Our "investment" is down in value, largely because of the "crisis". However, we have enjoyed where we live and will continue to do so for as long as we can. Renting is a fools game, all you are doing is giving other people money. We bought our house outright so no interest, etc. Property taxes here are quite low by comparison with France and UK. Here we pay about 150€ per annum for IBI for s house with 4 bedrooms, 2 bathrooms spread over 5 floors and space in a habitable attic for two more bedrooms and another bathroom. In UK, 10 years ago, we paid £840 per annum for a 1 bedroom flat

 

It could equally be said that buying a house on a mortgage is a fool's game, all you are doing ispaying a bank or other financial institution multiple times what you paid when you bought the house in interest.
It all depends on your circumstances. I owned several UK properties over my lifetime, all bought outright, made money from renting them.
Now I own no property, have money from the sale of those properties invested with good returns, no worries about repairs, rent a house I couldn't afford to or want to buy at a rent I can comfortably afford with a good landlord. No worries about leaving money as my son has plenty of his own.
I know three elderly Brits, long time residents, thirty years or more, all with properties they own but on fixed incomes they have seen dwindle in value as exchange and interest rates drop. They could sell and rent but can't afford to repair the properties to make them an attractive prospect. One couple have an apartment in a semi- rural location, husband had a stroke, wife can't drive, no shops or buses within walking distance. If they sold they would probably get less than 60k€ and as they have small pension incomes and the wife is fairly young that wouldn't stretch far to rent somewhere decent long term.

I'm very happy renting. At least my money goes into the pocket of a decent person, someone I know and like, not an anonymous grasping bank. I have no worries about repairs, everything needed is done promptly. There is simply no 'right' answer to the rent or buy question. It depends entirely on your personal circumstances. For me having no property is freedom.

But no way would I buy in Spain under any circumstances, or in any other European country. I did buy in Canada but things are straightforward there.

 

If you want to buy a place to live in for as long as possible then a reasonably priced property is a good purchase (perhaps not an investment). But if you buy and want to resell within the next (say 10) years you could be buying into a problem. We're renting for the foreseeable future (9 years in the same property so far!) and what we've spent on rent we're happy with cos we can move whenever we want.

After all the future negotiations are finalised we may think again! Time will tell but if things go pear shaped our biggest problem is getting rid of unwanted possessions!

 

Thanks for your input. It is much appreciated.

I forgot to say that if I buy a property I would need a mortgage of 80%. So, another major thing to think about.

 

My house has been informally valued at just over half what I paid for it and spent on it over the last yen years but I have no regrets. It is the house of my dreams and I am not looking to sell. I sold my UK house at the top of the market and got GBP 25,000 more than I ever expected so I can´t grumble too much. All the evidence I am seeing and hearing at the moment suggests that the market is at last moving again. Two properties near to me that have been on the market for years have recently sold and an estate agent friend has told me that he is now as busy as he was before the crash in 2008. Another friend who is a manager with a large Spanish construction company tells me that they are busy again for the first time in years, especially picking up on projects that were abandoned after the crash (infrastructure for new urbanizations in particular). Also, I read in the Spanish press a few weeks ago that building companies are having trouble finding enough skilled bricklayers and are once again looking to Romania and Poland for workers as they did in the boom years. My advice would be to buy now before prices start to soar, as they surely will, once the recovery gains momentum.

 

Oooo what construction firm does your friend work for? I'm a bricklayer who would love to work over there as I have a house in Oliva!

 

I think viewing houses as investments is a dangerous road to go down..... hence thousands of unsold repossessed properties. Just my opinion. Good luck

 

No one can really predict the future, although similar to the UK, a property in a large city in a good location may increase in value purely due to supply and demand.

Many people bought at the peak of the boom and therefore their houses have decreased in value. We purchased our main residence in 2004 and if we were to sell we would probably receive around the same price that we paid for the property, but we havent had to pay rent for the past 14 years.

Compare this to an apartment we purchased 25 years ago, and sold last week. We made 120,000 euros profit. Maybe in the next 5 years there is another boom, and we will all be property millionares Who knows?

Certainly with the punitive taxes on purchasing a property it has to be viewed as a long term investment (more than 10 years) as opposed to a short term gain.

