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PROPERTY

Why now is the right time to buy a property in Spain

Spain is the second-best country for first-time buyers, according to a new report.

Why now is the right time to buy a property in Spain
Photo: AFP

UK-based relocation service MoveHub compared 2016 property price data from the Global Property Guide with average salaries according to the Hay’s Group Global Salary Forecast to determine the best countries for first-time buyers to get a foot on the property ladder.

Of the 33 countries analyzed, the United Arab Emirates topped the table thanks to a nearly eight percent drop in property prices last year. 

In Spain, a 2.2 percent hike in salaries against a 5.75 drop in property prices put it in second place behind the UAE and ahead of Greece, Singapore, and Switzerland in the top five ranked nations.

“Overall the report revealed that countries with the biggest property price hikes had unfortunately also seen the slowest growth in annual incomes, with some salaries in decline, whilst house prices rose,” said MoveHub in a statement. 

“On the other hand countries with the highest salary growth enjoyed more affordable property prices or even prices in decline, making them the best places for first-time buyers”.

Spanish real estate is picking up after the bottom spectacularly fell out of the property market at the start of the global financial crisis and following an extraordinary construction boom.


Photo: AFP

With a glut of repossessed property in the hands of banks, prices are still far lower than they were at the peak but gradually creeping up as Spain’s economy picks up.

“It's a good time to buy from the market cycle angel, as the Spanish housing market is in the early stages of recovery after a grinding 8-year depression  though some hotspots like Barcelona and Ibiza have recovered so fast they are no longer looking like bargains,” Mark Stucklin at Spanish Property Insight, told The Local.

“It's also a good time to buy because the crisis cleaned up the sector and improved the standard of professionalism, and the quality of new development, which is just getting going again. And relative to other countries in Europe and further afield, Spain looks increasingly like a steady choice with a stable Government, economic growth, and safe streets.

Alexander Vaughan, co-founder of Lucas Fox International Properties thinks 2017 is a great time to get on the property ladder in Spain.

“We believe that this year has been a key turning point for the Spanish property market. After property prices bottomed out midway through 2014, 2015 saw modest price rises in prime regions. The recovery phase has continued throughout 2016, with the main difference being that price increases have not been limited to Barcelona, Madrid and desirable second home destinations,” he said.

“We believe that a growing economy, low financing costs, good potential for rental returns and capital appreciation will continue to drive sales throughout 2017 and beyond.”

Low interest rates, rising prices and signs that the economy is strengthening continue to attract property buyers to Spain.

With the Euribor  – the rate used to calculate most mortgage repayments in Spain –  remaining below zero for the last 12 months, many homeowners have taken advantage of low interest rates to contract fixed-rate mortgages. Traditionally these loans typically represented just 10 per cent of mortgages but over the last year the proportion has surged to 53.3 percent according to Spain’s Mortgage Association  (AHE).

The latest monthly data (for November) on mortgages granted, according to Spain’s National Statistics Institute (INE) show a 32 percent year on year interest, while sales rose 14.5 percent in the first eleven months of 2016.  

Low interest rates, rising prices and signs that the economy is strengthening continue to attract property buyers to Spain. Property prices are still very attractive and with more mortgages being approved, all the signs indicate that now is a great time to buy in Spain.

Turkey was named the worst of the 33 countries for first-time buyers in MoveHub’s research. While wages have only grown by 0.6 percent over the past year, house prices have shot up by 16.42 percent, mainly due to foreign investment, found the report.

Courtesy of MoveHub: The Best Countries for First Time Buyers in 2017

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RENTING IN SPAIN

How to rent a property in Spain without a job contract

When looking to rent in Spain, property owners and estate agents often ask for a 'nómina' and work contract - something that can prove tricky if you're self-employed or not working. Here's how to prove your solvency and secure the rental.

How to rent a property in Spain without a job contract

If you’re looking for a house or apartment to rent in Spain, there can be a multitude of different factors to consider.

The price, the size, the location, the neighbourhood, which floor the flat is, on and whether there’s a lift, whether it’s interior or exterior, how many apartments there are per floor, whether to go private or through an estate agents and, of course, the search itself.

When you’re going on visits, you’ll have to contend not only with owner or agent trying to ‘sell you’ the place, but also explaining the terms and conditions (often referred to as las condiciones or requisitos para entrar).

In Spain, the process can be a little complicated. Often landlords ask for two months deposit upfront, and those that go through an intermediary estate agent tend to ask for two months, plus an extra month (plus VAT, or IVA as it is in Spain) that goes to the agent! It certainly adds up. 

