals are governed by Spanish Civil Code and the Urban Leases Law (Ley de Arrendamientos Urbanos) which give tenants the right to lease property for up to 5 years with the option of a 3-year extension. You can terminate a rental agreement early but only under certain circumstances. One of these is if you (or a close relative) need to move into the property and make it your permanent residence. The clause only works if the tenant has been in the property for at least 12 months.  You must also give the tenant at least two months’ notice of your intention to occupy the property and terminate the lease. Something else to be mindful of is that this only applies if the property is in your own name, not the name of a business.

If you are intending to rent a property on the holiday rental market (Alquiler Vacacional) on the other hand, you will need a touristic licence (unless the property already has one).  Touristic licences are governed by each autonomous community and they all have different regulations, in fact, in some areas, you are unable to get touristic licences at all. For example, the city of Barcelona no longer issues touristic licences so if you intend to rent a property on the short-term rental market in Barcelona, you will need to purchase a property that has an existing touristic licence in place.  In other areas, such as Seville, if you want to rent a property on the holiday rental market you need to meet the same requirements as a hotel.

There is a third way to rent out a property and that is with a seasonal lease (Contrato de Arrendamiento de Temporada).  This type of lease is used when a property is rented out for a specific period of time, generally a minimum of 32 days and a maximum of 11 months. This type of lease is governed by the national Urban Lease Law in contrast to holiday rentals which are governed by the local autonomous communities. 

10. What are Golden Visas and how do I get one?

A Golden Visa is a residency-by-investment program that was introduced in Spain in 2013 to attract foreign investors. The program offers non-EU citizens and their families the opportunity to obtain a residency permit by making a qualifying investment in the country.  There are six different investment options, one of which is purchasing property with a minimum value of €500,000 (excluding taxes and transfer costs).  This investment can be split between multiple properties and must be made in cash and not through borrowed funds.

The Golden Visa has a number of benefits:

1. You can get residency permits for you and your closest relatives.  This includes your spouse, unmarried dependent children and dependent parents.
2. Unlike some of the other Spanish visas, there is no requirement to demonstrate proficiency in the Spanish language.
3. You are not obligated to reside in Spain although you will need to be in Spain to renew your permit.  If your long-term goal is to get permanent residency or citizenship, however, you will need to reside in Spain. 
4. Visa-free travel in the Schengen Zone for up to 90 days in every 6-month period.
5. Access to European education.  Your children can study in Spanish schools and universities, both public and private.
6. Access to healthcare. You and your family can receive medical care in Spain and across the Schengen Zone.
7. The Golden Visa gives you and your family the right to work in Spain either as an employee or a freelancer.
8. Ability to gain Spanish citizenship after 10 years.

If this is something that interests you, make sure that you meet the eligibility criteria before you embark on a purchase.

So, as you can see, there are a number of elements to consider when purchasing property in Spain.  If you are looking for a more hassle-free path to home ownership, consider using a specialized buyer advisory like Expat Estate who can find your perfect property and manage the whole purchase process seamlessly from start to finish.

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