9 tips for buying a second property in Barcelona
For people in Spain, buying a second property is not very out of the ordinary. 14.3% of Spanish households own a second home, which is more or less double the amount of Italy and France. There are many advantages to being the owner of a second property. Not only do people have a place that they can go to for a getaway, they also can have this property as a form of investment. It is the ideal way of creating a passive income.
Many people rent out their second homes for the majority of the year. The share of households owning a second property with time rises from 35-40 years of age, reaching roughly 20% of homes near retirement age. Currently there are 3.7 million second homes in Spain, which is 14.6% of all housing. Investing in a second home, however, is not easy, therefore we have listed the following ten tips to guide expats through this venture.
Buying a second property in Barcelona
Tip 1: Get to know the market; don’t make assumptions!
It is understandable that if you have already bought property before, you will feel more confident about the purchase of a second property. However, there are many factors to look out for in Spain when buying property. Without the right guidance, it is easy to overlook these matters. Pitfalls for those buying property in Spain include the deposit, purchase tax, off-plan properties, registration of property and the possibility of illegally built properties.
Tip 2: Define your needs and wishes; what is essential to your second property?
Buying a second property can mean that your needs and wishes are completely different from when you bought your first home. It is, therefore, crucial to be very specific about what the expectations for your second property are. Once you have a clear idea of the home that you’re in search of, the right real estate agent will be able to help you with finding your dream home with much more ease.
Tip 3: Buy at the right time; timing is everything!
COVID and Brexit led to the prices of houses in Spain being pushed down incredibly fast, however the market has recovered quite quickly. Nevertheless, it is still a good time to invest in a second property, since there have been some noticeable changes in the Spanish real estate market trends. Many people started working from home during the pandemic and some have stuck to that. Therefore, a lot of people moved out of the city centres. People value space more than before, which is understandable after Spanish residents were stuck in their apartments for a long while during the first full lockdown. Chances are now that it will be less difficult than before to find an apartment in the city. Nevertheless, Barcelona has been a city where many people want to live, therefore the market will always have its competitive elements.
Tip 4: Be careful with a bargain!
This is the case in every country when buying a house, but specifically, in Spain it oftentimes means that something is off. Therefore, it is highly recommended to have a look at the house together with a real estate agent. Though you might not have as big of a budget as with the first home, your second home should be just as comfortable, clean and in good condition. It is a place where you go to escape from your everyday life, so electricity that isn’t working, not having warm water, leakages etc. are certainly not part of that ideal getaway. Moreover, you don’t want to end up with debt, because of all of the repair costs. It happens quite often that internationals become very enthusiastic about the idea of a second home that they tend to look past some of the issues ahead with regard to the property. It is great to be excited and ready to make this investment, however, you don’t want your second home to become a burden to you over time, so approach the matter with caution.
Tip 5: Know its purpose; what are tenants looking for?
If you’re not planning on spending the majority of your time in your second property, then it’s important to consider what other people are looking for in a holiday home. This includes facilities within the home, but also its location and style. Finding the right balance between your own needs and wishes and those of possible tenants will make sure that you will be able to get the most out of your second property, all year round.
Tip 6: Get a professional lawyer/ translator
If you’re purchasing a home in Spain, you should retain the services of an independent Spanish lawyer early on in the process to ensure that your interests are safeguarded. Your lawyer should:
Tip 7: Make a reservation agreement
The reservation contract, or “Contrato de Reserva,” announces your intent to purchase. By paying a reservation fee, the property will be taken off the market temporarily. During the 14 to 21 days when funds are kept in escrow, you have the opportunity to see the property. A purchase contract will be drafted at the same time, and legal checks will be performed. This contract is very critical, therefore you should include conditions before signing it, in case you want to withdraw from the contract.
Tip 8: Have your papers in order
Fortunately, you will have been through the process of buying a house before, so it’s likely that you will be aware of what needs to be in order beforehand. If you’re not from the Eurozone, then it’s recommended to get a Spanish bank account, since your local bank could charge you for converting the currency or wiring funds. To apply for a mortgage in a Spanish bank, you will need the following documents:
- Certificate of salary from your employer of the past 3 months;
- Bank account extract of past 12 months;
- Extract of your credit history bureau;
- Copy of passport;
- 2 certificates of income tax (IRPF);
- Other records verifying the income receipt
Tip 9: Do your checks and sign ‘Contrato de Arras’
When doing your checks consider who is the actual owner of the property and whether the real estate agent has the authority from the seller to offer the property for sale. These might seem like very obvious matters that don’t need to be questioned, however, it is, unfortunately, the case that taking these precautions are necessary. Furthermore, it is important to check whether the property was built with planning permission. Proof only given by a private architect is in this case not sufficient enough in providing the information you need.
Furthermore, it is beneficial to check whether there is a community of owners and whether there are any charges registered against the property. Moreover, it is good to check if the utilities are connected to the property, but also what your ongoing obligations will be. Lastly, it’s important to check whether the property has all the right documentation in place.
Once you have put an offer and the seller accepts it, a provisional purchase contract will be drawn up, also known as ARRAS. After the contract has been drawn up 10% of the total price will have to be paid (minus the amount of reserve) as a deposit within the first 10 days. All parties must be present or have someone acting on their behalf via a notarial power of attorney when the deed of delivery is signed. A bank representative will be present if a mortgage has been requested, and they will continue to arrange the payment. Unless otherwise specified, payment is normally made by check.