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PROPERTY

Spain property roundup: Calls for new visa for home owners and what’s residential tourism

In this week's Spanish property news roundup we look at the predicted slowdown in sales in 2022, a campaign for a Spanish visa for non-resident second-home owners, why Spain is a leader in 'residential tourism' and plenty more.

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Valencia is the most popular region with foreign buyers. Photo: Rubén M. i Santos / Pixabay

Valencia region is again the most popular region with foreign buyers

According to the latest figures from the College of Notaries of Spain, the region of Valencia is the most popular with foreign buyers representing 26 percent of the market (29,019 buyers), followed by Andalusia with 20 percent (22,625 buyers), then Catalonia about 16 percent (17,493 buyers).

2021 was a record year for foreign buyers in Spain, representing 16.5 percent of property purchases. 

However, only nine of the 50 provinces of Spain attract 90 percent of foreign demand.

READ MORE:

Spain is a world leader in ‘residential tourism’

According Ángeles Serna, president of Spanish real estate group TM Grupo Inmobiliario, “Spain is in style and has been a leader in residential tourism for a long time”, now so more than ever. 

For those of you not familiar with the term residential tourism, it essentially refers to second home owners, foreigners who buy a property in Spain to spend extended periods of time in it.

In 2021, non-resident foreigners bought 43,827 Spanish homes and foreign residents bought 59,168, taking the total of Spanish property purchases in 2021 up to 102,995.

But it’s the sheer number of people who choose to invest in a home in Spain without living in the country that continues to stand out.

During a speech at the Real Estate Exhibition of Madrid (SIMA), Serna said for non-resident second-home owners some of the essentials they need to decide to buy in Spain are having internet broadband or fibreoptic installed, a terrace, proximity to the coast, an extra room to use as an office, an international airport nearby and a good cultural and leisure offering.

For José María Esteban director of Real Estate Promotion company Ores&Bryan, Spain has a real opportunity of positioning itself as the ‘Florida of Europe’. 

The average house price in Spain has increased by 31 percent in the last seven years

In the last seven years, the average price of new and used housing in Spain has increased in value by 31 percent. The minimum was reached after a financial crash, in February 2015. Therefore, housing in Spain continues to be a good investment, for those who can afford the increasingly expensive purchase.  

The average price of new and used housing rose 1.1 percent in May 2022, compared to the previous month and 8.4 percent compared to the same month in 2021, with which it already accumulates eleven months of year-on-year growth, according to the appraiser Tinsa. 

Growth continues to be largely driven by the evolution of prices in capitals and large cities, which maintains an intensity similar to that registered in April. In metropolitan areas prices are on the rise, while the prices of housing on the Mediterranean coast and the Balearic and Canary Islands remain stable.

Experts anticipate a slowdown in housing sales and prices in Spain in 2022 

Spain’s International Financial Analysts (AFI) and Bankinter’s research departments predict that over the course of 2022 the housing market in Spain will begin to slow down.  

Forecasters anticipate a drop in sales and a slower growth in average prices compared to 2021, a year in which transactions reached their highest since the real estate boom, and residential properties became more expensive on average by six percent.

AFI estimates that housing transactions will decrease “around 15 percent year-on-year in 2022”, but will grow steadily. They also predict that there will be moderate growth in 2023, but far below the levels of 2021, when sales soared more than 38 percent and hit 14-year highs. 

Rental demand is increasing in Spain

Around a quarter of the population in Spain rents (24.9 percent), according to Eurostat data, a figure that’s lower than across most of Europe but that looks set to increase due to the current lack of supply of new housing and a rise in property sale prices.  

According to a study on the sustainability of demand for housing in Spain by real estate companies Solvia and Fotocasa, 66 percent of people looking for housing choose to buy, while 34 percent are looking to rent. 

It’s no much that an increasing number of Spaniards would prefer rent rather than buy – as this is a country that values the stability of owning a property in the same light as having a job for the State – it’s rather a case of people not being left with another choice. 

Unfortunately, increased demand for rental properties is resulting in a sharp rise in rental prices again (+8.4 percent compared to May 2021), after two years of stagnation and price drops during the pandemic, particularly in big cities.

How inflation in Spain is affecting the real estate market

Spain’s Consumer Price Index (CPI) in May was 8.7 percent, four-tenths higher than the previous month, according to the National Statistics Institute (INE). And the annual rate of core inflation increased one point, to 4.4 percent. Experts believe that this will cause housing prices to rise between 1-2 percent.

