Spanish Property - How Much Would You Pay To Own One

[Trampa501]

It'd still be worth renting for 6 months there before buying, to know what you're getting.

I may well be renting a place initially in Madrid from the Autumn, but I won't have the resources to buy there. I've lived/worked out there previously so I know some of the background.

[Peter Hun]

Obviously I'm not talking about cities where work exists like Madrid, more the coast where the British buy. It isn't cheap in Madrid/Barcelona.

[righttoleech]

Obviously I'm not talking about cities where work exists like Madrid, more the coast where the British buy. It isn't cheap in Madrid/Barcelona.

I have noticed that the Usera area of Madrid seems very reasonably priced. This area may not be to everyones taste but it is no worse than any number of working class areas of London and good sized 2 bedroom flats seem to be around 100,000 euros. Maybe these places tend to have short leases and/or high service charges? I would be interested to hear views of anyone with first hand experience.

[Tankus]

I do have some experience of living/working in Spanish cities. Not that getting a rental return overly concerns me, as I'm looking for somewhere to live, instead of forking out 10k a year here in the UK (which may surge in the future if inflation does come back).

Many English teachers (especially the ones new to the game) find it difficult to find suitable places to rent in Spanish cities. Part of this is because there is a natural reluctance to allow tenants into people's property. It has meant that finding a place to rent in somewhere like Madrid is often difficult for Brit/Irish or American expats, and this has been the case for 25 years at least. So the claim that potential yield is 0% and that you probably won't find tenants, is sheer hokum. The only real downside if you want to rent out is that generally August will be empty.

In fact I may well be starting off renting a place in Madrid in the autumn, and finding somewhere suitable that isn't 30 miles away from town, will be my biggest challenge. I don't think alas I'll have the necessary resources to buy in Madrid (it's one place where prices are staying just a bit too high), so I will then look to a cheaper city like Valencia.

Valencia just went bust

http://www.independent.ie/business/european/heavily-indebted-valencia-asks-spanish-government-for-bailout-3174687.html

[Trampa501]

Valencia just went bust

http://www.independent.ie/business/european/heavily-indebted-valencia-asks-spanish-government-for-bailout-3174687.html

I have a good friend in Valencia and he predicted a few years back that the local govt would crash and burn.

It explains why property prices are dirt cheap in Valencia though - I imagine quite a few public sector workers are not getting paid for months at a time.

[Trampa501]

I have noticed that the Usera area of Madrid seems very reasonably priced. This area may not be to everyones taste but it is no worse than any number of working class areas of London and good sized 2 bedroom flats seem to be around 100,000 euros. Maybe these places tend to have short leases and/or high service charges? I would be interested to hear views of anyone with first hand experience.

I still feel 100k is expensive. A lot of people in work have to survive on 15 or 17k. I may be over-optimistic, but outside the central zones (and rich retreats like Hortaleza, SomosAguas or MiraSierra) I would classify 50 or 60k for a 2 bedroom flat as "cheap". No idea if it'll get as low as that in Madrid.

[Trampa501]

House price crash in full swing

bbva fire sale

House prices continue to plummet across the Iberian peninsula, with the ratings agency Fitch predicting a further 15% decline in Portuguese house prices and Spanish banks now vowing to sell-off unwanted stock at rock-bottom prices.

Spain's second-biggest bank, the BBVA, has said it will sell off €8.7m (£6.8m) of residential property on its books by the end of 2014, at whatever price is necessary to shift it.

[zilly]

House price crash in full swing

bbva fire sale

Article you quoted from now corrected - 8.7 billion not million. Quite a lot of bricks. I suppose if you take an average value of 100K euros per property that's 87,000 properties by my maths. That's a massive amount of real estate about to be fire-sold if I'm correct.

Edited August 4, 2012 by zilly

[Nautorius]

Article you quoted from now corrected - 8.7 billion not million. Quite a lot of bricks. I suppose if you take an average value of 100K euros per property that's 87,000 properties by my maths. That's a massive amount of real estate about to be fire-sold if I'm correct.

Given newbuilds are being released with 100% mortgages and big discounts, those private sellers are now looking at year 2002 prices. A 3 bed detached Villa in Estepona on the CDS....€170,000. Clearly older couple wanting to return to UK. A few years ago these were fetching €400k+ (Crazy Prices). Starting to get to a price where I would buy, especially with the exchange rate at 1.20+. Main concern is Tax in Spain....

http://www.barringtonhomes.eu/Estepona-Property/Buenas+Noches-S009.htm

N.

