How to Buy Investment Property in Spain
Any foreigner can acquire real estate in Spain. The key requirement is obtaining a Foreigner Identity Number or "Número de Identidad de Extranjero" (NIE for short) in Spanish, which serves as the identification number for foreigners in the country.
You can secure an NIE number from the Spanish embassy in your home country. Alternatively, upon your arrival in Spain, you can obtain it by visiting the Foreigners Office or a police station in person.
Investing in Spanish Real Estate Market
Investing in real estate in Spain can be an attractive option for several reasons:
Best Areas to Buy Investment Property in Spain
Costa del Sol – The southern coast, including cities like Marbella, Málaga, and Estepona, is known as the Costa del Sol. It’s a popular destination for those seeking beachfront properties and a Mediterranean lifestyle.
Ibiza – Famous for its nightlife and beautiful beaches, Ibiza attracts real estate investors looking for luxury properties, including villas and waterfront residences.
Mallorca – The largest of the Balearic Islands, Mallorca offers a mix of picturesque landscapes, historic towns, and coastal properties. It’s a sought-after location for both primary and vacation homes.
Valencia – Known for its cultural events, historic architecture, and the futuristic City of Arts and Sciences, Valencia is a growing destination for real estate investment.
Seville – The capital of Andalusia, Seville is renowned for its historic landmarks, including the Alcazar and the Cathedral. The city’s charm attracts those interested in historical properties.
Costa Blanca – Including cities like Alicante and Benidorm, Costa Blanca is known for its white sandy beaches and a range of real estate options, from coastal apartments to inland villas.
Tenerife – The largest of the Canary Islands, Tenerife offers diverse landscapes, from beaches to volcanic terrain. It’s a popular destination for those seeking a second home in a unique setting.
Where to Find Properties Online
Here are the three most popular local property portals in Spain:
If you are serious about investing in or buying real estate in Spain, make sure to organize a trip to inspect the properties in person. Sometimes, photos and reality do not match — especially in Spain.
Financing
Foreigners can obtain property loans in Spain, but non-residents are typically required to provide a substantial down payment, usually ranging from 25% to 40% of the property's value. Lenders may also require proof of stable income and sufficient funds to cover mortgage payments.
In addition to securing financing from Spanish banks, buyers can also explore obtaining a mortgage from their local banks in their home country. This option allows them to leverage their local property as collateral and use the loan to purchase a home or investment property in Spain.
The average mortgage rate in Spain currently hovers around 3% to 4%, though rates for non-residents may be higher due to the perceived risk.
Some lenders may also request additional collateral or financial guarantees when lending to foreign buyers.
Due Diligence and Sales Contract
Conducting thorough real estate due diligence is highly advisable to identify any potential issues with the property.
This process is essential before committing to a preliminary contract to ensure there are no hidden legal or structural problems.
For those unfamiliar with the Spanish real estate market, hiring a local real estate lawyer is highly recommended.
Property laws can vary by region, and a local lawyer can help navigate these nuances, ensuring that all necessary checks are completed before finalizing the purchase. This includes verifying that the title deed is clear, confirming the property's legal status, and conducting a house inspection to assess the condition of the property.
A lawyer can also assist in drafting and reviewing the sales agreement to protect your interests.
The sales agreement, or "Contrato de Compraventa," is a legally binding contract between the buyer and seller.
It outlines key details such as the agreed purchase price, payment terms, property description, and any conditions that must be met before the final sale. It also specifies timelines, penalties for breaches, and any items included in the sale, such as furnishings.
Having a lawyer involved ensures that the agreement is comprehensive and legally sound, providing peace of mind throughout the transaction.
Property Buying Costs and Taxes in Spain
Buying and Selling Costs | ||
% from Price | Who Pays? | |
Property Transfer tax (IVA) | 6.00% - 11.00% | buyer |
Notary Fees | 0.50% - 1.00% | buyer |
Legal Fees | 1.00% - 2.00% | buyer |
Real Estate Agent Fee | 3.00% - 6.00% | seller |
Costs paid by buyer | 7.50% - 14.00% | |
Costs paid by seller | 3.00% - 6.00% | |
ROUNDTRIP TRANSACTION COSTS | 10.50% - 20.00% | |
Sources: Global Property Guide, PWC, Deloitte. Last revised: February, 2025. |
Further reading: Property Taxes in Spain