How to Buy Property in Andorra as a Foreigner
Who can buy property in Andorra?
Foreigners can buy real estate in Andorra, but there are certain conditions they must meet. While there is no restriction on foreigners owning property, they must obtain prior approval from the Andorran government if the property is intended for use as a primary residence. Foreigners wishing to purchase real estate in Andorra are typically required to prove that they meet certain residency criteria, such as maintaining a permanent residence in the country or having a significant economic interest.
For non-residents, buying property is usually limited to those who intend to use it as a secondary residence or vacation home. Additionally, the property must meet a minimum value requirement, and the buyer must also demonstrate financial stability. Moreover, commercial property can only be purchased for use by your own business.
It is important for foreign buyers to be aware of the legal process and seek professional advice to navigate the regulations effectively.
Do the research
Investing in Andorra real estate offers significant advantages due to the country’s attractive tax policies and growing appeal as a destination for both personal and business investments. Andorra is known for its low personal income tax rates, which makes it an ideal location for those seeking to reduce their tax burden. This tax-friendly environment has attracted international investors, especially those from high-tax jurisdictions like France, Spain, and the UK.
Moreover, Andorra’s strategic location in the Pyrenees, offering access to both winter and summer tourism, adds to the potential for real estate investments, particularly in vacation homes, ski chalets, and luxury properties. The country’s modern infrastructure, combined with its rich natural beauty, makes it an appealing destination for affluent buyers looking for second homes or retirement properties.
Real estate in Andorra remains relatively affordable compared to neighboring regions, particularly the French and Swiss Alps, yet offers similar lifestyle benefits. The country is also politically stable, with a strong economy supported by sectors like tourism, finance, and retail. The demand for residential properties, especially in urban centers like Andorra la Vella and Escaldes-Engordany, continues to rise as more people are drawn to the benefits of living in a tax-efficient, secure environment. Overall, Andorra presents an appealing real estate market with strong growth potential, making it an attractive option for long-term investors.
Below are some sought-after destinations for real estate investment in Andorra:
- Andorra la Vella - As the capital and financial center of Andorra, Andorra la Vella offers prime opportunities for both residential and commercial real estate investment. This vibrant city is known for its modern infrastructure, proximity to major ski resorts, and tax benefits, making it a popular location for luxury apartments and high-end retail spaces. Areas like the city center and surrounding hills are particularly attractive for investors seeking both lifestyle and business opportunities.
- Escaldes-Engordany - Adjacent to Andorra la Vella, Escaldes-Engordany is known for its picturesque setting and access to natural hot springs. This area is ideal for those looking to invest in residential properties or wellness-focused developments, as it is home to many luxury spas and wellness centers. The area’s close proximity to shopping districts and ski resorts adds to its investment potential, especially for vacation homes and tourism-related properties.
- Ordino - Known for its tranquility and beautiful landscapes, Ordino is a sought-after destination for those seeking a quieter lifestyle while still being close to Andorra la Vella. Real estate in Ordino is attractive to both retirees and second-home buyers. The region’s natural beauty and hiking trails make it an appealing location for those interested in sustainable and nature-focused developments, such as eco-friendly homes and mountain chalets.
- Sant Julià de Lòria - This area, located near the Spanish border, is becoming increasingly popular due to its peaceful setting and lower property prices compared to Andorra la Vella and Escaldes-Engordany. It is ideal for residential investments, particularly for families or individuals looking for more affordable housing options in a scenic environment. Sant Julià de Lòria’s proximity to ski resorts and outdoor activities further boosts its appeal.
- La Massana - La Massana is a charming village surrounded by mountains, making it an ideal location for vacation homes, ski chalets, and boutique hotels. The village offers easy access to the Vallnord ski resort, attracting investors interested in the tourism market. With its mix of traditional charm and modern amenities, La Massana presents a strong opportunity for luxury real estate and long-term rental investments.
Where to find properties online:
Financing
Foreigners can obtain mortgage loans in Andorra, but there are specific conditions that apply. Banks in Andorra generally offer mortgages to non-residents, although these loans tend to come with stricter requirements compared to loans for residents. Foreign applicants typically need to provide proof of stable income, a valid residence permit (if applicable), or a significant financial background. Additionally, non-residents may be required to make a higher down payment, often around 30-40% of the property value, as banks tend to impose more stringent conditions on foreigners to mitigate risk. The loan amount and terms depend on the applicant's financial situation, the value of the property, and the specific policies of the bank.
Due Diligence and Sales Contract
Conducting due diligence is a critical component of real estate transactions in Andorra. This process ensures that properties are free from legal complications such as encumbrances, disputes, or claims that could impede the purchase. It involves verifying the property's title to confirm the seller's legal authority to sell.
In Andorra, the closing process typically involves the services of a legal advisor or consultant who prepares the necessary legal documents, conducts a thorough title search, and facilitates the transfer of ownership. Engaging a qualified legal professional is essential to ensure that the transaction adheres to Andorran legal standards and that all requisite procedures are meticulously followed.
It is also important to keep in mind that almost all legal transactions conducted in Andorra are done in the country’s official language (Catalan).
Property Buying Costs and Taxes in Andorra
| Transaction Costs | ||
| Who Pays? | ||
| Property Transfer Tax | 4.00% | buyer |
| Legal Fees | 0.10% - 0.30% | buyer |
| Notary Fees | 1.00% - 2.00% | buyer |
| Real Estate Agent Fee | 5.00% | seller |
| Costs Paid by Buyer | 5.10% - 6.30% | |
| Costs Paid by Seller | 5.00% | |
| ROUNDTRIP TRANSACTION COSTS | 10.10% - 11.30% | |
| Source: Global Property Guide | ||