How to buy a €2.8 million property for €350,000 in Spain

Co-ownership of luxury homes – a formula that was born in the United States – is growing rapidly in Spain with several companies emerging to try to popularise this as a way of co-owning a high-end second home at a more affordable price.

A luxury villa with a pool
A single share in a luxury house could cost the same as that of an entire coastal apartment. Photo by Ralph (Ravi) Kayden on Unsplash

In 2020, American start-up Pacaso sold a $2.2 million villa in California to eight people who paid $275,000 each, each becoming owners of a luxury second home they can enjoy for several weeks each year for a fraction of the price.

And last year, the company landed in Spain, opening in Marbella where it now has three villas.

The main client base is international, but “it is taking hold among Spaniards as well,” said Jesús Bravo, co-founder of Secconda, Spanish daily El Pais reported.
The idea behind the business is that everyone would love to have a holiday home, especially if it’s equipped with luxury items, such as a cinema or an infinity pool.
The small sticking point, of course, is that not everyone can afford it or if they can, they’re not keen on investing a couple of million in a house that isn’t occupied most of the time.

“Less than 25 percent of homeowners spend more than a month in their second home. The enjoyment of the house is small when compared to the costs and the time that have to be dedicated to its maintenance”, said Juan Carlos Fernández, founding partner of Abriqot.

“People use the second home for a maximum of six weeks, the rest of the time, it’s empty or rented out,” Bravo added.

Just ‘show up and enjoy it’
While co-ownership in itself is not a new concept – it’s existed for decades informally among friends and family – it is becoming more professional now.

So how does it work? The company selects and buys homes and then markets them as co-ownership properties. Once they’ve found co-owners to sell to – the maximum number is eight –  it usually creates a limited company in which the co-owners have a share.

Although the company doesn’t retain any ownership of the property, it does remain on as administrator, offering services, such as financing (this varies between 50 percent with Dalima and 70 percent with Pacaso), alterations, interior design, maintenance, bill payments, cleaning, and so on.

“The co-owner only has to show up at the house and enjoy it”, said Pacaso’s European corporate relations manager Ignacio Alonso.

Of course, this does come at a price. The platforms have a profit margin of around 12 percent, with Dalima – which specialises in ‘affordable luxury’ – coming in at about 5 percent. They also charge for the maintenance and management of the houses: Abrigot, for example, charges a fixed monthly fee of 100 euros per share.

A co-owner can buy from one share – 12.5 percent of the property – up to a maximum of four. The cap is to avoid any one co-owner holding more than 50 percent of the property.
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 an Abriqot property you can use it for between 42 and 45 days a year and if you own two shares, it will be double that.
This could 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.  
If you acquire 50 percent – or four shares – you would be entitled to six months’ use each year. You can sign this over to your friends and family to use, but most of the companies won’t allow you to rent the property out. 
After one year of ownership, co-owners can sell their share.
“Shareholders have the right of first refusal, so the sale of the stake should be offered to them first,” said Bravo.
And Pacaso’s Alonso is quick to dismiss any worries that co-owners may struggle to sell their shares: 
“We sell shares in 10 days and with an average appreciation of 10 percent in the first year,” said Alonso, noting that “all the shares sold were because the seller wanted another larger second home in another destination”.
Very different concept to timeshares
You book dates via the company’s app.  Each company has their own rules when it comes to booking dates, but they agree on several things:
For example, co-owners can reserve up to 24 months in advance; each can have a maximum of five reservations at the same time for different dates; the stays will be for between three days and two weeks; and only one reservation within a 12-month period can include a major date such as New Year’s Eve.
Owners can also make last-minute bookings if there are no other reservations for those dates.
It’s a bit like having a stake in a luxury hotel as when you arrive at the villa, everything will be ready for you. You’ll be greeted by a full fridge, the perfect ambient temperature and you can book add-ons, such as a chef, a massage or an excursion, too.

“Being able to access a wonderful home for a fraction of what it costs, that is, without having to be a millionaire, is a fundamental factor in the adoption of the model,” Fernández said.

Pacaso would not rule out opening up the business to include “lower-level properties” in future, but they would always seek to maintain “the quality status”, Alonso added.

The idea might seem similar to timeshares, but actually it’s very different – there are far fewer owners and when you buy a timeshare, you don’t ever own a real estate asset.

“A home can be shared by more than 50 people, which means that you only have one week a year to enjoy it,” explained Fernández. 

The type of housing is very different, too.

“With timeshares, they are hotel rooms or poorly maintained apartments,” Alonso said.

The companies to buy through and what’s available
Pacaso paved the way for this new business in the US and operates in the US, the UK and Spain. It sold its first 400 units last year. It currently has three stunning villas in Marbella with shares from 632,379 to 788,688 euros apiece.

Abriqot buys houses valued between four and eight million euros, so the shares are sold at prices between €400,000 and €800,000. It has around 25 properties in Costa del Sol, Costa Blanca and Madrid. A mere €128,000 will get you a share in a villa in Jávea or one in a spectacular villa in Sotogrande for €400,000.

Secconda started up in December 2021 and is in the process of purchasing houses in Levante and Catalonia and is also looking to invest in the Dominican Republic. At the moment, it has a villa in Marbella, with a price of €2.8 million euros, so each share is €350,000. 

Dalima, a recently created Spanish company, is a bit different: its portfolio is made up of “affordable luxury” homes and specialises in houses that cost between €800,000 and €1.5 million. That puts individual shares at  between €80,000 and 150,000, a similar price to that of an apartment on the coast. It has 30 properties, mostly in Alicante. Dalima also allow you to rent the property out through them and use the income generated to cover maintenance costs.

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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.