[swissy_fit]

Given newbuilds are being released with 100% mortgages and big discounts, those private sellers are now looking at year 2002 prices. A 3 bed detached Villa in Estepona on the CDS....€170,000. Clearly older couple wanting to return to UK. A few years ago these were fetching €400k+ (Crazy Prices). Starting to get to a price where I would buy, especially with the exchange rate at 1.20+. Main concern is Tax in Spain....

http://www.barringtonhomes.eu/Estepona-Property/Buenas+Noches-S009.htm

N.

So you wouldn't mind the garden fronting onto a dual carriageway? (check the satellite image)

Given that, it's not that cheap IMO.

[swissy_fit]

Duplicate

Edited August 13, 2012 by swissy_fit

[Nautorius]

So you wouldn't mind the garden fronting onto a dual carriageway? (check the satellite image)

Given that, it's not that cheap IMO.

I know where it is. And no, no problem with the dual carriageway. All Villas within 250m (i.e. all Villas around there) suffer from the same noise.

N.

[timebandit]

Given newbuilds are being released with 100% mortgages and big discounts, those private sellers are now looking at year 2002 prices. A 3 bed detached Villa in Estepona on the CDS....€170,000. Clearly older couple wanting to return to UK. A few years ago these were fetching €400k+ (Crazy Prices). Starting to get to a price where I would buy, especially with the exchange rate at 1.20+. Main concern is Tax in Spain....

http://www.barringtonhomes.eu/Estepona-Property/Buenas+Noches-S009.htm

N.

I have lived close to this location a few years ago. Following your post I made an enquiry. Ea reply below try € 126,000, if you think villa worth a punt. Don't forget adding my 10% for soften up the vendors

Hi xxxxxxxx,

I have copied a link to the villa you enquired about on our site. This villa is being sold significantly below the market value as it was inherited and the new owners are looking for a quick sale. We have viewings every day this week and 2nd viewings on Saturday and Sunday. We have already had an offer of 125,000€ which the owner turned down. If you wish to make an offer please feel free to do so. The property is in immaculate condition and is the lowest price for a villa we have ever listed in 9 years.

http://www.barringtonhomes.eu/Estepona-Property/Buenas+Noches-S009.htm

[swissy_fit]

What are all the taxes on a place like that in Spain?

And how is holiday rental income taxed?

[Democorruptcy]

I know where it is. And no, no problem with the dual carriageway. All Villas within 250m (i.e. all Villas around there) suffer from the same noise.

N.

Seems a funny way to look at it.

So if there was a "cheap" house in a row on the edge of a cliff suffering from erosion, it would be OK because all the houses were going to fall into the sea?

[Garb]

3 bedroom flat, 1 bathroom in Granada 24,800 Euros (£19,480). Main drawback here (from what can be gleaned from the web page) is it's 4th floor - and no lift is mentioned

Granada property

It has a lift 'con ascensor' (you can see it in the pics as well) but it doesn't have windows! Looks like it's been stripped of windows and wall sockets (or possibly never finished but it looks too old for that).

Golden rule is rent first. The cheapest place in the town I live in is next to where the rubbish is left every night for collection. You'd never know this unless you lived here or viewed the property after 8pm.

Rent first!

Garb

[Trampa501]

I still feel 100k is expensive. A lot of people in work have to survive on 15 or 17k. I may be over-optimistic, but outside the central zones (and rich retreats like Hortaleza, SomosAguas or MiraSierra) I would classify 50 or 60k for a 2 bedroom flat as "cheap". No idea if it'll get as low as that in Madrid.

With the announcement of the Euro Vegas casino project, I now despair that prices will ever come down to a reasonable level in Madrid. Other parts of Spain yes, but not Madrid.

[Peter Hun]

What are all the taxes on a place like that in Spain?

And how is holiday rental income taxed?

You are taxed on a purchase price specified by the council on the assumption that you paid more and are a crook who is lying about it.

Holiday income is taxed whether you earn it on not (of course you will get very little due to the over supply).

Worldwide taxation is applied, so you pay tax on your UK wealth as well.

Spain will tax you for everything it can and there is no legal appeals process.

With the announcement of the Euro Vegas casino project,

LOL, another fantasy project that will never happen.

Edited September 9, 2012 by Peter Hun

[Trampa501]

LOL, another fantasy project that will never happen.

That's right, Madrid is world famous for big building projects that never happen...

like the 4 towers

Or Terminal 4 at Barajas

See also 80 metro stations in 7 years, or the Rio project, or the underground cross-rail between Atocha and Chamartin...

In fact can you name one project (without googling) that was big news in Madrid, yet never materialised?

I agree, that until the building starts at the end of 2013, there are going to be bargaining and pushing for position, plus the Euro-situation may impact on it, so it's not 100%. But in relation to Madrid, I'm scratching my head to work out what you mean by another fantasy project that will never happen??

[swissy_fit]

You are taxed on a purchase price specified by the council on the assumption that you paid more and are a crook who is lying about it.

