There is a recent trend in Spain for expats to downsize. After enjoying years in a coastal village, as people become older they need facilities close by, so many are selling and moving into the nearest town. Others simply decide to sell up and return to their home country, and yet more are moving on to other areas of Spain or even other countries. The property market in Spain has seen rocky times since 2008 and although there are some signs of it improving, especially at the higher end, it is still not easy to sell and prices remain low
1. Estate agencies in Spain generally demand a 5% commission, much higher than in the UK. Sometimes you can do a deal to reduce it, but as a rule of thumb it is a good idea to count on it being 5%. Nowadays all agencies must be registered; the majority belong to one of the 2 professional associations API and GIPE, and it is important for you to make sure the one you choose is registered with one of these. Occasionally, you will often see a property for sale at a different price at different agencies, and this can be for a number of reasons - because the vendor has agreed a price to include the agency fees and the agency, or because the vendor has based the final price on a particular valuation. The amount of effort put in by agencies differs widely unfortunately, but you should also take into account that there is a vast array of property on the market and that the middle market is the one which is suffering the most and is the most problematic for agencies.
2. Should you try the internet? Why not? A sale via the internet avoids the agency fees but you will have to pay to place your advertisement, and this could be up to several hundreds of pounds. Nevertheless, many people have found this a successful way to sell their property, and advise that you don’t just aim at the British market as there are plenty of people from other countries looking to buy in Spain at present. You will need a good lawyer whether you use an agency or the internet.
3. If the property you are selling has been your permanent home as a Spanish resident for 3 years or more and you are over 65, you shouldn’t be liable for capital gains tax (CGT). However, if it is a second or holiday home, or you are a non-resident, you will be liable for this. How this is calculated depends on each regional authority but it will be in the region of 21% of the gain. Of course, if you sell your property for less than you paid for it, there will be no CGT due.
4. Non residents will find that 5% of the sales price will be withheld by the Tax Authorities until they are sure that all outstanding taxes have been paid.
5. The costs for the vendor will be the estate agency fee and their lawyer’s fees. Of course the vendor should have paid all current utility bills, mortgage, etc. The purchaser has the heavier financial burden as they will have to pay notarial fees as well as their lawyer and a tax similar to stamp duty.
6. Are you returning to the UK? In this case the foreign exchange rate will be of great importance. Currently Sterling is at a high level against the Euro, so if you want to take the sale proceeds back with you, consider that Euro to Sterling is not as attractive as it was. You may want to have a slightly higher asking price for your property to take this into account although this might damage the chance of a quick sale while property prices stay low. Make sure you discuss the exchange options with a specialist currency exchange company such as Smart Currency Exchange. They will be able to advise you about the best way to transfer your funds.
7. You will need to nominate a Notary for the sale of your property - most people return to the Notary who presided over the sale when they were the purchaser, but you are free to choose any Notary you want. The Notary is there to make sure that all taxes are paid and that both parties understand and agree to the sales contract (escritura).
8. Expect haggling over the price. These days buyers make low offers but are usually prepared to discuss the price. Consider offering to include all or some of the contents to make your asking price more attractive. Some friends who recently sold their house to a Frenchman only managed to achieve their asking price by including all the furniture except for a few “personal” items. Since they were moving to a much smaller home nearby, they didn’t need to buy a great deal to replace it. If you are returning to the UK, you probably won’t want all the furniture anyway.
We all like to think that our property is “different” and “special”, particularly if we have put a lot of time and money into it, but we have to be realistic and accept the prevailing market conditions. So if you are selling your home in Spain and want a reasonably quick sale, pitch your price sensibly. If you are not in a hurry, you can afford to wait to see if prices begin to climb. Either way “buena suerte” as they say here!