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Property in Spain: mortgages for self-employed, cheapest villages and best buy-to-let cities

Property in Spain: mortgages for self-employed, cheapest villages and best buy-to-let cities
The citiy of Seville in southern Spain currently offers the best return on investment for those who buy-to-let in the country. Photo: Jocelyn Erskine-Kellie/Flickr
Stay up-to-date on the latest Spanish property news with The Local's weekly roundup, this time how self-employed and temp workers can apply for a mortgage, the cheapest villages to buy a home in Spain and the cities where buying-to-let really pays off.

Spanish properties are getting older 

More than half of all residential buildings in Spain were built more than 40 years ago.That’s 25.2 million buildings that were constructed in 1971 or earlier 

These are the findings of a new study by property search giants Idealista, which found that the greatest proportion of old buildings in Spain were in the Basque Country (63,5 percent built more than 40 years ago), Catalonia (59,8 percent) and Aragón (56,2 percent).

The Spanish government has at its disposal almost €4.4 billion in funds from the Next Generation EU scheme with which to renovate many of these decaying residential structures, improve their energy efficiency and more. For private property owners, this includes an upcoming 60 percent tax deduction for certain renovation works.

READ MORE: The Spanish home improvements you can get a 60 percent tax deduction for

Best buy-to-let cities in Spain

A new study by another leading property website in Spain – pisos.com – has listed the Spanish cities where property investors who rent out their properties obtain the highest annual profit. 

Based on the fact that the average 90sqm property in Spain costs €166,500 in 2021 and the average rental is €875 a month, the average landlord in Spain obtains a gross annual profit of €10,500, equal to a gross profit of 6.31 percent. 

This encompasses rural Spain as well, but which cities offer the best return on investment for those buying property to let out in 2021 (keeping in mind that prices and rents are higher than in the countryside)?

Seville in southern Spain currently offers a 9.62 percent return compared to 5.88 percent in the previous quarter, the highest of all cities in Spain according to pisos.com. 

After the Andalusian capital are Murcia (8.20 percent), Zaragoza (6.32 percent), Las Palmas de Gran Canaria (6.03 percent), Oviedo (5.92 percent), Valencia (5.88 percent ), Badajoz (5.68 percent ), Toledo (5.67 percent ), Valladolid (5.56 percent ) and Logroño (5.2 percent).

Spain is the fourth most popular country to own a second home

International real estate consultants Knight Frank’s ‘Global Residential Cities Index’ has found that Spain is the fourth most sought-after country for foreign buyers to purchase a second home abroad. 

Using data from 900 real estate companies, they found that the UK, Australia, the United States and then Spain were the most popular destinations for a second home in 2021.

Sixty-five percent of respondents said the pandemic hadn’t changed their preferred second country of residency and 56 percent said their plans to buy a second home were unaltered by the Covid-19 crisis. 

The ten cheapest villages to buy a home in Spain 

Idealista’s latest data on the pueblos offering the cheapest properties in the country reveals what many property hunters in Spain know already: buying in Spain’s interior is considerably cheaper. 

The average per square metre price of all types of homes in Spain in 2021 stands at €1,675 sqm according to Spain’s Property Appraisal Society, which reflects just how cheap properties in the following Spanish villages are:

  1. El Carpio de Tajo (Toledo): €304/m2.
  2. Barruelo de Santullán (Palencia): €383/m2.
  3. Cebolla (Toledo): €401/m2
  4. Almadén (Ciudad Real): €407/m2
  5. Herencia (Ciudad Real): €413/m2
  6. Mota del Cuervo (Cuenca): €416/m2
  7. Malagón (Ciudad Real): €426/m2
  8. Horcajo de Santiago (Cuenca): €432/m2
  9. Torralba de Calatrava (Ciudad Real): €438/m2.
  10. Puerto Serrano (Cádiz): €439/m2

READ ALSO: What’s the average price of a property in Spain in 2021?

Did you know?

Generally speaking, Spanish banks tend to offer mortgages to people with job contracts. 

However, getting a mortgage in Spain if you are self-employed or have a temporary job is possible, even though it can be pretty tough. 

Firstly, you’ll have to show high monthly earnings even if you don’t have a fixed contract. Proving that you’ve maintained this high revenue for a long period of time, month in and month out, will play in your favour.

Secondly, you’ll probably have to agree to a lower monthly mortgage payment which doesn’t represent more than 40 percent of your average monthly earnings, which means that you’ll be paying mortgage payments and the corresponding interesting for longer.

Thirdly, not having any outstanding debts or ongoing loans will also prove to the bank that you’re a trustworthy candidate for one of their mortgages. 

A fourth requirement will likely be that you have a sizeable amount of money saved up, higher than the average down payment of 20 percent of the value of the house which contract workers are currently expected to pay. 

And finally, you might be asked by your bank to provide a mortgage guarantee (aval hipotecario), in other words a guarantor who will cover your mortgage payments if you stop paying.

Properties in Spain

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