Holiday income is taxed whether you earn it on not (of course you will get very little due to the over supply).

Worldwide taxation is applied, so you pay tax on your UK wealth as well.

Spain will tax you for everything it can and there is no legal appeals process.

/quote]

So in the event you pay 100k Euros for a property :-

1. The council can declare it as being worth 250k Euros for their taxation purposes?

2. They will demand a percentage of holiday income whether or not you get any.

3. They will demand tax on UK income that they have no way of knowing anything about.

Sounds a bit far-fetched to me. Got any more precise figures and examples?

I don't doubt that they will tax as much as possible, I guess you have to adapt the approach of lying about everything to the authorities - admit nothing.

[LiveAndLetBuy]

I have noticed that the Usera area of Madrid seems very reasonably priced. This area may not be to everyones taste but it is no worse than any number of working class areas of London and good sized 2 bedroom flats seem to be around 100,000 euros. Maybe these places tend to have short leases and/or high service charges? I would be interested to hear views of anyone with first hand experience.

I live in Arganzuela, which is next to Usera (other side of the river) a bit more central and not much more expensive. Usera is OK (in fact Madrid is remarkable for having very few really horrible areas) but you really need to see the areas for yourself. If you prefer more open spaces then Moratalaz ain't bad and you can pick up 3 bed flats for €60k there. Also there are areas in the centre such as Malasaña, Chueca and Lavapies where you can find property for less than €100k.

You really need to spend at least year renting before buying anyway, and you have to be sure you will be living there for several years. It costs over 10% to buy the property and if you want to sell it it will take over a year, and you will probably have to drop the price. Even after recent law changes, renting in Spain is much better than renting in the UK - rents are cheap, most tennants can't be kicked out for 5 years (3 years after the recent law changes) and the landlord can only increase the rent in line with inflation. Tennants are highly protected.

Also be aware that tax changes coming in over the next 6 months (removal of rebates, VAT increases, and probably worse once Spain gets bailed out) will place further downward pressure on prices. Everyone in Madrid believes prices will by lower this time next year - even the agents have stopped pretending otherwise!

[LiveAndLetBuy]

So in the event you pay 100k Euros for a property :-

1. The council can declare it as being worth 250k Euros for their taxation purposes?

2. They will demand a percentage of holiday income whether or not you get any.

3. They will demand tax on UK income that they have no way of knowing anything about.

Sounds a bit far-fetched to me. Got any more precise figures and examples?

I don't doubt that they will tax as much as possible, I guess you have to adapt the approach of lying about everything to the authorities - admit nothing.

It may seem far fetched but this is true. The Spanish inland revenue have their own way of assessing house prices and use that to tax property purchases rather than what people declare they have paid. It stems from people paying in black money and lying about what they paid. As you'd expect, the inland revenue valuations are above what people are paying these days and it's another reason why the Spanish tend to avoid tax - they get ripped off by the inland revenue!

Regarding the other taxes, they do exist but again people try to avoid them. There are rumours of tax inspectors going around resorts and knocking on doors to see if properties are being let out, and they definitely are checking electricity usage to see whether places are being occupied (I know someone who works for a Spanish electricity company).

You are meant to declare all worldwide income to the Spanish tax authorities, but the UK does have a dual taxation agreement that should mean that you get taxed in one country or the other, but never both. However nobody trusts the Spanish tax authorities so they don't declare anything if they can get away with it (which of course they can).

[LiveAndLetBuy]

With the announcement of the Euro Vegas casino project, I now despair that prices will ever come down to a reasonable level in Madrid. Other parts of Spain yes, but not Madrid.

Nope, prices are coming down in Madrid. Nearly 50% down from peak already and, as mentioned above, austerity measures will push them lower. Eurovegas is years away, will be built out of town, and will be accompanied by yet more house construction. Madrid has an oversupply of property, the banks aren't lending, and nobody has a job. It'll take more than Eurovegas to push prices up for the time being.

[righttoleech]

Nope, prices are coming down in Madrid. Nearly 50% down from peak already and, as mentioned above, austerity measures will push them lower. Eurovegas is years away, will be built out of town, and will be accompanied by yet more house construction. Madrid has an oversupply of property, the banks aren't lending, and nobody has a job. It'll take more than Eurovegas to push prices up for the time being.

Interesting insight LiveAndLetBuy.....thank you.

[Peter Hun]

I agree, that until the building starts at the end of 2013, there are going to be bargaining and pushing for position, plus the Euro-situation may impact on it, so it's not 100%. But in relation to Madrid, I'm scratching my head to work out what you mean by another fantasy project that will never happen??

Spanish banks will have to fund 80% of EuroVegas. As they are asking for at least 60Billion from the Germans to bail out their banking system, it will be like asking the Germans for a loan to build it.

It will never happen.