 

Yes, I agree. I bought my first property in Spain in 2003 and sold it last year for the same price I originally paid - but that didn't include the 10% additional costs on purchasing with transfer tax, legal and notary fees, nor the near 10% selling costs with estate agent's commission and plus valia - nor did it include the cost of improvements made to the property. However, as you say, we had not paid any rent during that period which is money we would not have recouped anything from. So just to cover costs anyone buying a property and selling it again would have to get 20% more than the original purchase price just to break even, not counting the cost of improvements.

I don't regret buying, in fact I bought again as I wanted a different type of property in a different location this time, for practical reasons, but I certainly wouldn't regard it as an investment.

 

As far as buying houses with a view to investment is concerned - the old hackneyed phrase no doubt rings true in Spain,
as much as it does in the UK namely - so long as the property concerned is in good condition, etc . . then its down to . . . . .

Location, location, location.

 

When you go to sell your home, its only worth what people are willing to pay. I purchased last year, I made 2 offers, First offer was cheeky, the 2nd was well below the asking price and I made it very much a take it or leave it offer. It was accepted and the owner took a big hit.

 

To the OP: I guess the answer to your question is "No" or "Maybe"

However, most of us who have bought, did so with a view to living where we wanted to, hassle-free (no awkward landlords) safe in the knowledge that whatever we did to the property was for our own benefit. So much depends on the market when you buy and when you sell but that applies wherever you buy property, Spain, Portugal, USA, UK Russia...

 

Another thing to bear in mind is how exchange rate fluctuations affect the price of property. Had I wanted to return to the UK after I sold my old house last year (as many sellers do), transferring the proceeds back to sterling at that time (when sterling was almost 30% lower against the euro than it was when I bought the property) would in fact have meant that I would have covered all the buying and selling costs as well - but I didn't. I wanted to stay here.

 

Yes it can be to your advantage. UK buyers are aware though and have been expecting owners to discount more. It could happen in reverse if the pound went back to 1.40 and someone had bought at 1.12. One never knows with currencies.

 

I agree with the majority.

We bought in 2007 in Madrid and 4 years later the place was worth less than half what we had paid and about half of what we owed on the mortgage (a similar mortgage % to what you are looking at).

We were cautious enough to have foreseen an economic decline and although my wife lost her job, I did not, so we were able to keep paying the mortgage, unlike many.

Now we are probably about even in terms of the current value / current mortgage debt, but we don't expect to be able to sell for what we paid in out lifetimes.

However, we do rent it out (its too small for us to live in now) and the rent covers around 80% of the costs and that is improving. We expect that very soon, the rent will cover 100% of the costs, so as a very long term investment, it may provide us with some retirement income.

 

Maybe the OP might get a better return on his investment by looking at properties that have Buy to
Let potential but along the lines of Buy to Holiday Let in the popular holiday resorts, Golf Resorts, etc, etc
of the Med in Spain, for with the 'good weather' lasting longer than a typical UK summer.
It could be a more promising avenue to explore rather than buying a property with a view to realising
any medium to near term capital appreciation. Of course this depends on whether the OP can afford
a second property above the one his renting, etc, etc.

 

So many bought to let on the Costa del Sol that most are empty ten months of the year. Walk around some and they are deserted. Golfers on holiday mostly prefer hotels. Buying there I would call a lifestyle investment. If you are living in it , like it and intend to stay, what does it matter.
We sold one during the boom and did extremely well as we bought during another recession but bought another which put a dent in the profits. If I were to live in Spain permanently I would buy for investment in UK and rent in Spain.

 

Thanks Isobella. My husband and I have been thinking about buying in Uk for asset investment and continuing to rent in Spain. However, we would still need to get a mortgage and then hire a property management company to rent and deal with the maintenance which I think would eat up a lot of the rent money we would be collecting to cover mortgage.

 

Trent You titled this thread "Is Spanish property a good investment?"

I would have said, probably not.

Then you said, 80% Mortgage.

So now I would say NO WAY FORGET IT, if you really mean "Is Spanish property a good investment?"

 

Juan C

Tell me more of your opinion please.

 

One thing I can't help but notice is that while there are seem to be a gazillion second-hand properties for sale that seem unsellable, new developments continue to be built and manage to sell off their units. So seems to be a market for new properties, but not secondhand ones. Almost like cars where the moment you take it on the road (or open the front door in the house case), then you can wipe 30% off the value. Curious.

