IT IS often said that a long standing love affair exists between Ireland and Spain. Although it is not surprising when you consider that there are an estimated 78,000 Irish people officially registered as living in Spain, however in reality this figure may be grossly underestimated.
In recent times the price of the Spanish property has not dramatically dropped as some people have suggested. However it is true that housing prices in Spain have only increased 2.2 per cent in 2007, by comparison to 5.8 per cent in 2006. The highest increases reported were in the regions of Murcia (9.4 per cent), Extremadura (9.1 per cent) and Baleares Island (7.8 per cent).
Indeed, while there is a clear process of moderation in the increase of property value, this is far from being bad news. For property purchasers there are now more opportunities than in the last five years, so it is the right moment to do your research without additional pressure.
The Spanish government has recently implemented new policies and laws (such as the Law 8/ 2007 of 28th May regulating the land), with the purpose of combating cases of corruption from local mayors and unscrupulous developers and bringing with that more security to the building sector and therefore to the final purchaser.
With any Spanish property purchase, no matter how streamlined the process may seem, our legal advice for prospective purchasers along the Spanish coastline is to research your investment wisely.
If you are considering investing in this market take your time to familiarise yourself with your chosen area. Ask yourself the following fundamental questions. Are you buying this property for investment or residential purposes? What has the capital appreciation been in the last few years? Does the property have a potential rental scheme if required? Are you buying with the view to early retirement? If so is there an adequate transport system and health services in that area? Never rush into a decision or be pressurised into doing so by an estate agent or developer.
Protect yourself right from the start
Before signing any documents or committing yourself in any way, it is essential that you engage an independent lawyer who can give you proper legal advice. Be careful with so called experts in Spanish Law, your lawyer should be qualified in Spain and have insurance in place. Make sure that your lawyer is acting exclusively on your behalf and be suspicious if the developer insists that you use a particular lawyer.
Prepare your finances
There are advantages and disadvantages of having a mortgage loan in Spain or realising equity from your Irish house. You have to consider the tax repercussions in both countries (there is a double-taxation treaty between Ireland and Spain). Obtain as much clarification as possible on commission, rates and valuation, and be realistic with the type of investment you can afford. The loan offer for non residents can be up to 80 per cent of the market value of the price of the property.
In order to complete a transaction in Spain you must have your NIE, which is the abbreviation for “Número de identidad de extranjero”, an identification number for foreigners. According to Spanish law every foreigner who buys a property in Spain has to obtain an NIE from the Spanish government, regardless of their nationality and whether or not they intend on becoming residents in Spain. Without a NIE the Spanish tax authorities are unable to assess you or process your annual tax payments such as income tax (IRPF) and the annual wealth tax (Patrimonio). Not paying these taxes can result in heavy fines. Therefore it is both mandatory and in your interests to obtain an NIE. If you become a resident in Spain you will need an NIE for all your interactions with the Spanish state.
It is very important to have a Spanish Will in place in relation to you Spanish assets in order to avoid legal problems for your beneficiaries. A Spanish/Irish Will in both languages is advised, and should be registered in Spain at the Registro General de Actos de Ultima Voluntad. Therefore any of your heirs will be completely protected without the need in incurring in higher expenditure once the Will needs to be executed. Again prevention is better than cure.
Alvaro Blasco is qualified as both a Solicitor in Ireland and an Abogado in Spain.
For legal advise on buying in Spain contact Alvaro Blasco Solicitors on 01 5545711 or firstname.lastname@example.org