It is also making it harder to get a mortgage as interest rates on financing are increase too. Most Spanish mortgages with variable rates normally vary based on a variety of factors, but this number has been rising and in May 2022 saw figures of 0.240 percent, well above the average. 

READ ALSO: What the Euribor rise means for property buyers and owners in Spain

The Bank of Spain has estimated that the increases could range from anything between €35 a month to an additional €400. Bankinter predicts the Euribor rate will finish the year at a staggering 0.40 percent, but, more encouragingly, Caixabank’s prediction puts it at just 0.13 percent by the end of 2022.

Spanish lawyers create a petition to introduce a new visa for property owners

The latest stats show that non-resident property buyers account for around 19 percent of all purchases in Spain and this percentage is considerably higher in many parts of the country, particularly those popular with tourists and foreign residents such as the Costa del Sol, Costa Blanca, Balearics and Canaries.

As a result of this and the fact that Britons represent around 12 percent of foreign buyers, Costaluz Lawyers have created a proposal for a new type of visa: the Spanish property owners visa.

Following Brexit, British nationals can now only spend 90 days out of 180 days in Spain and there is a lack of visa options for those wanting to buy a property. Anyone hoping to gain residency through buying a property currently has to spend over €500,000 to be eligible for Spain’s Golden Visa.

A petition has been created in order to gather support for the new visa which you can sign here.  

READ ALSO: Valencia region pushes to give Brits more than 90 days in Spain

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For members

MOVING TO SPAIN

Six hard facts Americans should be aware of before moving to Spain 

There are 40,000 US nationals living in Spain but the road to residency and integration isn’t always straightforward for them. Here are six practical points Americans should factor in before embarking on a move to 'España', from work, to tax and healthcare.

Six hard facts Americans should be aware of before moving to Spain 

If you’re a US national who is considering making a move to Spain, you’ve no doubt already been captivated by all the country has to offer: the food, the people, the rhythm of life, the culture, the wine (of course), the scenery, the festivals, and so on. 

There’s a long list of quality-of-life positives that come with a move to Spain which could indeed make you happier than you are in the US. 

But before you start considering a permanent or long-term move to the country of your dreams, you should first think of the practicalities and potential downsides of such a big life change. 

MAP: Where in Spain do all the Americans live?

Above all is the fact that despite the United States’s reputation as a world leader in many regards, for the Spanish government you’re a third-country national with the same rights (or lack thereof) as any other non-EU national, from a Chinese person, to an Australian or an Indian citizen.

This is the crux of the matter, and a factor which will influence most of the important points to be aware of that we will now list.

Finding work or building a career isn’t easy

You’ll no doubt already know that Spain is renowned for its high unemployment rate, unstable work market and relatively low wages, but as a non-EU national there is an added set of obstacles to consider.

Firstly, applying for residency through a contract job is near impossible. Spanish employers would have to first demonstrate that they have been unable to find a suitable EU candidate for the position before being able to sponsor/hire you. 

Alternatively, you’d have to have the skills and experience which are included in Spain’s shortage occupation list, but this is made up almost entirely of jobs in the maritime and shipping industry.

It is true that Spain is set to make it easier to recruit non-EU foreigners to cover some of its most pressing labour shortages, but these are mainly in the tourism, hospitality and agricultural sectors.

Then there’s the nightmare non-EU foreigners in regulated professions are currently enduring – think doctors, dentists, engineers, lawyers and so on – as the validation of their qualifications (known as homologación) is a pricy and convoluted process which takes at least three years. Others who need to have their qualifications verified for non-regulated professions (known as equivalencia) will have to wait two years on average.

With that in mind, setting up your own business might be one of the best bets to make a living for yourself and gain Spanish residency. This self-employed work visa is also a bit arduous as you’ll need proof of financial means and a business plan among other requirements, but on the whole it’s probably one of the most feasible residency options.

The Spanish government did announce an upcoming Startups Law and digital nomad visa in 2021, legislation which could indeed make it easier for Americans to remote work from Spain, but it isn’t clear yet when this will be approved.

A final option is that of becoming an English-language assistant at a Spanish school. It’s an easy way to get into Spain, it offers decent pay for the few hours you’re required to work and it can be a stepping stone to other work goals from within Spain.  

You need a lot of money to ‘buy’ Spanish residency

If you’re retired or don’t plan to work in Spain, then you’ll need to show you have the financial means to cover your costs. 

This can best be done through Spain’s non-lucrative visa or the so-called golden visa. 

