Real Estate Market in Spain
After some exploratory trips, you may be convinced that Spain is your next home. The next step would be renting a house in order to know different locations before taking the important decision of buying a property.
How Renting Market Works in Spain
The latest Urban Leases Law (LAU in Spanish) came into force on May 25, 2023, following the approval of Law 12/2023, of 2023, June 24th.
Duration of the Lease Agreement
According to the LAU, the duration of a lease agreement is freely agreed upon by the parties. If it is less than five years, upon the contract’s expiration date, it will be automatically extended on an annual basis until the lease reaches a minimum duration of five years.
However, the tenant may terminate the contract by giving 30 days’ notice before the end of the contract or any of its extensions.
Usually landlords will request at least six months rent. For shorter stays, there are other options (Airbnb among others).
Payment of Rent and Deposit
The rent will be freely determined by the parties. Rent is to be paid monthly and must be made within the first seven days of the month.
When the lease agreement is signed, the tenant must pay the landlord a one-month deposit in cash.
The rent price can be updated annually if explicitly agreed upon. In any case, it cannot be increased beyond the Consumer Price Index (CPI, similar to inflation).
3 Months Upfront
To start renting, you need at least 3 months rent:
- 1 for the first month
- 1 for the real estate agency
- 1 as a security deposit
Rent Price Reference Index
Aims to regulate rental prices in areas, with supply and demand problems.
Only Catalunya has implemented this measure so far.
In order to find an apartment, you can go straight to a real estate agency or search online. Pirvate ads are common. Yet, we recommend that you use an agency for all the paperwork.
General housing websites
The same ones than below for buying a house.
Steps and Expenses When Buying a House
The process of buying a property requires a whole series of time-consuming steps and some resources, especially if we want to achieve a quick and professional purchase. That’s why many people choose real estate agencies to deal with these tasks.
Besides, buying a home involves certain expenses and taxes that we need to take into account. What are they and how much do we have to pay?
Steps buying a house
1st Payment: 3.000 €
Called “Señal”, it secures that the property goes out of the market.
2nd Payment: 10 % price
Called “Arras”, it’s a formal contract sign between the two parties. Shall any party withdraw the agreement, it will lose the money or pay back twice.
It is signed within 1 – 2 weeks after the 1st payment.
3rd Payment & Notary Official Contract
Both parties sign the official contract at a Notary’s office. After that, the contract will be registered at the Properties Official Register.
It usually takes places 1 – 2 months after 2nd payment.
Taxes
See at the right all the expenses and taxes that come with a house purchase
Expenses
| SUBJECT | AMOUNT |
|---|---|
| Real State Agent Fee | 3% 6.000 € minimum |
| Notary | 1.000 |
| ITP Tax – Second Hand | 8% |
| IVA Tax – New House | 10% |
| Register | 500 € |
| AJD Tax | 1,5% |
TOTAL: on average, 10 – 15% purchase price
Can you know the house value?
The difference between cadastral value and market value in Spain lies in their purposes and the way they are calculated:
- Cadastral Value: This is the value assigned to a property by the public administration for tax purposes, specifically by the Dirección General del Catastro. It is determined based on factors such as the location, size, construction, and age of the property. The cadastral value is usually lower than the market value and is used for calculating taxes like the Impuesto sobre Bienes Inmuebles (IBI), among others. Cadastral value is outdated and does not reflect the real price.
- Market Value: This represents the price at which a property would be sold in the open market between a willing buyer and a willing seller. It is influenced by supply and demand, economic conditions, and other market dynamics. The market value can fluctuate over time, unlike the more stable cadastral value.
- Appraisal value refers to the estimated worth of a property as determined by a professional appraiser. The appraisal value is commonly used by banks or financial institutions when deciding on the amount of a mortgage or loan to be granted. It helps ensure that the loan does not exceed the property’s realistic market value. Unlike market value, which is influenced by buyer demand, the appraisal value is an objective, expert evaluation of the property’s worth.
Where do Spanish people buy & rent properties?
Actually, there are no secrets. When buying or selling a property in Spain, the most common methods include real estate agencies, online websites, and traditional word of mouth.
In 2023, Idealista continued to be the leading real estate portals in Spain, experiencing significant search volumes and user engagement. Idealista, the most visited portal, reported around 46.3 million visits per month. You can find up right the bottom to switch to English. Fotocasa saw approximately 13.2 million monthly visits.
It is important to notice that those ads belong to real estate agencies. Selling from private to private is very uncommon. Yet, you can find some private ads in Idealista and in Milanuncios. We highly recommend that you use a real estate agency to deal with all the paperwork.
ONLINE WEBSITES FOR SPANISH PEOPLE
ONLINE WEBSITES FOR FOREIGNERS
