Buying Property in Spain: A Detailed Guide for Foreigners

Buying property in Spain is a fantastic life investment. Acquiring a home in one of Europe’s top countries offering a high standard of living not only provides you with a valuable investment but offers the opportunity to secure long-term residency in Spain.

The real estate landscape in Spain has experienced both peaks and troughs, with property prices stagnating and real estate agents reporting few sales. Nonetheless, real estate retention is widely practiced in Spain, and foreigners buying Spanish property can anticipate long-term value appreciation.

Why buy property in Spain?

The Spanish property market stands out among foreigners buying property overseas for several reasons.

Seven reasons to purchase real estate in Spain

1. Buying a property in Spain valued at least €500,000 grants eligibility to one of the most sought-after Golden Visas in Europe and a long-term Spanish residence permit.
2. Own a home in regions with year-round sunny weather and mild winters.
3. Enjoy a high quality of life in a country with a much lower cost of living than the US, Canada, and European countries like France, Germany, and the UK.
4. Acquire real estate in consistently sought-after Spanish tourist destinations, ensuring a steady stream of rental income from vacationers.
5. Compared to the United States and most Western European countries, Spain’s property prices are more affordable, offering good value for investment.
6. Despite occasional market fluctuations, Spanish real estate historically shows long-term appreciation and is primed for continued growth, with an increasing number of Spanish properties sold to foreign buyers.
7. The country is well connected globally, with direct flights to cities throughout the US and worldwide.

Spanish Property Ownership and Market History

A significant majority of the Spanish adult population enjoys homeownership. According to the most recent figures from Statista, 76 percent of Spanish residents own property in Spanish compared to 66 percent in the United States. However, it’s worth noting that homeownership includes individuals living in homes owned by their families.

Spain has a strong cultural preference for homeownership, with many considering it a key aspect of personal and familial success. Past Spanish governments encouraged it, and it’s not uncommon for families to pool resources to help one another buy property.

The culture of homeownership has created a steady appreciation of Spanish property prices. Still, the 2008 financial crisis rocked the Spanish economy, leading to a sharp decline in property values and leaving many homeowners with depreciated assets and economic challenges.

The Spanish property market has since rebounded, although it’s yet to reach pre-global financial crisis levels, meaning foreign buyers have opportunities to invest in one of the best places to buy property in Europe at affordable prices.

Can Americans buy Spanish real estate?

Foreign nationals can buy or rent property in Spain without authorization or restrictions. There are no specific legal requirements for Americans moving to Spain and other foreigners buying property. The Spanish government actively encourages foreign ownership through the Spain Golden Visa program, granting foreign buyers a renewable residence permit by meeting the minimum purchase price threshold.

Americans buy property in Spain by leveraging the accessibility of the real estate market, taking advantage of a wide range of Spanish property types, the streamlined acquisition process for expat buyers, and the right to live in Spain long-term.

While foreigners are free to buy Spanish properties, certain aspects of property buying may be challenging or accessible to only Spanish residents, such as large deposits to secure a mortgage or specific financing options available to those with a Spanish bank account.

How do you buy Spanish property?

There are no restrictions on buying real estate in Spain as a foreigner, whether it’s your first or 20th investment property. You just need to find the right property (either by yourself or using a real estate agent) and make sure that all the paperwork is in order to proceed with the transaction.

Here is a guide on the process of buying property in Spain.