As the name suggests, the non-lucrative visa (NLV) is a residency permit which doesn’t allow you to work in Spain or technically carry out professional activities you have abroad from Spain.

A US national wanting to apply for the NLV for the first time in 2022 will need to prove they have €27,792 ($31,390) for one year, an amount which rises if you include other family members. You’ll have to show proof of financial means when you renew the NLV again.

You can find more in-detail information on the NLV’s financial requirements as well as a breakdown of the pros and cons in the articles linked directly below:

As for the other main option for those who won’t work in Spain – the golden visa – the main options are buying a property (or more) worth €500,000+ (the option most applicants choose) or investing €1 million in a Spanish company or having €1 million in a Spanish bank account.

READ MORE: What foreigners should be aware of before applying for Spain’s golden visa

So all in all, applying for Spanish residency as a US citizen who can’t or doesn’t want to work in Spain involves having a lot of money saved up.

Public healthcare is the standard in Spain, but access to it as an American is subject to conditions

As you hail from a country where healthcare is notoriously not available to all, you may have assumed that here in Spain, where the approach is starkly different, anyone can walk into a public hospital and receive treatment. 

And there would be nothing wrong in thinking that initially, but the truth is that access to Spain’s sanidad pública is based on social security contributions, which are paid through your taxes as a contract employee or self-employed worker.

What this means is that if you’re a US national residing in Spain you won’t automatically get access to Spain’s public healthcare system. 

In fact, if you’re applying for the NLV or golden visa, you will have to take out comprehensive private health insurance for your application to be accepted, something which can be difficult and costly if you have pre-existing conditions.

You should also keep in mind that there’s a scheme called the “convenio especial” (special agreement) which allows foreigners who have been registered as residents in Spain for a year to pay a monthly sum into the country’s public health system to have access to it.

Under 65s pay a fixed monthly fee of €60 per month and over 65s pay €157 per month to obtain full cover through Spain’s public health system.

You’ll have to resit your driving exam again

The US is for the most part a nation of drivers. In Spain, if you live in a town or city you will be able to move around easily on foot or by using the country’s efficient public transport network.

However, if your intention is to buy a car and continue driving in Spain, keep in mind that after six months of residency in the country you will need to resit your driving exam again in Spain and get a Spanish driving licence.

Unfortunately, Spain and the United States have no mutual licence exchange agreement or recognition scheme.

READ MORE: How much does it cost to get your driving licence in Spain?

It’s certainly frustrating to think that you will have to cough up a considerable amount of money for something that you already know how to do, but on the plus side you’ll get to understand Spanish roads and driving, and possibly learn how to use a stick (gearbox) as most cars are manual in Spain.

You have to commit to living in Spain

Keep in mind that when you obtain Spanish residency, it won’t necessarily entitle you to enter and leave the country for the rest of your life, especially if you spend extended periods of time outside of Spain. Permits have to be renewed and their conditions respected.

At first you will be given temporary residency (which lasts five years) and with this permit you risk losing residency when you leave Spain for more than six months in a period of one year.

In the case of sporadic absences from Spain, the sum of these periods outside of the country during those five years of temporary residence must not exceed ten months if you intend to apply for permanent residency. 

Permanent residency is valid for ten years (you can then renew it or apply for Spanish citizenship), but you can lose your residency if you’re outside of Spain for more than 12 months continuously, or for more than 30 months during the last five years.

Only the golden visa offers more lenient rules in terms of time spent outside of Spain. 

None of this means that you can’t spend several months at a time back home in the States – in fact extenuating circumstances such as caring for a sick family member, work or study allow for a bit more time outside Spain – just keep in mind that you have keep tabs on long absences outside of Spain as a non-EU citizen.

You have to pay taxes in Spain even if you’re not working here

As a Spanish resident (someone who spends more than 183 days in a calendar year in Spain), you have to pay taxes here.

Foreign residents in Spain pay tax on their worldwide income at personal tax rates which are progressive, from 19 percent to 45 percent.

Fortunately, there is a treaty between Spain and the US which helps determine which country to pay taxes to and the tax deadlines.

Equally, if you live in Spain and own assets abroad worth more than €50,000, you have to declare all this to the Spanish taxman, through the Modelo 720.

There are plenty more tax matters to keep in mind if you have assets and/or income sources on both sides of the Atlantic (it may be worth consulting a tax expert), so just keep in mind that if you move to Spain you will have to deal with all of this complex scenario.

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