The dream of owning a home is still high up in the dream of most Spaniards and Expats. If the purchase of a second hand home is the main option, especially for those who want to live in the Coast, there are other possibilities. Each one presents some advantages and disadvantages that should be carefully considered before starting the search.
New construction: Brand new but... usually far from the Coast
Although the proportion of households living in rented home in Spain has gone from 11% in 2011 to more than 20% last year, we mustn’t forget that the European average is around 30%.
An unpolluted home and in perfect conditions. These are the expectations of those who opt for a new build, high energy efficiency, optimal materials and the incorporation of new technologies. The main advantage of this type of construction is that it does not need any reform and has the latest technology which will help its occupants to control costs, something that will be much noticed in the long term when bills stat to arrive. New furniture, will be required, so you will have to face an extra expense although it can be minimized at the beginning and buying progressively when the economy allows it.
Location, that is, one of the main characteristics to take into account if you want to buy a house, a characteristic which may plays a double role. On the one hand, most new homes are located on the outskirts of cities, since the Coast it is mostly saturated unless you are prepare to pay a fortune for a plot at a few meters from the beach or inside a resort. The advantage is that these new houses usually are larger in size than second-hand homes, since the square meter of construction on the outskirts of cities has a lower price.
Acquiring a home from plans will normally provide us more square meters for our money however we must wait for the construction to be finished, which in some cases can be several years.
It is also quite common that the down payment and the first payments are made when the house is not yet finished, so you will be paying for something that cannot be enjoyed for some time. Therefore, I suggest to acquire legal advice to verify that all agreements between the parties have included guarantees that protect the future owner in case of breach of contract or any defects that may be encountered when the property is handed over.
Second hand: may be smaller, but you can walk right in...
Depending on the time of construction of the house we acquired or the actual conditions that the property may be, we may must spend an additional amount to carry out some type of reform before we can move in. That is why I always advise to obtain a survey report from a good architect.
The necessity to undertake these works it could be for two reasons: on the one hand, aesthetically adapt the space to the tastes of the new owner and, on the other, make those essential improvements typical on homes of a certain age, which could range from providing thermal and/or acoustic insulation, to repair or modernize the electrical system or to renew the plumbing. A good recommendation is to budget extra money for such unforeseen circumstances.
The main advantages of second hand houses is the possibility of entering immediately to live in and thus avoid having an eventual double mortgage and rent expense for a time. The location, which is usually nearby where you really would like to live. Being near the Coast or in the town centre, however, the owner may have to live on a smaller home than he would get on a newly build for the same price.
From a fiscal point of view, both the purchases of first-hand homes and those second hands are taxed. If the first transfers of real estate are subject to VAT 10%, the sale of a second-hand house is taxed by the Transfer Tax (ITP). Depending on the Autonomous Communities, the ITP will vary between 5% and 11%.
It is considered second hand not only those homes that have already had at least one owner, but also those that after the construction have been rented for two years and the new owner is not the former tenant.