Costa Del Sol, Spain, the enduring appeal & new practicalities

Dixie is focused upon high-end properties primarily located between Marbella and Sotogrande with budgets typically between €750k – €4m. A member of AIPP – the Association of International Property Professionals – since June 2023, Dixie was joined in the business by her son, Alex, back in 2014. Alex has strengthed and helped grow the business as Head of Operations.

“It is a dream of so many to own a holiday home in a warm climate on the Mediterranean, of course. Others are searching to find a property that can give them a second income and a great return on investment. Then, with the change in working practices, after the pandemic, many are looking to relocate to warmer climes than their native countries. The Costa del Sol is home to many people originating from Northern Europe, British, Scandinavian, Dutch, German etc”.

But why choose the Costa Del Sol instead of other parts of Southern Spain or Portugal?

“Malaga airport is a globally linked hub with flights to all parts of Europe year-round. Many airports in the other touristic areas of Spain and Portugal operate seasonally and flying in and out in the winter can be a challenge. The Costa del Sol also has many traditional established towns like Fuengirola, Malaga, Marbella and Estepona, which makes it a vibrant area to visit, eat and drink all year round. The parts of Spain and Portugal that are more package holiday focused tend to be a lot quieter during the winter.

On the Costa del Sol, most shops, bars and restaurants and beach restaurants are open all year round from Malaga all the way down to Sotogrande. The weather is a key reason for people wanting a holiday home and the Costa del Sol enjoys one of the world’s best year-round climates. Malaga city, the capital of the Costa Del Sol, is a thriving, forward looking cosmopolitan city. Recent international surveys have placed Malaga amongst the finest cities in the world.

The Costa del Sol gives amazing accessibility to the rest of Spain, Europe and Africa. It is only two and half hours by train from Malaga to Spain’s capital Madrid. You can reach the beautiful city of Sevilla in just two and a half hours. You can travel to Barcelona and all of the way through to the rest of Europe from Malaga’s Maria Zambrano station.

From Sotogrande, the beautiful old town of Tarifa is only about 45 minutes away. From Tarifa you can jump on a ferry and be in Morocco in North Africa in less than half an hour. The Costa del Sol is also a golfer’s paradise during the winter months. There are more than 70 golf courses from Malaga all the way down to Sotogrande.”

“People buy properties here for lots of reasons, as I have said. Some move to live permanently, some travel to and from their two homes – one perhaps in Northern Europe and their second home here, on the Costa del Sol”.

If you own a property in Spain but live more than 183 days a year outside of Spain you will be considered a Non-Resident in Spain for Tax purposes.

“You need to pay property taxes in Spain even if you normally pay taxes in your home country. As a Non-Resident you will need to pay a municipal property tax called “IBI’ and you will have to file a yearly tax declaration for your Spanish property to the state tax agency, Agencia Tributaria. The tax that needs to be declared is usually referred to as the “Non-Resident tax” which needs to be filed on a tax form “Modelo 210”. The tax is usually 0,209 0,48 % of your taxable value (Valor Catastral) if you do not rent out your property. If you do rent out your property, you need to declare your rental income and deduct your costs. Our recommendation is to always get help from an expert tax expert to present your tax forms, we can help with that”.

“The costs for buying property in Spain are slightly different, dependent on whether you are buying a brand-new property from a developer or a previously owned property which has been deeded. We call them Resales properties. 

Here is a quick overview of the different costs involved. Don’t forget that we will walk you through these costs. 

Resale properties:

Transfer Tax (ITP) 7% – this is currently a flat rate to encourage growth in the Andalucía region. 

New Properties from Developers:

IVA 10% of price agreed (VAT) and 

Stamp Duty (AJD) 1.2% (this is currently reduced from 1.5%) 

Rest of other costs below are the same for Resales or New Developments:

Notary and Land Registry Fees:

No more than 0.25% of the asking price for both, if the sale of the property is above 1 million, the percentage would be lower. 

Legal Fees- 1% -1.5% of the asking price. 

Mortgage Fees- if you decide to buy the property financed by a bank in Spain you will have to organize a valuation, the cost of this varies from 500€ – 2.000€.

The rest of costs for deeding the mortgage are paid by the bank

Property Survey – It is advisable to instruct a property surveyor to check the current state of installations of the property. The cost of this ranges between 500€ – 2500€ depending on the size of the property and the amount of work required. This cost is usually covered by the buyer. 

Survey is not needed when purchasing a brand new property as you will receive a builders guarantee (Seguro Decenal)

Bank Charges- Transactions of purchase in Spain are usually paid by “Cheque Bancario” (Bankers drafts) which is issued by your bank. The banks charge a fee for issuing these cheques so check with them.

Spanish banks also charge fees when you are transferring large sums of money between countries and/or in other form of currencies. It is highly recommendable to use a currency exchange company who will offer you the best rates on the market and also save you from high transfer costs”.

“Clients approach us every day asking for help in finding the right property for them. But what is the process for buying a property here in Spain? 

Did you know that it is very different to house hunting in other countries. We have access to every single property available for sale on the coast, so you don’t have the hassle of hopping from agency to agency to find the right property. All agents collaborate with each other.

You give us your criteria and then we will use two different portals to search out the properties that fit your requirements. Once you have selected the ones you like, we can set up the viewings. Can you imagine wanting to see 10 different properties in different areas up and down the coast, and all with different agencies? It is a logistical nightmare and it would certainly take the shine off your Spanish house hunting break. Once you have done the fun part and selected the properties you want to see, we will sort out of the logistics. 

When you find the right property for you, the five key steps are…

1. We will draw up a reservation contract which formalizes your serious intent of purchase.
2. You will pay a reservation deposit. Proof of the transfer of this deposit will take the property off the market. 
3. Your lawyer will carry out due diligence on the property. This is to ensure the purchaser that the property is in correct legal order. We usually allow two to three weeks for this. 
4. Next is the private contract. (Sale and Purchase Agreement) at this point 10 to 20% of the purchase price is paid to the vendor. The private contract will contain all the terms and conditions of sale, including any special clauses or inventory. 
5. Completion and hand over of keys at the Public Notary with your choice of lawyer.

It is worth considering setting up a Power of Attorney (POA). 

With your POA your lawyer will be able to take care of transferring utilities, and community payments and all related property matters for your home in Spain. Including signing at the Public Notary on completion day if you are unable to get to Spain. 

There you have it. It always helps to understand the process as you embark on your house hunting journey in a new country. 

Please do get in touch with me if you would like to discuss your interest in a property here on the wonderful Costa del Sol”.

dixie@mitchellspp.com

+34 677 433 728