There are major differences between the UK and rural Spain when it comes to buying houses. Some of these are due to different legal processes and some come from the different social and economic conditions.
I can't advise on the legal side - though I would recommend a book called You and the Law in Spain price £19.991. This has chapters on the buying process, as well as other legal aspects of Spain, such as employment law and driving in the country.
Anyway, back to my house buying tips, in no particular order:
Buying a house in Spain is a lot like buying a car in the UK, and in practice you seem to have about the same level of protection. Don't expect people to tell you all the bad things about the property, it's up to you to find them out yourself.
It's your responsibility to find out about any plans or building that could affect your property. This seems to be a hit and miss affair. Sometimes that information will be available from your local town hall, sometimes it may only be held by the provincial government.
Your solicitor is there to make sure the property is bought legally. I haven't found anything like the search process (see above) that UK solicitors go through. They'll check that the seller can legally sell the place and that you pay the relevant taxes, but that's about it.
Surveys are to all intents and purposes non-existant. One reason for this could be the lack of surveyors. If you really don't feel confident with a particular property you might be able to get a local builder to have a look around. However, you won't have any legal recourse if they miss something. You should also be aware that as an outsider, the locals are more likely to stick together. If they have the choice between hacking-off a foreigner or someone they have known all their lives (and could even be related to), guess who will lose. Ultimately if you think a property will need some work, and you can't get anyone to give you a quote/estimate, then find another house - there are plenty of them for sale.
Some estate agents make a big deal about "getting twice your deposit back" and will tell you "it's the law". What this means is that if you make an offer and give the vendor (say)€10,000 as a deposit, then in theory if they pull out, you'll get your €10k back plus another 10k damages. In practice I doubt that anyone, ever, has done this. You'll probably get back what you paid and no more. It's not worth kicking up a fuss, there's no-one you can complain to anyway.
There's an old-fashioned concept called black money. Traditionally when a house changed hands, there was a price declared on the paperwork for the government and another price agreed between the parties, usually for much, much more. The idea was that the vendor would only have to pay tax on the declared amount, while the rest was paid in cash (literally - bundles of notes). These days the practice is much less common. The governemnt have cracked down on it in a big way. they have much better methods for detecting it and the will fine both parties of they discover this type of fraud. On a practical side, if you do pay a proportion in cash, when you come to sell in the future (when the practice is totally eradicated - even in the rural areas) you will get left with the capital gains tax bill on the difference between the documented price you paid and what you sell for. So you're paying the tax that your vendor saved, as well as on your own capital gain. Avoid this practice. If the vendor applies pressure, just walk away - there are lots more houses for sale
The house market in Spain is not like that in the UK. Most brits in the UK own one house and only move when they have another place to go to. That means that sellers tend to be a lot more serious about wanting to sell (particularly now, since they need to shell out for a home information pack before putting the place on the market). In Spain a lot of resale i.e.old, housing stock is a second house - often through an inheritance. This means that the vendor might have it for sale for many years as they are not particularly worried about having to sell it quickly.
A corollary of the above is that a lot of property is priced at pure fantasy levels. The owners have a view that all Brits and Germans are rich, so they'll just wait until one comes along who's willing to pay whatever they are asking.
A second effect of this is that there's very little in the way of an efficient market. In the UK it's easy to set a value on your house: just see what other, similar ones, are selling for in the same area. Since houses in Spain can and do take years to sell, and since a lot of old properties don't have anything they can be compared with, prices tend to be pretty random.
The final consequence of such a slow market is that when you do buy a house it's going to be yours for a considerable length of time. You can't think that if you don't like it - or that Spain's not for you afterall, that you can just sell up and move away. Published data shows that it takes on average 2 - 3 years to sell a house. Since this is an averagesome can take a lot longer, so you've got to be ready to have your capital or mortgage tied up for a significant time. Be very sure the house is what you want, or you could be stuck with it for years.
When you do come to sell, forget about making a profit - you probably won't. In the UK the number of houses being built each year is less than the number needed. This leads to excess demand which is what drives house prices to go up faster than inflation. In Spain, as I mentioned earlier, a lot of property is either inherited or is empty. During the 1960's and 70's vast numbers of spaniards moved away from the countryside, where they would live their lives herding goats, and moved to the cities and the coast to earn vastly higher wages as waiters and in offices. This means that the supply and demand equations don't work. There is no excess demand to push up prices. You will also find that when you bought, you had to pay 7% tax on the house value. When you sell you'll have to pay estate agents fees which are much higer than in the UK (typically 6%). So the 7% buyers tax plus the 6% sellers fees mean that even if you get 13% more than you paid for the house, you'll still only break even.Oh yes, did I mention you'll have to pay capital gains tax on any profit you do make?
While we're talking about money, there are no bargains or "undiscovered" properties any more - you're about 10 years too late. There are a few properties on sale for low prices, and I mean €50,000 here. However, none of them are habitable and will require vast amounts of your time and money to become usable - that's if you can even get permission to rebuild them (see the next point about who's paying the agents). Before you embark on a rebuild, ask yourself if you would do this in the UK? have you ever renovated a house before - let alone in a country who's laws and customs you are unfamiliar with and where you probably don't speak the language. Put aside all the aspirational stuff you might see on TV, that won't be you. If nothing you read here or elsewhere puts you off, have a think about the finance. Take what you'll pay for a ruin and then think what a brand new house in the same location would sell for. Now add in your rebuilding costs, reckon on at least €1000 per sq. metre of house measured around the outside (i.e. not internal floorspace). Is it still worth it, or are you paying hugely over the odds for a house that won't be finished for at least 2 years?
Finally, and this goes for the UK too, but it's worth saying here as people visiting Spain on a shopping trip frequently forget that they're not on holiday - they're planning to spend a greaqt deal of money. Remember who's paying the estate agent and therefore where their loyalties lie. As I've said, fees in Spain are much higher than in the UK and therefore the incentive to get a sale is greater, too. While most agents are genuine, honest people they are under no obligation to tell you when you are about to make a mistake - or if you've overlooked something. There are regulations that agents have to work under, but the descriptions and advice you might get (particularly about renovating old properties or scope for rebuilding/adding extensions) can be, well, doubtful. For example, phrases like "water nearby" means just that: the house has no supply - but it might, just, be possible to get one installed. Similarly "electricity coming" means it has no supply - don't hold your breath waiting for the "coming" to materialise, either. Also if someone answers your question with "I'm sure", mentally think if "I wish" would also make sense in the reply - it could be closer to the truth and remember what I said about buying cars.
1Confession time. If you use this link, I might get a small commission from Amazon - provided enough people buy the book to get up to the minimum payout threshold.
