Tips for Renting or Buying a House in Spain

Published on 18 July 2024

Spain's real estate market continues to attract foreign buyers, with 131,388 properties purchased by foreigners in 2023, representing 20.9% of the total market. This demonstrates a significant interest from international buyers and underlines the attractiveness of Spain as a destination for expats. The Costa del Sol, the Valencian Community and the Balearic Islands are the most popular regions in Spain. Their favourable climate, lifestyle and relatively affordable property prices compared to other European destinations are the main reasons why.

In the Costa del Sol, Málaga alone accounts for 39% of foreign property purchases, reflecting its popularity among expatriates. Alicante in the Valencian Community boasts an even higher proportion, with 51.4% of property transactions involving foreign buyers. The Balearic Islands also remain a top choice for expatriates seeking a blend of Mediterranean lifestyle and natural beauty.

In terms of the rental market in Spain, especially in coastal areas, there have been significant changes in recent years. Rental prices have risen considerably in many parts of Spain, particularly in the most touristy and coastal areas. This is due to a combination of factors such as tourist demand, limited supply and the increasing popularity of Spain as a place to live. 

Finding a suitable property may take longer than expected and requires patience. Maintaining a flexible attitude and being open to the peculiarities of the local market and culture will always help. Spain boasts diverse and appealing regions for living and vacationing; exploring and discovering different options can be very enriching.

  • Known for its sunny weather and picturesque beaches, the Costa del Sol attracts retirees and tourists alike to places like Marbella, Málaga and Fuengirola. 
  • The capital, Madrid, offers a vibrant cultural scene and robust economy, with sought-after neighbourhoods such as Salamanca, Chamberí and La Latina. 
  • Barcelona boasts iconic architecture, a rich cultural heritage and a Mediterranean lifestyle, with popular districts such as Eixample, Gràcia and Barceloneta. 
  • Valencia combines urban living with beachfront charm, highlighted by attractions such as the City of Arts and Sciences and neighbourhoods such as L'Eixample and Ciutat Vella. 
  • Alicante and the Costa Blanca are known for their mild climate, beautiful beaches and thriving expat communities in areas such as Alicante City, Benidorm and Altea.
  • The Canary Islands and the Balearic Islands are also popular destinations for expats. The Canary Islands offer a subtropical climate, stunning beaches and a relaxed atmosphere on islands such as Tenerife, Gran Canaria and Lanzarote. In contrast, the Balearic Islands, including Mallorca, Ibiza and Menorca, are known for their tranquil coves, vibrant nightlife and charming architecture. 

  • There is also a growing interest in Spain's rural areas, where tranquility, nature and a more traditional lifestyle appeal to those looking to escape the hustle and bustle of the city. These rural regions offer a variety of options, from renovated country houses to large estates, which provide the perfect balance between tranquility and access to modern conveniences.

     

Rental Process 

To find a rental property, you can use online platforms such as Idealista, Fotocasa and Habitaclia, as well as real estate agencies and local networks for a comprehensive search and selection. These will help you to search comprehensively and select the right property. 

Once you have identified potential properties, arrange viewings and negotiate terms directly with landlords or through qualified agents. It is important to ensure that the tenancy agreement is in writing and contains all the essential details, such as the amount of rent, the duration of the tenancy, deposit requirements and responsibilities for maintenance and repairs.

The Urban Leases Act (Ley de Arrendamientos Urbanos) governs tenants' rights in Spain. The deposit for a rental property is typically one to two months' rent. It must be returned at the end of the tenancy unless there is damage or outstanding rent. The new housing law states that rent increases will be capped at 2% in 2023 and 3% in 2024. In terms of maintenance and repairs, landlords are responsible for major repairs, while tenants are generally responsible for minor repairs and ongoing maintenance.

When renting a property, it's important to take certain precautions:

  • Firstly, carry out a thorough background check to verify the landlord's ownership and the legal status of the property. 
  • Secondly, make sure that all terms and conditions are clearly spelt out in the contract before you sign it. It's a good idea to seek legal advice from a solicitor to review the tenancy agreement and ensure that your rights and responsibilities are properly addressed. 

These precautions can help prevent potential problems and ensure a smooth rental experience.

Steps to Purchase, Taxes, and Additional Costs

The process of buying a property involves several key steps:

  • First, you will need to secure funding and obtain pre-approval for a mortgage if necessary. 
  • The next step is to conduct a thorough property search using online portals, estate agents and property exhibitions. We recommend hiring a lawyer (abogado) to carry out legal checks, including a title search and checking for any outstanding debts or encumbrances. 
  • Once you have found a suitable property, make an offer and, if accepted, pay a reservation fee or deposit, usually around 10%. The next step is to sign the private deed of sale (contrato de arras), which details the agreed terms and conditions. 
  • Finally, the purchase process is completed by signing the public deed (escritura) before a notary and paying the balance. These systematic steps ensure a structured approach to buying a property, reducing risk and providing clarity throughout the transaction.

When buying property in Spain, it's also important to consider the various taxes and associated costs. The Property Transfer Tax (ITP) is typically between 6% and 10%, depending on the region and the price of the property. Other costs include notary and registry fees, which are approximately 1% to 2% of the property value and cover legal documentation and registration. Legal fees are usually around 1% of the property price and include the services of a solicitor for the legal aspects of the transaction. Other costs to consider include surveyor's fees, mortgage arrangement fees and moving expenses. Taken together, these costs form an essential part of budgeting for property transactions in Spain.

Property Insurance, Liability Insurance, and Life Insurance

Insurance plays a crucial role in property transactions in Spain, providing essential protection against unexpected events and damage for both owners and tenants. Following insurance options are essential to mitigate risk and provide peace of mind when buying property in Spain:

  • Home insurance is available for both owners and tenants and covers the structure of the property and its contents against unforeseen events such as fire, theft or natural disasters. 
  • Liability insurance is recommended to cover potential legal liabilities arising from property ownership or rental. 
  • Life insurance is often a requirement when securing a mortgage, providing financial security for dependents in the event of unforeseen circumstances such as illness, disability or death. 

Generali offers the best protection for your home in Spain. Generali's home insurance allows you to choose what you really need for your home in Spain, with tailor-made building and contents cover to suit your insurance needs. As long as the contents are included in the home insurance, we also include standard public liability cover for you and your family, which can be extended up to €1 million. 

Moreover we can adapt to any situation, whether you use your home as your primary residence, as a holiday home, or if you rent it out to third parties as a holiday let. At Generali, we offer specific cover for holiday and tourist rentals.

We also provide life insurance with different levels of protection that can be tailored to suit your needs and lifestyle, with some options including capital growth in the event of death or disability due to accident, advance payment for critical illness, international repatriation cover or the option of a 10-year level term insurance.

Feel free to get in touch with us today. Locate your nearest broker or agent here or  request a quote.