 

My rule of thumb is that you need to expect to live in a property in Spain for at least 10 years to make purchasing it a better option than renting. Of course this is a simplification and varies according to local markets, personal circumstances and other factors. But it's a starting point.

If you are considering buying to let in Spain then that's a different matter. Personally I wouldn't go near it in Spain. I'm sure people have made money out of it but I've seen too many people get burnt. Not just by property prices, but by problems with tenants as well.

 

If you are considering buying to let in Spain then that's a different matter. Personally I wouldn't go near it in Spain.

Yeah, I have been both a renter and a landlord in the US and I wouldn't opt to be a landlord in Spain even if I was given a free property. Low return on investment, high potential for problems.

My #1 rule of investment is... what are you going to do in the worst case scenario? If your house plummets in value, are you going to be screwed? Or are you going to continue to own it and not care? If you are going to be screwed, don't do it.

 

More opinions please. Positive and negative welcome.

 

Very relevant as we are looking at selling in the UK (our main home which currently rented out, and keeping a small cottage we have home rented out so we have some "skin in the game" I think they call it) and buying over here.

My list so far after researching and speaking to others

Cons

- I haven't met a person yet who said buying was a good move *
- The costs associated with buying
- The fact that even if you negotiate a great deal the state can tax you on what they deem the value to be
- The unknowns due to being new here eg planning concerns, external factors like a local council simply charging all residents on an urbanisation for the cost of road improvements etc

* Almost anyone who has bought since the early 2000s has been hit by economic factors affecting the whole world to some extent so this is a big factor

Pros

- We love life here and want the kids to grow up here, buying will bring a certain additional level of comfort/stability/enjoyment for us
- The prospects for Spain v UK in terms of property, whilst obviously dependent on location specifics, seem potentially better, at least in the next 5 years. Market picking up (probably very slowly) and Brexit costs/unrest etc mean the UK could and probably will be in for a rough ride in the next 2/3 years
- We live, and would buy, in a town that is close to Malaga, a relatively strong economy with diversified job opportunities, strong tourist demand (from within Spain as well as without), excellent air, road and rail links, and we would buy in an area by the sea, surrounded by mountains and therefore a limited supply of housing in the most desirable areas

As you can probably tell, I'm leaning more towards buying here.

We would buy with the worst case in mind - basically that we could rent the place out if we needed to go back - and without overstretching ourselves financially.

All that said, we love our rental home and could consider committing to that longer term and making it more our own in that process - I don't see rent as dead money like some do if the cost is reasonable.

So there's my opinion!

 

Trentfrog - Have you ever considered moving into the Sunbeds for Hire business in Spain because for a modest
outlay and a good pitch, you could be coining it from all those Sunbed derived British and German tourist's
on the Costa's.

As you might have seen on the news - Thomas Cook think it's a winner, charging tourists £22 for a Sunbed
reserved online before starting their holiday in Spain.


La Tasca - Sun lounge wars hots up on the Costa's

 

Hi

Looking for people’s personal opinions here, so only want to here from people not involved in the Spanish property sector please.

From your own personal experience, has your Spanish property (now or sold in th past) been a good investment for you?


Any thoughts?

Have no regrets about buying here and after 23years here if we had rented it does not take Sherlock Holmes to work out how much we would have flushed down the toilet pan in rent.We bought our first house in Pesetas just over 7years later we sold it in Euro's as it was coming up to the bubble for 4 times more than what we paid for it and honestly think that will never happen again.Just absolutely crazy,crazy times.Then a lot of people were doing the same as us selling for stupid money on the coast and moving considerable distance inland where property was still cheap.Oh and just to say I did not walk out of the notaries in Fuengirola with a bulging back pocket as that would have been illegal now wouldn't it?

 

Have no regrets about buying here and after 23years here if we had rented it does not take Sherlock Holmes to work out how much we would have flushed down the toilet pan in rent.

This is a perrenial myth that paying rent is flushing money down the toilet. If you rent and invest the money elsewhere where it earns more than the percentage you are paying in rent, then purchasing the property is flushing the potential earnings gains down the toilet.

eg I pay 4.2% of the potential purchase price in rent, and consistently earn more than that on the investments made with the money I didn't spend on the house.

