Holiday homes in Spain

8th March 2010 - written by Jasmine Harman in association with Towergate Connect

Jasmine Harman looks at why Spain, a popular destination for holiday home buyers, has fallen foul of economic turmoil.

Spain has long been the favourite destination for Brits buying abroad, but in the last couple of years, the property market has taken a battering. First there were ‘land grab’ scares, then corruption, and most recently, huge oversupply of property, causing prices to plummet.

During 2009 the number of distressed sales rose dramatically due to the economic crisis and buyers experienced difficulties in raising the finance required to make a purchase. This led to huge oversupply in some areas, which meant that to stand a chance of a sale, vendors have had to slash their asking prices. It’s a buyer’s paradise in Spain at the moment, with sale prices 30-40% below their peak. 

In order to facilitate as many buyers as possible, agents and developers have launched new fangled schemes.  These include rent-to-buy arrangements whereby you pay a deposit, and rent the property for 2 years before deciding whether to complete the purchase. If you decide to go ahead, your deposit & rent go towards the pre-agreed purchase price. 

If you want to bag a bargain in Sunny Spain, here is a guide to how the process works. The first step is to ensure you can raise the finance and know exactly what your budget is. Many lenders are only willing to loan a maximum of 60% of the asking price, so you’ll have to cover the rest, plus all the associated costs.

When you make an offer you will normally be asked to pay a small holding deposit, whilst your lawyer carries out searches and the sales contract is drawn up. This is a legally binding document and will contain details of the agreed deposit, price, and completion dates.

You will pay a full deposit (normally 10%) upon signing, and if you subsequently breach the contract, you’ll forfeit your deposit. However, if the vendor breaches, they must pay you double your deposit. It is a very fair and secure system, and eliminates worries such as gazumping or cold feet… It is at this point that you should take out a comprehensive insurance policy on the property, as whatever happens now, you can’t back out!

On top of the purchase price, you will incur costs of around 10-12% in fees, comprising of Legal fees, notary fees, land registry, searches, stamp duty equivalent or in the case of a new build, VAT equivalent and other taxes. Notary and property registration fees are based on a sliding scale depending on the value of the property.

Brits love Spain for its sunny weather, beaches and cuisine. Plus with rail connections and cheap flights in abundance, it’s easy, quick and usually cheap to get there.

Towergate Connect and Jasmine Harman

Towergate Connect has selected one of the UK's most high-profile travel celebrities, Jasmine Harman, who is best known for her work on Channel 4's 'A Place in the Sun - Home or Away', to contribute towards regular news and views articles to our website.