8 steps to prepare for your investment in Valencia

Invest in Valencia

Are you dreaming of buying a property in Valencia? – But you don’t speak the language and it seems too complicated for you? Are you looking at a large amount of properties for sale in Valencia on the internet and trying to contact agencies but getting no answers from them?

We were there and we would like you to save your time and money when buying a property by presenting you these 8 points of advice you should hear in mind to make this process as smooth as possible.

1. Get to know the area

Buying a property is a big decision and your first homework should be to do your own research. If you don’t know the city and the region we would recommend you to visit Valencia to spend some time here, to ask locals and other expats and to explore the areas of your interest. Your search will be much easier if you already know whether you prefer areas closer to the beach, in the city center, or perhaps, you chose to live outside the city.

2. Property search

Set your requirements; think about what is very important to you and what is optional. Do you want a place that is ready to live in the city or can you accept a house that needs to be renovated? It will significantly facilitate the search. As a first step you can scan the most popular online platforms with houses for sale in Valencia to get an idea of what is on the market: www.idealista.com , www.fotocasa.es

3. Budget

It is important to know what you want to spend. Depending on the budget you have, we can advise you what is available on the market. Once you find the property that you want to buy, you’ll have to transfer the money in Euro from abroad to your Spanish account, ensuring you have prepared your funds on time to avoid delays.

4. Documents

You’ll need a NIE (Número de identidad de extranjero) which is a tax identification number and a Spanish bank account to purchase a property. Consider applying for a NIE as soon as you decide to buy a property, you can contact the consulate in your country in order to see if it is possible to get it before coming to Spain. Otherwise, if you’re not in Valencia, another person authorized with Power of Attorney can do it for you. There are many Spanish banks that open accounts for a non-residents, it is important to do the research to find the best offer. We can help you with that.

5. Purchase cost

On top of the selling price you need to add 12-15% of additional costs for: taxes, commission for agency (it’s very unlikely you can find a direct offer), notary, and other administrative costs. Please have a look at the example we present below to get an idea of the price breakdown.

6. Other costs

As a property owner you need to have in mind other costs that are related to your real estate, these costs will be different depending on whether you have an apartment in a modern building or an older one, this include: property tax paid once a year (in Spanish IBI – Impuesto de Bienes Inmuebles); community charges paid once a month or once in a trimester (in Spanish gastos de comunidad); utilities like electricity, gas, water (in Spanish suministros) paid monthly or every two months, home insurance (not mandatory but recommended) paid once a year. If your property is for rental investment, you should also have in mind management costs. We can prepare an estimate for you.

7. Mortgage

If you need to ask for a mortgage for your investment, please have in mind that the process will take longer as the bank will need to check your credit worthiness. As a foreigner you’re entitled to get not more than 70% of the purchase value and it will also depend on the bank entity. If this is your case, contact us and we can get you in touch with the relevant professionals for a fast quotation.

8. Agents

Please be aware that there are many real estate agencies in Valencia that don’t work on exclusivity. If you find an interesting apartment, don’t be surprised that the same property will be listed by a number of aencies.

If you have already found a property that you’d like to buy, these are the steps that you have to take in order to become an owner:

1. Offer – you will be asked to pay an initial deposit to make a formal offer. It will vary from 500€ to a few thousand euros depending on the property value and the agency you work with. If your offer is accepted this amount will be deducted from the final price, if rejected, you’ll get it back.

2. Property Registry (in Spanish Nota Simple) – you apply to the Public Property Register to inspect if the property is free from any debts and other legal issues.

3. Pre -agreement (in Spanish Contrato de Arras) – there are different types of the pre – agreement but the most common one is called Arras Penitenciarias – once you agree on the price you sign this agreement where you set the purchase date and pay the deposit (most likely 10% of the agreed price). If you withdraw from the deal, you lose the deposit. If the seller withdrows, they will be obliged to pay youdouble.

4. Property surveyor (in Spanish Tasación) – if the purchase requires a mortgage, you’re obliged to appraise the property. Please bear in mind that, if you need a mortgage, the bank will only offer you the amount based on the lowest value.

For example: your agreed purchase price is 150 000€, but the property has been evaluated at 135 000€, so the bank will give you the percentage of 135 000€, so you must double check that you have sufficient funds to complete the transaction.

5. Final purchase contract (in Spanish Contrato Compraventa) – once you have transferred the remaining amount to a seller (normally done by a bank check to the seller’s account), you sign the contract in front of the notary (chosen by you or recommended by the bank in case of mortgage). Based on the new mortgage law, you’ll be obliged to visit the notary twice. If is impossible for you to come to Spain in person, you can authorize a trusted person with a Power of Attorney to do it for you which has to be signed also before the notary. As a final step, the property will be transferred to your name. You’ll get a copy of the documents on the signature date and once everything is processed, you’ll receive the original version (can take up to 2 or 3 months). Keep all the documents safe!

Congratulations! You have just bought your Mediterranean dream house!

Please have a look at the price breakdown below:

FRAME I

Let’s assume you find an apartment for sale in the city of Valencia on the secondary market for 200.000€ Please, bear in mind that these costs are rounded up and my vary.

COSTS OF PURCHASE

1. 7260€ – as a standard 3% plus 21% VAT charged both buyer and seller (can be less) – commission for the agency

2. 20 000€ – 10% – Spanish Transfer Tax (Impuesto sobre Transmisiones Patrimoniales – ITP), in Valencia it is 10% but it’s different in various regions of Spain

3. 700€ – Notary’s fees – as a standard are shared between buyer and seller

4. 400€ Property Surveyor – mandatory if you need a mortgage to buy the property

5. 500€ Property registry cost

6. 1000€ Lawyer (can be less or more depending on the service you require) – it is not mandatory but highly recommended if you’re not familiar with the local law

TOTAL COST 29 860€ (amounts to 13%) = 229 860€

FRAME II

COST OF OWNING A PROPERTY IN SPAIN

*please note that this is an estimate, the amounts my vary.

1. 300€ IBI (property tax) – Calculated on the basis of the valor catastral (cadastre?) (an administrative value that is usually lower than the market value set by the city hall the rate varies from 0.4% – 1.3%

2. 50€ per month Gastos de comunidad (Community charges), the amount will vary depending on whether it is a new or older building; if it has other services, like a pool or concierge the price can be higher

3. 120€ per month Utilities bills (electricity, water, gas) – this amount will vary depending on the month and the number people- living in the apartment, you will use more AC in the summer months and heating in the winter months.

4. 30€ per month Internet (fibra óptica) – there are many providers but if you want to have a decent velocity (300 MB), you have to pay around this amount

5. 150€ per year – Home insurance – depend on the insurance coverage

6. 1000€ per year Personal Income Tax (IRPF) (as a non-resident in Spain you need to pay – annually an income tax and it will vary depend on weather your property is rented out or not)

A. Property not rented out – the tax rate is fixed as 25% of 2% of the valor catastral of the property

200.000€ – Valor catastral for tax purpose

4000€ – Taxable base (2%)

1000€ – PIT (25%)

B. Property is rented out – you’re obliged to declare the income and pay tax – it will be different for each person depending whether you have other income and if there is a double taxation treaty with your country.

IN TOTAL: 3850€ per year

We assume that you now have more clarity on the whole process. As you see, there are a lot of things to be considered. We believe you want this process to be a nice adventure rather than a survival camp so please be patient and consider hiring a property finder who will work for you. 

If you have more questions or doubts, we’re here to help you. If this text is useful, please leave us a comment or contact us. If you are also interested in other topics, we invite you to read our other posts (How to find an apartment for rent in Valencia)

Last updated on 21 February 2023