1. Find a property: Searching for property in Spain is relatively straightforward with Spain’s established foreign buyer market. However, finding the right property for you requires careful consideration of various factors. A Spanish real estate agency can assist in finding suitable Spanish Properties for inexperienced foreign buyers. Spanish real estate websites like Fotocasa and even British real estate websites like Rightmove have vast inventories of Spanish properties for sale.
2. Set your budget: All buyers have different circumstances and needs. A foreign buyer may be motivated to purchase Spanish property for a primary residence, vacation home, or investment property. Determine these factors and set your budget.
3. Apply for an NIE: Foreigners buying property in Spain to rent out or live in must obtain a Número de Identificación de Extranjeros (NIE), a foreigners’ tax identification number, which is a crucial requirement for various transactions, including property purchases in Spain.
4. Acquire financing: While there are cash buyers, some investors require financing to purchase property. Buying properties abroad with a mortgage may require more demanding criteria, such as a larger down payment. Speak with a Spanish mortgage provider to find out what’s needed to secure a mortgage as a foreign buyer.
5. Sign a purchase agreement: After identifying the property you wish to purchase, the next step involves signing a purchase agreement, a legal document overseen by the property lawyers representing both the buyer and the seller. In Spain, a purchase agreement, referred to as Contrato de Reserva, temporarily removes the property from the market, providing a specified timeframe for completing due diligence checks and other formalities associated with the purchase.
6. Complete due diligence: Your legal representative will liaise with the land registry office (Registro de la Propiedad) to ensure no outstanding debts are associated with the property. At this point, buyers are recommended to conduct a thorough survey of the house, preferably through an RICS-accredited surveyor.
7. Sign and pay your deposit: As part of the Spanish real estate purchasing process, buyers must sign a preliminary agreement, referred to as the Contrato Privado de Compraventa, and pay a deposit of ten percent of the purchase price. You are generally expected to make the deposit payment within ten days after signing the agreement, although the specific values and deadlines may vary, depending on the purchase agreement.
8. Register new ownership: The purchase is finalized when both you and the seller sign the Escritura de Compraventa, signifying the transfer of the title deed for a house in Spain. With the Escritura de Compraventa, you can register the sale with the Notaria Publica (notary) and pay the land registration fee.

Financing a Spanish Property Purchase

The Spanish banking sector is accommodating to foreigners due to the country’s large expat community, and prominent institutions and mortgage lenders provide diverse mortgage products for both residents and non-residents, including:

• BBVA
• La Caixa
• Santander
• Bankia

Nevertheless, mortgages for non-residents are likely to have more restrictions than those available for full-time Spanish residents. It is common practice for mortgage providers to require buyers to pay a 10 to 20 percent deposit when finalizing house sales. Foreign nationals can expect a mortgage agreement to require a 20 to 30 percent down payment when purchasing a house in Spain.

Based on a quote from Santander for a 65-year-old American retiree purchasing a second house in Spain, the minimum down payment would be 20 percent with a mortgage period of 15 years. Certain international banks offer mortgages to foreign nationals, depending on their nationality and financial circumstances.

Types of Spanish Property

A diverse selection of property types is available in the Spanish real estate market.

Apartments

For city dwellers in Spain, the predominant housing choice is often a flat or apartment, referred to as a ‘piso’ in Spanish. Apartment blocks are featured across the country, with properties varying in quality and size, from compact studios to spacious two-story duplexes and penthouses.

Villas

A fully detached house is known as a villa in Spain. Villas are relatively uncommon among the Spanish population compared to their popularity in the UK and the US. However, villas are littered across the Spanish coastline and in rural areas.

Townhouses

A ‘casa adosada’ is the equivalent of a townhouse in the United States, a compact, dethatched, or semi-detached home. Townhouses often feature communal gardens and shared swimming pools, especially on the coast.

Quad Houses

Spanish quad houses are homes connected on two perpendicular sides to two other houses, each with its private entrance at the front or side. A type of property increasingly popular in Spain, these homes offer a unique blend of privacy and community living.

Cave houses

In the southern regions of Spain, including the renowned Costas in Granada, it is not uncommon to come across cave houses. Known as trogladitas in Spain, most are located in Altiplano de Granada, a mountainous Andalusia region between the Sierra Nevada and the Sierra de Castril. The rock walls of cave homes offer natural insulation and remain pleasantly cool during Spain’s hot summers, contributing to inherent energy efficiency and a distinctive architectural experience.

Where to purchase property in Spain?

You can buy property anywhere in Spain. Ultimately, it comes down to what region you prefer and the lifestyle you want. Below are some of the best places to buy property in Spain.

Costa del Sol

Located in Andalusia, Costa del Sol is one of Spain’s most famous places to get holiday homes. Foreigners are drawn to the amazing climate and fantastic beaches, and you’ll find that life is very relaxed and charming, with plenty of activities and enjoyment available. Málaga and Marbella are also some of the best cities to live in Spain and buy property.

