Purchase or rental in Spain: which option to choose?

Expatriation in Spain tempts you? Warm temperatures all year round, beaches and hikes, are all criteria that will make you cross the Pyrenees border and above all stay there. But you have a crucial question: are you going to rent or buy your property? Each option has advantages and disadvantages. Here are some food for thought that will help you finalize your project.

Rental: affordable and flexible

From a financial point of view, the rental is more accessible than the purchase because it requires no contribution.

Be careful however because rents can go up or down every year. In addition, the owner will ask you for 1 or 2 months deposit and all work is the responsibility of the tenant.

To access a rental in Spain, the administrative procedures are quick and simple. You should :

• open a bank account in the country;
• provide guarantees to your landlord: “downstream” (certificate from your employer or your bank) or “nomina” (salary statements).

But when you rent, everything is not allowed: the authorization of your landlord will be compulsory to carry out work.

In addition, the rental contract binds you to your accommodation: you cannot change it before the term, under penalty of penalties to be paid.

At first, and this in order to avoid moving all your furniture, you may have thought of furnished rentals. Note that it is complicated to find in Spain. In fact, the vast majority of leases of furnished property are intended for seasonal rentals. This induces a regular change of domicile and therefore an unstable situation. This formula will suit some but not others ...

Purchasing: the lasting solution

A purchase in Spain can be advantageous if you have thought about a sustainable installation in this country and if you have a good knowledge of the place.

An investment in stone ensures you a heritage that you can always sell if necessary, especially in a popular country like the Iberian Peninsula. Another advantage: mortgage rates are low. You thus constitute a savings, with monthly payments which are sometimes almost identical to the price of a rent.

However, buying abroad is not easy and therefore requires being sure of your decision.

You will first need to have relatively large personal capital (often 20 to 50% of the total amount) to be able to claim a home loan from a Hispanic bank.

If you opt for an investment in an older property, more accessible than the new, it is advisable to add to the amount of the property, a budget envelope of 20 to 30% for the renovation works.

The procedure for acquiring property in Spain is more complex and more restrictive than in France.

As a non-Spanish national, the first administrative procedure to be carried out will be the request for a NIE (Foreign Identification Number).

Opening a bank account will then be necessary in order to pay a reservation deposit for your future assets. To facilitate the process, the reservation can be signed by the real estate agent, on behalf of the seller. Which can be interesting for a stranger.

You should know that in the Iberian Peninsula, the loan contract does not exist. You must therefore pay a mortgage on your property.

In addition to the notary fees, plan a lawyer fee. In Spain, the role of the notary in a real estate transaction is to register the sale contract. The other formalities being the responsibility of the buyer, the assistance of a lawyer will be very useful, even necessary.

Finally, the withdrawal period does not exist in Spain. If you wish to abandon your acquisition, a penalty may be applied to you.

Also note that the capital gain is taxed at 19% if you want to resell your property within 20 years after signing the sales contract.

Rental could be the preferred solution

Making the decision to go live abroad is not easy and organizing your departure for the unknown is just as difficult. Between spending a vacation in a country and living there, there is often a gap. So if you are not sure whether you will like the chosen location, renting may be the preferred alternative, at least initially. You will therefore keep a fallback solution in your country of origin.

In order to test your expatriation, you can spend the winter months in Spain and the summer months in France. This is the solution adopted by many retirees.

For people going to work abroad, renting rather than buying can also be a solution. Even if you know the duration of your professional mission, you may still be homesick and do not want to return sooner than expected. Breaking a rental contract will then be simpler and faster than the resale of an apartment or a house.

The context of Iberian real estate must also be taken into account. Indeed, even if credit rates fall, selling prices are up. After the real estate crisis of 2008, prices fell but there has been an increasing increase in these for a few years.

In the end, choosing between renting or selling is up to you. You are better placed than anyone to know what is right for you, based on your desires, your financial resources and your vision for the future.

Whichever option is chosen, it will be necessary to enlist the services of a professional specializing in real estate in situ. He has a perfect knowledge of the local market and the regulations in force in the country. He will therefore be your best ally in the success of your project.