If capital gains on the house were a factor (back to op's original question) then it changes, but its unlikely in Spain. Plus buying a house as in investment has high transaction costs and is poor liquidity, plus maintenance costs. All in all, far more economic to rent and invest elsewhere.

Only reason to purchase, as many have pointed out, is the desire to place down roots and have a home, ie its an emotional choice, not an economic one.

edit: I'm no expert in property investment, but a friend who lives here invests all his money in property. He has properties in various countries as investments, but he rents in Spain.

edit 2: Another friend has a problem with hacienda and is having to leave Spain as a result. If he owned his house he would be liable to lose it to them, but he rents, so has the ability to up and leave (problem related to a property investment in England where he bought some land, spent a couple hundred thousand building a house, then sold the house. For reasons unknown, hacienda only recognise the original purchase price of the land and the eventual selling price of the house, slapping an 80,000 euro tax bill on it, which is more than he made in the whole endevour. After a year of trying to sort it out, the 80,000 bill continues to grow through interest, accounts frozen etc, so he's leaving.)

 

Property values in Barcelona are now rapidly increasing and rents are at an all time high.

 

Incidentally, my daughter- in - law sadly died unexpectedly and suddenly last week. The property she and my son own here in Spain is in her name. So if my son informs the authorities of her death, as he should, he will be obliged to pay IHT ona property bought twenty years ago and which has greatly increased in value since then.
If he sells he will of course pay tax on the considerable capital gain..
Problems of ownership to be taken into consideration.

 

Please may I offer my condolences to you, and your son, on the loss of your daughter in law.

 

The way I see it is that unless you can buy cash outright, you are giving money away.

If you buy with a mortgage, you are giving to the bank (obviously).
If you rent, you are giving to the landlord (who may well in turn be giving to the bank anyway)...

But, at least if you buy with a mortgage you could end up with some capital at the end of it, but it is a risk. With renting there is no risk.

Despite my experience with negative equity on my first purchase, I still went ahead and purchased a second property when the market was low in 2016. Nothing ventured, nothing gained....

 

I did buy my former Spanish home (and my new one) outright. I calculate that we would have paid at least €66k in rent over the 11 years we lived in it on a permanent basis (it was a holiday home for almost 4 years before that), and obviously we wouldn't have got any of that back. The amount we didn't recover when we sold it (in taxes, commission, legal expenses and cost of improvements) was in the region of €35k. So I think overall we were better off buying.

 

I think you have to look at the whole picture and tell people the whole picture if it's going to be useful.
For example, I bought here and I don't regret it (info for KG5!). However, I bought in 1995, married to a Spaniard, pregnant and sure that I was staying. Wouldn't have made much sense for us to have rented if we could avoid it.
I wouldn't look on buying a house as an investment, we all need somewhere to live.

 

Thank you for giving me more of your reasons. My reasons for not knowing whether to buy or keep renting is we are only here because of my husband’s business and really like the place we are renting. It is in the city centre of Valencia and the landlord is great. We would like to continue the business until we retire but after that we can’t say for sure Spain is the place we wanna live until we die. Is it crazy to rent for 15-18 more years though?

 

Our purchase was also outright with no intention of moving on. As said before, our purchase was carefully planned following appropriate research. At the time, our ages (SWMBO 48, M-i-l 76, self 66) precluded playing around, wasting time deciding where we wanted to spend the rest of our lives so it had to be the right choice, first time, a choice as to where we wanted to see out our remaining years. 10 years down the line, we think we got it right.

 

There are so many pros and cons for both renting or buying. Not all Landlords are good at carrying out repairs etc. Not all properties are a good buy.

I would never buy overseas if I needed a mortgage. To me it is important to own my home, bought and sold a few times and did OK. No care home will get it. We have thought about downsizing and having a spending spree but would have bought again. but didn't like anything we viewed. Never thought of it as an investment but it is a feel good factor if value increases.

I imagine over the last ten years investments would not have kept up with uk property prices unless it was all gambled on the stock market and lucky.

 

I would never buy overseas if I needed a mortgage.

What do you mean by "overseas"?

If you live in Spain, work in Spain, pay your tax in Spain, have to abide by Spanish law etc, Spain is not "overseas", it is your home.