Barcelona

Barcelona is the central city of Catalonia and one of the most famous destinations in the world. The city is multicultural and bustling with cultural activities and entrepreneurial spirit. In a nutshell, Barcelona is a fantastic place to live in and ideally located by the sea. With the city being extremely popular among tourists, it is a very good place to invest in rental apartments. Be aware that real estate property in Barcelona is more expensive than in other Spanish locations.

Madrid

Madrid, the Spanish capital, is famous for having a good work-life balance, offering plenty of jobs and entertainment. It has excellent museums, restaurants, and bars. Its infrastructure and facilities are very developed, making it easy to move around the city. As it is the capital city, real estate prices are higher than average.

Valencia

Valencia is the third-largest city in Spain. Its climate is pleasant and mild, and it is appreciated for its relaxed pace of living – way more peaceful than Madrid and Barcelona. Located close to the sea, Valencia has a large port area with a beautiful promenade filled with bars and restaurants. It is also famous for its many green spaces. The real estate market in Valencia is considerably cheaper than in Madrid and Barcelona.

Balearic and Canary Islands

Famous for their beauty and idyllic beaches, the Balearic and Canary Islands are some of the best places to invest in. Whether in Menorca, Mallorca, Ibiza in the Balearics, or Tenerife in the Canary Islands, you will find fantastic properties right by the sea. Not only is the quality of life outstanding but owning a property brings high returns on investments as, during tourist seasons, demand for rental properties is high.

Finding a House in Spain

As the rules for foreigners buying property to retire in Spain are relaxed, many real estate agents list new and existing properties for sale in Spain. Popular Spanish estate agents include:

• Fotocasa
• Idealista
• Kyero

The overseas buying process is straightforward, particularly through an established British estate agent like Rightmove; however, this comes with its own risk criteria, and foreigners should view any properties they consider buying.

Taxes on Buying Property in Spain

Foreigners and Spanish residents must pay taxes when buying a house in Spain.

Other property taxes

In addition to transfer tax, property lawyer legal fees, land registry, and other fees paid during the purchase process, buyers must pay additional Spanish taxes.

Capital Gains Tax: Capital Gains Tax applies to any profit made from the sale of a property from the original property price. The tax rate is progressive, from 19 to 23 percent. Buyers are eligible for tax relief if the property is their primary residence or they have lived there for several years.

Additionally, individuals over 65 who have lived in their Spanish homes for at least three years are exempt from paying capital gains tax.

Property Tax: Property owners must pay annual property taxes, called Impuesto sobre Bienes Inmuebles (IBI), at a rate ranging from 0.4 percent to 1.1 percent of the property’s cadastral valuation.

Average House Prices in Spain

Below is an estimation of Spain’s real estate market prices per square meter by region, according to Numbeo:

Average house prices: Spain vs the US

Get Residency by Buying Property in Spain

Spain joined the reigns of countries offering Golden Visa programs, granting Spanish property buyers the right to live in Spain. The Spain Golden Visa program allows investors and their families to receive Spanish residency in exchange for an investment in real estate of a minimum value of €500,000.

The initial residence permit is valid for two years and renewable for three, after which permit holders can apply for permanent residency. A total of ten years of residency allows visa holders to qualify for Spanish citizenship and a Spanish passport.

Other Considerations for Purchasing Property in Spain

Spanish translators

The official language in Spain is Spanish; therefore, Spanish properties and entities involved in the sale will likely conduct business in Spanish. Many estate agents speak English, and the Spanish Ministry of Foreign Affairs has a list of accredited translators to assist with legal activities in Spain.

Building insurance

Although not mandatory in Spanish law, a building insurance policy is highly recommended for property owners seeking comprehensive protection and financial security against unforeseen events and potential risks to their real estate investment. While Spain doesn’t suffer from natural disasters like earthquakes, the country is not exempt from other risks such as fire, theft, or structural damage, and certain regions of Spain, including Andalusia, are prone to wildfires.

How Can Global Citizen Solutions Help You?

Global Citizen Solutions is a boutique migration consultancy firm with years of experience delivering bespoke residence and citizenship by investment solutions for international families. With offices worldwide and an experienced, hands-on team, we have helped hundreds of clients worldwide acquire citizenship, residence visas, or homes while diversifying their portfolios with robust investments. 

We guide you from start to finish, taking you beyond your citizenship or residency by investment application. 

Frequently Asked Questions about Buying Property in Spain