ALVARO BLASCO, a Spanish and Irish solicitor working and living in Ireland, answers some of the most common questions in relation to property owners in Spain.
Q: Is now a good time to buy property in Spain? Or shall I wait one or two years?
A:Well not many people could see the crisis coming and nobody knows when it will be over but the prices are definitely much lower now.
I believe it’s great time to buy as there have never been so many good opportunities for bargains out there. However, I think that the prices will still go down or stabilise next few years.
We are in a buyer’s market, and those in the strongest position to take advantage are cash buyers or people who can finance up to 50 per cent of the transaction with their own equity.
The oversupply of the market, the difficulties of many owners to maintain a second property and the liited access to credit means there are lots of bargains out there.
The fact that many builders, developers and purchasers cannot or will not be able to comply with their contractual obligations also brings a wide range of very interesting opportunities for potential buyers.
Q: We are considering buying a house in Spain, should we buy a second hand or off the plan?
A: It all depends on what your real needs are and if you have already a house in mind.
The most important thing is not to rush, as the good options available now will be there for a considerable time.
In general the second hand property market is currently a much safer option. It’s probably easier to find a seller who is offering a house for a more affordable price.
With many builders and developers heavily in debt with banks and suppliers they’re ability to reduce prices will be generally more difficult, but there’s also the advantage of dealing with a reliable developer.
Another advantage is that the total cost of buying second hand is slightly cheaper that off plan. With second hand you generally pay transfer tax at a rate of seven per cent and off the plan you pay VAT (at seven per cent) plus stamp duty, normally at a rate of one per cent.
These taxes are even lower when buying in Canarias Island. However, a survey is a must when buying a second hand property, not only to know the market value but also the real estate of the house.
Q: A few years ago I bought a house with my husband as joint owners and now that we have separated I would like to buy him out. What would be the most profitable way to do so considering that I might need to increase the capital of my current mortgage? Would you advise a ‘novation’ or a ‘subrogation’ with my current bank? And what if I change to another bank, what would I have to do?
A: The removal of the joint ownership by transferring the 50 per cent of the property to the other co-owner has in Spain a lower tax burden than normal transaction with taxes at a rate generally of just 1 per cent..
Apart from that you will have to renegotiate with your bank the terms and conditions of the mortgage, depending on your financial needs.
It’s a good idea anyway to shop around with another financial provider to see it a new loan with another bank is the most profitable option.
The banks are more demanding of new clients by obliging them to pay different commissions and also by incorporating to the loan offer different collateral products such us insurances, credit cards, savings account, etc. So it’s important before making your mind up to have an exact idea of the global cost of each of your financial options.