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Spanish property news: Co-ownership, best mortgages and ‘barrios’ where prices have fallen most

Stay up-to-date on the latest Spanish property news with The Local's weekly roundup. This week we cover how you can co-own a luxury property, the neighbourhoods (barrios) in Spain where prices have dropped the most and what Spaniards are looking for in a new home.

Castellón de la Plana, Spain
Castellón de la Plana in the Valencia region has the neighbourhood where prices dropped the most in Spain. Photo: Joanbanjo / Wikimedia Commons

How to co-own a luxury property in Spain (and is it the same as timesharing?)

Owning a luxury home at a quarter of its market price may seem like an impossible dream, but it can become a reality through co-ownership.

Secconda is a new company that offers the chance to co-own a luxury home and be able to use it throughout the year. So far, the company operates in Spain and the Dominican Republic.

It works by offering customers between one and four shares of the property (which is usually divided into eight shares). This is so that you cannot own more than 50 percent of the home. It’s similar to a timeshare, however there are fewer owners and you own a greater percentage of the property, so that you’re able to use it more than just one or two weeks a year.

The number of days you can use the property is directly related to how much of the property you own, so for example, if you own one share of the property you can use it for 40 days a year and if you own two shares, you can use it for 80. This may be a good option for Brits who want to live in Spain and stay under the 90 days, but who don’t want to deal with the problems of what to do with the house for the rest of the year.  

READ ALSO: Reader question: Can Britons living in EU spend more than 90 days in another Schengen country?

The neighbourhoods in Spain where prices have dropped most

According to property giant Idealista La Zona Auditorio in Castellón de la Plana (Valencia region) is the neighbourhood in Spain where property prices have fallen the most from September 2019 to September 2021. Here, prices have dropped by -28.7 percent.

The Reyes Católicos – Paseo de San Antonio area of in beautiful Cuenca in central Spain comes in second place with decreases of -26.5 percent, followed by Diagonal Mar and el Front Marítim del Poblenou in Barcelona with decreases of -22.4 percent.

However, Diagonal Mar and el Front Marítim del Poblenou were still listed by property agency FotoCasa as one of the 10 most expensive neighbourhoods in Spain this year with property prices of €6,976 per metre squared.

The list of the cheapest neighbourhoods to buy in Spain was topped by Arrayanes-Belén in the municipality of Linares in Jaén (Andalusia) at just €445 / m2 in September 2021. El Baladre, in the Port of Sagunto in Valencia comes in second place at €448 / m2 and Colonia Requena-Virgen del Carmen in Alicante comes in third place at €493 / m2).

September saw the biggest monthly property boom since 2008

With 1,780 houses sold per day, September saw the biggest property boom in Spain since the economic crisis of 2008. The end of the summer was one of the most popular times to buy property and agencies have been seeing a strong increase in interest since the most severe Covid lockdowns at the beginning of 2019.

Accumulated savings, favorable interest rate conditions and changes in life and work habits all contributed to the rise in property purchases in Spain. The ninth month of 2021 saw a total of 53,410 houses sold, which represents an average of 1,780 per day, according to data published this Monday by Spain’s National Institute of Statistics (INE).

The figure reflects an increase of 40.6 percent compared to the same period in 2020, taking into account that at that time the market was still assimilating the impact of Covid-19. The regions with the highest annual increases in home sales in September were Navarra (68.3 percent), the Basque Country (55.9 percent) and Andalusia (54.9 percent). The only region which didn’t see an increase was Extremadura with (-2.4 percent), while Asturias (1.4 percent) and Murcia (19.7 percent) registered the lowest increases.

READ ALSO – KEY POINTS: What to know before buying a property at auction in Spain

Which Spanish banks offer the best mortgages now?

Last September, according to the latest data from the Bank of Spain, the average price of mortgages stood at 1.57 percent APR, the second-lowest value ever recorded. Despite these low-interest rates, there is still a big difference depending on which banks you get your mortgage with, so which are the best?

According to the banking comparison website, BBVA and ABANCA offer the lowest interest rates. BBVA’s fixed mortgage has a lower interest rate for the average client.

This is one percent for up to 15 years, 1.20 percent if you pay the money back in 20 years and 1.30 if it is repaid in 25 years. The variable mortgage with the lowest interest rate is from ABANCA. Its rate is Euribor (the basic rate of interest in the EU) plus 0.85 percent.

During the first year, a fixed interest of 0.85 percent is applied, whereas most banks apply an initial fixed rate of more than 1.50 percent.  

