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Select a region such as Costa del Sol from the menu on the left and see lists of estate agents in that region.

You'll also find useful information on buying property in Spain and getting a Spanish mortgage.

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Latest news on the Spanish property market

June 2009 - Low property prices could cause tax headache for buyers

Purchase tax on Spanish property is paid by the buyer at the time of completion of the sale. This is currently 7% of the purchase price. However, there can be a sting in the tail for the new owner. When the purchase price is below the price that the tax authorities believe it should be, the authorities can levy an additional tax on the purchaser based on the rateable valuation of the property. Each property has a rateable valuation and this valuation has a multiplier applied which the tax authorities consider the true value of the property. If the purchase price is lower than this true valuation, there can be a significant outstanding tax amount which has to be paid after the sale has been completed.

This power to levy a retro tax was brought in to counter tax avoidance where significant amounts of 'black' money were used in property purchases. It was common practice to pass over large amounts of cash 'under the table' and declare a much lower purchase price than was actually being paid. But the current usage of this power seems to ignore economic realities. The fact is that many properties are genuinely being sold at greatly reduced prices. A number of factors are contributing to this.

There is huge over-supply in the market coupled with a dramatic fall in prospective buyers. The global economic slump and banking crisis have made it very difficult to get a mortgage. The collapse of sterling against the euro has brought severe problems to British owners of Spanish property. Those living in Spain but who are reliant on income from home, for example a UK pension, have seen a drop of around 30% in their disposable income, in a very short time period, making it difficult to meet mortgage payments in Spain. On the other hand, those who remain resident in the UK but have bought property using a Spanish mortgage have seen their monthly payments effectively rise by 30% (they need to spend more pounds to buy the same amount of euros).

The net result of all these factors is that many UK property owners decided to sell up. The weakness of sterling meant they could effectively undercut euro zone property owners by up to 30%. For those lucky enough to be in a position to purchase, the combination of factors has presented the opportunity to genuinely buy at greatly reduced prices, something which the tax authorities seem not to take into account.

Purchasers do have the option to appeal against the higher tax assessment but in practice this is very difficult because it is impossible to prove that there was no hidden cash involved in the purchase.

Until the authorities eventually recognise what is actually happening in the property market, purchasers need to factor into their budget the possibility of having to pay this excess tax. Prospective buyers can protect themselves from a nasty shock by calculating what the full tax liability might be. Check the rateable valuation of the property (available from the local Ayuntamiento) and apply the multiplier (in Malaga, 2 at present but needs to be checked). Thus, real tax liabilty could be 7% of rateable valuation multiplied by 2. At time of purchase, 7% of the purchase price will be payable as part of the purchase process but the tax authorities may later demand payment of the difference between real tax liability and the actual amount paid.

To clarify, the following is an example:

In this example, the purchaser would have needed to set aside an additional 4.2% over and above all other costs involved in the transaction.

April 2009 - Property Slump Continues

It is predicted by the president of G14, a confederation of principal estate agents in Spain, that the number of new homes builders will start this year will be no more than 150,000. That represents a dramatic fall from the 700,000 homes which were started annually during the boom period. However, it will take some time for equilibrium between supply and demand to be restored. The difficulty in borrowing money from banks combined with fear of job loss and a general feeling of insecurity means that very few properties are selling at present and there is a huge catalogue of properties available for purchase. A total of 558,500 thousand homes were sold in 2008 and while this sounds like quite a buoyant figure, the number is nearly 29% down on the 2007 figure.

February 2009 - Rates and prices down

Falling interest rates means good news for mortgage holders. Rates are now at their lowest since October 2005 with mortgages being around 3.5%. This means repayments on an average 25 year mortgage have fallen by 25% from their level six months ago. However, despite the low interest rates, buyers needing to borrow to finance their purchase are finding it difficult to obtain mortgages. This is due to the more cautious approach to lending now being taken by the banks, and indeed to the lack of available funds to give to borrowers.

Both purchase and rental prices continue to fall. Average rental prices in Valencia have fallen by a massive 14.5% in the last year. Tens of thusands of newly built homes remain unsold, and there is little activity in the second-hand market either. But the falling value of sterling against the euro has meant that some British owners can offload their properties at substantially discounted prices and still make a profit on the deal. The weakness of sterling effectively enables those who bought properties with sterling to sell those properties at up to 30% below what they could have sold them for last year and still break even or even make a profit on the deal.

Landsbanski allegation

The fallout from the collapse of the Icelandic bank Landsbanski has reached the Costa del Sol. Landsbanski and two of its subsidiaries are being investigated by a San Roque court following allegations of misleading advertising brought by a legal firm representing 28 victims, all of them British pensioners. It is claimed that products offered were not covered by insurance policies although promotional literature stated that the products were insured. A number of investment resellers are also targeted in the complaint.

Mortgage relief

In an effort to help people who have lost their jobs to keep their homes, the Spanish government plans to increase to three years the grace period allowed for suspension of mortgage payments.

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