Let’s take a look at the main types of property you can consider during your search for a holiday home in Spain. With the exception of one type (which I’ll get to) all should be considered when planning any property viewings.
New Properties
A new property is a home being sold by a builder that has not previously been lived in. There are two options when it comes to buying new properties in Spain.
a) Off Plan
Over the last twenty years, buying property off plan has been by far the most common way to purchase. When demand outstripped supply a build/waiting time of 12 months was quite normal. When the prices in the market were rapidly rising, buying off plan was also the cheapest way to buy as the purchase price was fixed with a deposit. Buying an existing property usually carried a premium, a bit like jumping the queue if you like.
In a slower or more ‘normal’ market, the appetite for off plan properties is very much less. Builders are not so keen to start new projects at the moment and are concentrating on selling their existing stock which costs them far more to keep than an off-plan project.
With few exceptions, only those seeking true, high end, bespoke designed villas are currently looking at off plan properties in Spain. The table has turned and off plan is now the premium cost option. If you are looking for a bargain property in Spain, then there are better ways to buy at this moment in time.
b) Key Ready
When the credit crunch bit, it bit the Spanish property market very hard. The consequence of restricted credit was many builders couldn’t get funding for new and sometimes existing projects. Buyers found it difficult to complete on off plan purchases and generally less people could afford to buy a home in Spain. This downturn resulted in a surplus of housing stock on the market.
A completed new, unsold property aka ‘Key Ready’ property can be an expensive problem for a builder. The builder may have a mortgage on the property, local rates and community fees to pay. For these reasons, many ‘Key Ready’ new homes have been greatly reduced in price in order to sell as quickly as possible. The amount of ‘Key Ready’ properties on the market and more importantly ones that have good reductions is getting smaller all the time, as the market begins to recover and investors once again look to Spain. Homes are sold and builders cash flow improves, leaving less cherries to be picked. There is still a window of opportunity though, so make sure you look in to this this type if you are planning to buy in 2009.
Finca/Farmhouse/Rural Properties
The idea of a small holding or Finca in the country is quite an idyllic one and often the whitewashed old style villa is where you can imagine yourself to be, when daydreaming about your future place in the sun. Without wanting to shatter any dreams, the reality of this type of purchase is somewhat different. There are many legal hurdles to overcome before you can buy and many more potentially waiting for you in the future that you can’t legislate for. (We’ll go in to more detail about ‘Being Safe and Legal’ in the next part of the guide which I’ll send you shortly).
Connection and more often reliable connection to utilities cannot be taken for granted. Not least to mention the property may well need work doing that could potentially cause more stress than it will alleviate. Buying this type of property has undeniable risk attached and should should only be considered if you are prepared to take that risk and potentially invest a lot of time, money and energy in to the project.
Resale (pre-owned property)
The sale of resale properties in Spain has many similarities to the resale market in the UK. Similar in that they come in all shapes, sizes and locations. Similar in that they are being sold for many different reasons, i.e trading up, trading down, births, deaths, marriages, re-locators and those selling for financial reasons. Definitely worth considering and there are some good opportunities on the market at moment.
Bank Repossession Properties
Another unfortunate by-product of the economic downturn has been the repossession of properties in Spain. Two or three years ago banks would often lend up to 100% of the purchase price and now some of these properties are back on to the market as repossessions. Buying a bank repossession is by no means a guarantee of a stunning deal, in fact very often a traditional resale or certainly a ‘Key ready’ property can be a much better value for money proposition. That said, there are still some good opportunities for those wanting to look down this avenue. The best ones come and go very quickly, so you will need to be in Spain and ready to buy to stand the best chance of securing a good deal. Register to receive details of Spanish Bank Repossession Properties