What Spaniards are looking for in a home?

76 percent of Spaniards consider that buying a home is the best way to invest for the future and, of those, 50 percent consider that this option has been strengthened after the outbreak of Covid-19, according to data from a survey conducted by the Vía Célere Housing Observatory.

42 percent of Spaniards plan on moving home in the next five years to find a better property, while those wishing to move to a new neighbourhood to better suit their needs has increased from 22 to 35 percent. 15 percent said that the home confinement and lockdown during the first wave of Covid-19 caused them to discover what they needed from their neighbourhood. 

Those surveyed who prefer a new home to a second-hand one also increased. In 2021, 74 percent of Spaniards preferred new-build homes over second-hand ones, compared to 67 percent who preferred them in 2020.  

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How to turn a bar, office or shop into a residential property in Spain

Commercial properties in Spain can be a lot cheaper than residential ones, but it’s not as straightforward as buying a former restaurant, office or shop and moving in. Here are the steps to follow and what you need to be aware of.

How to turn a bar, office or shop into a residential property in Spain

One of the tricks budget property hunters in Spain have been using in recent years is buying a local (commercial property), oficina (office) or nave (industrial unit) and transforming it into a vivienda (residential property) to live in or let out. 

It’s a trend that’s roughly doubled in big cities such as Madrid and Barcelona in the last five years. 

Buying a commercial property can work out to be 50 percent cheaper than a flat or house in Spain and there can be other advantages such as it being more open plan than Spain’s typical corridor-themed apartments as well having more money to invest in the renovation. 

Is it possible to turn a commercial property into a residential property in Spain?

Yes, in theory it is, but it’s not always possible. The rules relating to a change of property’s usage from commercial to residential or vice versa are determined by each municipality in Spain, so before you rush to buy un local, you have to do your homework first and be aware of some of the most common pitfalls.

It could be that the limit of residential properties per hectare has been surpassed already, or that without some major changes the property doesn’t meet the standards of size, rooms, space, height, layout, ventilation, air extraction or light of the town or city hall. 

It isn’t the most straightforward process and depending on the property and the individual municipal rules in place, it might just not be possible to live in the property or rent it out to others.

Living in a commercial property is illegal and may cause you problems such as not being able to activate water and electricity or register your padrón at the town hall.

Despite all the paperwork needed, flipping a bar or office and turning it into a home usually works out cheaper than buying a residential property in Spain. (Photo by ANDER GILLENEA / AFP)

Don’t be discouraged however, as in many cases it is possible to change the use of a property from commercial to residential and in regions such as Galicia authorities are currently facilitating the process to address the matter of empty abandoned stores and the lack of well-priced accommodation for young homeowners.

What are the steps to follow in Spain to change a property from commercial to residential?

Check the statutes of the community of owners: In order to make any changes within the community of neighbours, permission must be requested in advance. Beforehand, you can ask the comunidad president for a copy of the community statutes to see if the change of use from commercial to residential is mentioned.

READ ALSO: ‘La comunidad’ -What property owners in Spain need to know about homeowners’ associations

Request permission from the town hall: After getting the green light from la comunidad, you have to go to the ayuntamiento (town hall) of the town where the property is to find out if it’s possible to add another residential property to the finca (building). 

Even if this is confirmed, it doesn’t certify that the change of usage from commercial to residential is allowed, for which the town hall will ask you to provide an architect’s proyecto técnico or feasibility report based on municipal urban laws. You will only be allowed to swap from commercial to residential if the project meets the safety and habitability requirements of the Technical Building Code (Código Técnico de la Edificación).

Get the Building Licence: Known as licencia urbanística or permiso de construcción in Spanish, this is an official document required by the town hall for you to carry out a construction or renovation project. In other words, you’ll need this municipal authorisation to begin work on your future residential property, whether it’s major work or minor . 

Get the Certificate of Habitability: Once the renovation work is complete, you’ll need the cédula de habitabilidad to be able to move in or let the property out . The conditions for this are regulated by each regional government and again it’s an architect who must prepare a technical report in order for a town council technician to issue the certificate of habitability.

The certificate we need for the change of use is that of primera ocupación (first residential occupation), which has to include the usable surface area of ​​the home, rooms, address, location, maximum inhabitants etc.

How much does it cost to transform a commercial property into a residential one in Spain?

If for example it’s a 80m2 property with two rooms, the total would be about €50,000, according to property websites Idealista and Habitissimo, with the bulk covering renovation costs (€500/m2= €40,000) and the rest going to cover permits, architecture costs and taxes.