Steps to buy a house in Spain as a foreigner
The fall in the price of free housing in Spain - an average of 13.7% in 2012, according to data from the National Statistics Institute - has put this investment on a plate for foreigners and there are more and more who buy homes in our country. According to the General Council of Notaries, in 2012 the sale of housing to non-resident foreigners in Spain increased by 28.4% over the previous year.
British, Russians, French, Norwegians, Belgians, Germans and Italians are, in this order, those who are currently most interested in buying a house in Spain, especially in coastal areas, without forgetting the Chinese community that mostly buys flats in large cities (Madrid, Barcelona, etc.).
Necessary formalities to buy a house in Spain
The acquisition of a home in Spain by a non-resident foreigner is a fairly simple procedure. It is only necessary to have the NIE (Número de Identificación de Extranjeros). It is a personal, unique and exclusive sequential number that is essential for any type of economic transaction in our country (from opening a bank account to buying a house).
The NIE is granted ex officio by the General Direction of the Police to any foreigner to whom an administrative process is initiated, but it can also be requested as long as the reason of the request is accredited. This request can be made from outside Spain - through the embassy or consulate - or from our country, going to an immigration office or police station.
Once the NIE has been applied for and obtained, the foreigner who is not resident in Spain can start buying the property. It is not compulsory to have a bank account in our country, although it is recommended. All taxes and expenses associated with the purchase of a home (VAT in the case of new homes, ITP in the case of second-hand homes, notary fees, management and registration, as well as the IBI and the rubbish tax) must be paid in Spain and having a bank account facilitates the process.
In our country, there is also the Non-Resident Income Tax (IRNR), which is a direct tax levied on income obtained in Spanish territory by individuals and legal entities not resident in Spain, unless they are taxed via IRPF. It is understood that a person has his habitual residence in our country when he spends 183 days in Spain during the calendar year. In this case, it would be taxed by IRPF and not by IRNR.
How to finance the purchase of a home in Spain
Spanish banks offer financing to non-resident foreigners in Spain without any problem. There are also mortgages designed exclusively for them, such as the UCI Sun Morgage mortgage which offers an interest rate of 4.95% for the first twelve months and Euribor+2.80% for the rest of the life of the loan. The maximum financing for this loan is 70% and the repayment term is 30 years with a 1% origination fee.
However, as reported by the Bankimia bank product comparator, non-resident foreigners can also access the same mortgages that are offered to nationals. The financial conditions are also the same as those applied to Spanish citizens: maximum financing of 80% of the appraisal value or sale of the property and a maximum repayment term of 30 years. The bank will also analyse the applicant's job stability and level of indebtedness.
Another attraction for foreigners who are not resident in Spain and who want to buy a home in our country, not to live there but to rent, is found in the apartments owned by the banks, which are offered with discounts of up to 60%, especially in coastal areas.
These homes owned by financial institutions enjoy not only very competitive prices but also mortgages are very advantageous conditions. Thus, for example, Banco Santander's real estate agency, Altamira, is currently marketing the Altamira Mortgage Loan, which offers a maximum financing of 100% of the appraisal or sale value of the property (the lower of both), a repayment term of up to 40 years, an opening commission of 0.2% and an interest rate of Euribor+1.25%.
The BBVA real estate agency (BBVA Vivienda) also has a mortgage loan on the market that finances 100% of the appraisal or sale value of the property, with a repayment term of up to 40 years, without an opening commission and with the possibility of reducing the mortgage payment by up to 30%.
These conditions are very advantageous with respect to the rest of the mortgages and make it possible to predict that the sale of homes to non-resident foreigners in Spain will continue to rebound during 2013.