- In 2022, foreigners -especially British, German and French- were the main buyers of property in Spain, with a total of 88,858 sales, reported the Colegio de Registradores.
- According to Uri Geigle, lawyer and founding partner of DAUSS, the legal framework and the geostrategic location in Spain are among the two aspects that encourage the greatest interest in operating in the country.
July 2023.- Despite the instability of the economy in Europe, inflation is decreasing in Spain and the country continues to establish itself as one of the destinations for foreign investors, which in 2022 accounted for 13,75% of all home purchases, as reported by the Colegio de Registradores.
Among the reasons behind this trend is Spain’s stable and transparent legal framework, which guarantees legal certainty in real estate transactions. The laws and regulations in place provide protection for both buyers and sellers; furthermore, government policies favorable to foreign investment have strengthened the country’s reputation as a viable and attractive destination, partly due to programs like the Golden Visa.
“The Spanish real estate market has become an attractive destination for international investors due to its legal stability and transparency”, says Uri Geigle, lawyer and founding partner of DAUSS, who also points to the legal advantages offered by Spain, together with its economic recovery and price-quality ratio in the real estate market, which establish a safe and profitable investment framework.
Reasons for the increase in foreign investment
Along with more traditional elements such as the favorable climate and culture, Spain also stands out for its investment-friendly environment after recovering from the recent economic crises with a notable improvement in economic stability and sustained growth, which provide confidence in operations.
In terms of the real estate market, Geigle explains that “the price level continues to be much more attractive in Spain than in other European countries”, presenting a great opportunity for those seeking long-term profitability.
Also, the wide variety of properties available, from apartments on the coast to rural houses and properties in big cities, offers diversified options to satisfy the needs and preferences of buyers.
Legal requirements and recommendations for investment
“The Spanish real estate sector offers a solid opportunity for foreign investment. However, prior to any transaction, it’s crucial to take into account the legal requirements and recommendations necessary to provide legal validity to the process”, explains Geigle.
Fundamental aspects include conducting transactions through the execution of a public deed issued by a notary, as well as obtaining a Foreigner Identity Number (NIE), which is essential for any financial or real estate transaction in Spain. In addition, it’s necessary to comply with the payment of taxes generated by the transfer or possession of the property.
To ensure legal certainty, it’s also important to register the property to confirm ownership and protect the rights of the owners against third parties. In this matter, it’s advisable to carry out a Due Diligence to identify existing charges and verify the urban requirements established by the competent authorities. Thereby, the status of the property is known before the sale, avoiding future surprises.
Documents required for an optimal transaction
“The aspects to be considered are diverse and range from the legal to the contractual or urban planning aspects. In general, the seller must provide the title deed, cadastral and registry documentation, tax receipts, certificate of occupancy, invoices and any other documents that affect the property, such as mortgages or energy certificates”, details Geigle.
In the case of a property subject to the Spanish Commonhold law, it’s necessary for the seller to provide documentation related to the Community of Property Owners and the regulations and obligations derived for the common areas of the property, such as corridors or stairways, or the periodic contributions to cover maintenance and administration expenses.
The prior contractual preparation, usually in the form an earnest money contract, plays a key role as it establishes the conditions and scenarios of the operation. As for financing, Uri Geigle recommends knowing the terms established by Spanish financial institutions, especially those intended for foreign investors, as they vary based on whether they are non-resident foreign individuals, residents or legal entities.
“Conducting Due Diligence helps to avoid surprises and guarantees a safe investment. Many times, the foreign buyer is interested in a property that doesn’t meet their goals, so having specialized advice is crucial to ensure compliance with all current regulations and carry out a safe transaction”, concludes Geigle.
Founded in 2016, DAUSS is a law firm focused on advising national and international clients, especially German-speaking ones. Alongside legal advice, thanks to the experience gained over the years, they offer support services to entrepreneurs with the aim of optimizing market entry and investments in Spain.