Not only that, but very often in Spain you are expected to prove you will be able to pay your rent every month. And it’s not as simple as you might think. 

Most estate agents or landlords think hat the best way to ascertain this is by you providing proof of an employment contract (contrato laboral) and recent payslips (la nómina) that demonstrate you are paid the same amount every month, and that it’s enough to cover the rent and other expenses.

Here’s where things can start to get tricky for self-employed people (known as autónomos in Spain), who number more than 3 million in Spain.

Regardless of whether your monthly autónomo earnings are high pretty much every month, regardless of how consistent they may be, or even if you have regular clients, the irregular and insecure nature of Spain’s work market have ensured that landlords and realtors take a rigid attitude towards the rules.

This is especially true following the turbulent economic times of recent years as we’ve moved from global pandemic to war in Europe to spiralling inflationary pressures on the global economy.

Landlords want to be sure you can pay the rent. Therefore, they may favour a waiter with a nómina of €1,000 a month over an autónomo who can prove monthly earnings double that for the previous six months. Doesn’t seem fair, right? 

READ MORE: Why you should be raising your rates if you’re self-employed in Spain

Well, that’s often how it can be in Spain. Fortunately, if you find yourself in this situation, there are various ways you can convince potential landlords that you are financially solvent enough to rent their property, with or without a fixed contract

The law

Now, it is not unheard of – in Spain nor anywhere else in the world – for an estate agent or landlord to try and squeeze more money out of you, or to add on some extra charges. In most people’s experience, Spanish estate agents and landlords are no better or worse than anyone else, but it’s worth keeping in mind.

It has been known, however, for some in Spain to try and get an extra month’s deposit by telling potential tenants that they need a nómina by law in order to rent a property in Spain, and that they’re doing you a favour by allowing it.

Simply put, this is not true. According to Spanish law, more specifically, La Ley de Arrendamientos Urbanos (Urban Renting Law), although many landlords require some form of financial insurance, there is absolutely nothing to say a nómina is necessary to rent a property in Spain. A deposit is legally required, but a nómina?

Helpful? Certainly. Legally necessary? Definitely not.

That said, if you explain to the property owner that you’re self-employed, some landlords maybe be willing to make other arrangements to ensure the rent.

Here are some options, and other bits of paperwork that could help:

Aval bancario: Like a bank guarantee, some landlords request tenants without nóminas or work contracts to set up an aval bancario.

You must pay in an agreed amount (often worth the value of two or three months of rent, sometimes more) into a bank account that you’re a customer with.

It’s money that you cannot touch for an agreed period of time and which you pay some interest on, and in the event that you do not pay your rent, the landlord will be able to access said funds.

This is not the cheapest way to rent a property, but it may be one of the more effective ways of convincing a landlord to accept you as a tenant.

If you pay your rent diligently every month and prove that you are reliable, after a year you should speak to your landlord to ask them them to cancel the aval in order to not continue paying interest on it and recover your stored money.

Anuncios de particulares: If you’re using the usual rental search engines like Idealista or Fotocasa, the vast majority of rental adverts are from estate agents (inmobiliarias) who ask for all the proper documentation, including contracts and pay slips, and often the extra month’s rent as a fee.

When you’re making your search, keen an eye out for anuncios particulares , which are private ads direct from landlords.

Sometimes if you deal directly with the owner themselves, they are less strict about rules with regards to nóminas and contracts. Maybe you’ll get really lucky and find a landlord that takes a liking to you and who only asks for one month’s deposit.

Seguro de impago de alquiler: A landlord may be more likely to rent to you even if you don’t have a nómina when they have seguro de impago de alquiler, non-payment rental insurance. It protects the landlord for the duration of the contract and covers the rent and any repairs or legal fees.

IRPF: IRPF is Spain’s personal income tax, and providing your most recent income tax return could help put your potential landlord at ease by proving that what you’ve earned over the last year could cover the cost of the rent.

Seguridad Social: Similarly, providing proof of your social security payment can help prove your financial solvency.

Bank statement: a simple bank statement to show account activity – and that you have enough to pay the rent and deposit, of course – might ease the mind of your landlord as it allows them to see your incomings and any debts you might have.

IVA: Showing your VAT (IVA in Spain) returns could be another tool that, when used in conjunction with other ways of proving your solvency, could convince a landlord to rent to an autónomo.

Pensioner documentation: If you’re retired and you’re looking to rent, any official documents which show how much pension money you receive every month, along with bank statement reflecting savings, should suffice to convince a landlord or estate agent that you’re solvent.

READ ALSO: Renting in Spain: Can my landlord put up my rent due to rising inflation?

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