Your guide to buying property in Valencia
Buying property in Valencia, whether for personal use or as an investment, can be an exciting but stressful time if you are are an expat and not familiar with the process and costs. This article should help you to better understand the property market in Valencia.
Real Estate Market in Valencia
Many investors from the Netherlands and the US find Valencia an attractive market as prices are lower compared to other cities including Barcelona, Madrid, Seville or Malaga. With the current exchange rate on the USD to the Euro, buying property here is even more viable for American investors.
Valencia is the third largest city in Spain, with the second largest port in Spain and with the uncertainty surrounding Catalonia and its quest for independence, the real estate market has seen exponential growth in the last couple of years.
This is not to say this trend will continue as people looking for mortgages will find it extremely costly at the current interest types. If you are looking for a bank to finance your mortgage, you should check the interest rate they are offering and to what percentage they will finance the property. This is because if you are not a resident in Spain with a salaried account, they might only offer up to 40% of the value of the asset.
Banks and Documents
To buy a property in Valencia, you typically need to open a bank account here as you will need to deliver a bankers draft/cheque at the signing of the purchase. In order to open an account here you do not require a NIE (National Identity Card for Extranjeros). You will however need a NIE later at the signing of the purchase. Most banks will open an account online if you are a resident of the EU. You have up to 3 months to submit your identity documents in person after opening an account online. You can apply for your NIE at your local consulate or directly in Valencia by applying for an appointment. Depending on your citizenship, you might be asked to produce documentation indicating your reason for needing a NIE.
Another important factor to consider when investing in real estate in Spain is that if you are buying with own funds versus a mortgage, and are not an EU citizen, you are eligible for a Golden Visa if you invest up to 500,000€ in real estate. The 500,000€ can be invested in more than one asset to become a resident.
Finding a property
Once you’ve determined how you will finance your property, you can embark on the exciting journey of finding the perfect property. Idealista is the largest portal in Spain for buying and renting property. Real estate agencies as well as private sellers use this portal to market their property. You need to keep in mind that if you use an agency, their fees can range anywhere from 1.5%-3%. Most agents unfortunately do not speak English and this might present a problem when trying to navigate the purchase process.
When you identify your potential property, you can pay a reservation deposit (typically between 500€-2000€). It is best to agree with the owner whether you will be refunded this amount should you not go through with the purchase as some owners might withold it. This amount is later deducted from the purchase price.
With the reservation fee, you can ask for the Property Registry document (nota simple) which verifies that the property comes free of all debts (utilities, community charges and property tax or IBI).
It is also best to get a surveyor to check the property and if you are using a bank to get a mortgage, they will appoint one who will also value the house. Should the sale price exceed the value they assign, you should be prepared to pay the difference as the bank will only lend based on this assigned value.
If you are satisfied with the documents and wish to go through with the purchase, the next step is a letter of intent (contrato de arras) which determines the date by which the sale will be completed. Also, you will asked to pay up to 10% of the purchase price at this signing. Should you renege on the sale after this contract is signed, you can lose this 10%. Should the seller not go through, they are liable to pay you double (20%). You should get a lawyer or consultant (gestor) to look over these documents before signing.
The final purchase signing is done before a notary. You or the seller should identify one and set a date, based on the arras contract. The notary checks all documents and deeds related to the property are in order and will go through everything with you before you sign. They also check there is nothing outstanding to be paid in taxes/bills by the seller. If you cannot attend the signing you can assign someone with ‘powers of attorney’.
At the signing, you need to present a bankers draft in the seller’s name and when the contract is signed by both parties, the keys are handed over and you become the proud owner of your home.
Once you have your keys for your new home, you can change the utilities to your name (the notary will have given you this information) and contact your community to inform them of change of ownership.
If you are interested in buying a property for investment, contact us as our team at Dasha Living Space will be happy to help you with the process including managing your investment for you.