Frequently Asked Questions
Why invest in Spain?
What is the Spanish property market doing right now?
I heard there has been a Spanish property crash?
Which areas do you cover?
Do I qualify for a mortgage?
Can I get a buy-to-let mortgage?
Can I get an interest-only mortgage?
Can I buy with somebody else?
What rental yield can I expect?
Will you rent the property for me?
Is it best to rent my property long term or for holiday rentals?
How do I view the property I want to buy?
Do you do inspection trips?
Do you sell off-plan property?
What if I want to sell?
What are the transaction costs when buying a property in Spain?
What about "land grab"?
What about the Marbella corruption scandal?
If these deals are so good, why don't you buy them all yourselves?
Do I need to speak Spanish to invest in Spain?
What do I need to pay up front?
What fees do you charge?
What are the ongoing costs?
What about furniture?
Should I buy a big villa or smaller units?
What's the weather like?
Do you have any commercial property?
Do you invest in any other countries?
I want to build my own villa, can you help me?
Does everything always work perfectly?
I want to buy, what do I do now?
How long before I get the keys?
Not found the answer you were looking for? Contact us with your query.
Why invest in Spain? Back to top
Spain is the most popular British holiday destination, and also the number 1 choice for British people emigrating (2000 people a week are leaving the UK to move abroad). While fashions change, one thing that Spain, and particularly the Costa del Sol will never lose is its climate (over 300 days of sunshine a year). Add to this the convenience factor, just a 2hr 30min flight from London Gatwick, and regular cheap flights from the UK, Scandinavia, France, Germany (and increasingly Russia and Eastern Europe) and it is a winning formula for both holidaymakers, ex-pats and golfers. Aside from the lifestyle reasons, it makes financial sense to invest here at the moment too. Many overseas property deals in emerging markets are for cash buyers only, and of those that can be bought with a mortgage there are few that require less than a 30% deposit. This is simply a poor use of capital, and swallows all but the largest of bank rolls very quickly, halting further investment. Spain may not be emerging anymore, but for a long-term investment you just can't beat it. At the moment we are in a unique position where we can buy premium property in a tried and tested market using very little capital and hold it for long term capital growth.
What is the Spanish property market doing right now? Back to top
Spain has been through an off-plan boom over the last few years. Whilst there has been a huge demand for property there has been an even greater supply, with building everywhere. Many people have bought off-plan thinking the prices would just keep going up, and the most recent batch of off-plan investors are now realising they are stuck being forced to complete on a property they never really wanted or can't afford, and they are having to sell for less than they had hoped, often barely recovering their investment or even selling at a loss due to the inflated prices they paid. No new building licences are being issued in Marbella now, allowing a much needed breathing space for demand to catch up with supply. Even so, prices have risen slightly over the last 12 months, it is definitely a buyers market right now, and we are advising clients to expect to hold on to their Spanish property for at least 5 years if they want to sell it for a profit after taking into account buying and selling costs. Whatever the state of the market those with premium property will always sell, but those who have bought the wrong property or in the wrong location will struggle. This is why we adopt the "first choice" principle so that we provide a clear exit strategy and our properties rent more easily.
I heard there has been a Spanish property crash?
A few months ago the share price of a large Spanish developer dropped significantly and this triggered a lot of publicity in the international media about a Spanish property crash, bubbles bursting and general panic. We looked on with amusement as even the Financial Times reported a sudden reversal of the direction of house prices in Spain. We have been listing properties from distressed sellers for over 3 years now and even before that were advising clients against buying off-plan. The main effect of the negative publicity has been that valuers have gone super-conservative with their valuations, making our job slightly harder. However, we have used this as an opportunity to negotiate even better deals with vendors, so when you are buying with equity built in and a minimal deposit you have very little risk with huge upside.
Which areas do you cover? Back to top
We look for property between La Cala and Estepona on the Costa del Sol. There are opportunities elsewhere in Spain, and in some of these areas property is cheaper, but the Costa del Sol has the best climate, and is more international. Along with Monaco and St. Tropez, Marbella has a reputation for being the playground of the rich and famous, you might say the LA of Europe. The infrastructure is better here too. We buy very selectively West of Estepona because there is too much building here and not enough going on yet to warrant it, although we have recently sourced some superb deals in Sotogrande and we look for larger villas and high-end apartments in this up and coming prestigious location. East of La Cala is Fuengirola, Torremolinos and Benalmadena, and we avoid these areas because in our opinion they are over-developed and have had their day, so the potential for capital growth is less. Simon has always worked on the basis that Hawkwood will only market properties that he would be prepared to buy himself.
Do I qualify for a mortgage? Back to top
Mortgages are available for non-residents usually to the age of 75 years. Any mortgage will be subject to status, and you will need to show the bank that you can afford the repayments. It is sometimes possible to get a non-status mortgage, for example for higher value properties or if you have no proof of earnings. An additional fee will apply in this case, please contact us to discuss your specific situation.
Can I get a buy-to-let mortgage? Back to top
There are currently no buy-to-let mortgages in Spain that we know of for non-residents. The financial services are not as developed as in the UK, for example, although new products are becoming available all the time.
Can I get an interest-only mortgage? Back to top
Yes. Although at the moment it is usually interest only for a fixed term, e.g. 1 - 5yrs then reverts to repayment of capital. Some banks will do a longer term but often the amount you can borrow is restricted. Usually the shorter the interest-only period the lower the interest rate.
Can I buy with somebody else? Back to top
Yes. You can apply jointly for a mortgage, or alternatively it is sometimes better to apply for the mortgage in one persons name and add the second to the title deed. This enables you to buy more property further down the line as you can get twice the number of mortgages. Those wishing to buy as a group of three/four or more, we recommend that as above you buy in one persons name and have a private partnership agreement for the same reason. Also banks are less willing to lend to three or more people buying the same property as they regard it as a higher risk.
What rental yield can I expect? Back to top
For a long term rental you can expect 4% or therabouts. To obtain a higher yield you may like to consider holiday rentals. Although this is more management intensive, as a general rule you can expect to receive approximately the same per week as you would per month on a long-term rental for the Summer season. Out of season there is plenty of scope for renting to golfers. The Costa del Sol is nicknamed "Costa del Golf" due to the large number of quality courses. Over 5.5 million golfers came to the area last year, many escaping the bad weather and poor light in their home countries, and creating a good demand for quality short-term accommodation in the process.
Will you rent the property for me? Back to top
We will shortly be launching a rental division, but for now we work with a selection of rental agents who have proved effective and reliable for us in the past. If you are buying as an investment you will obviously want to know that you will be able to rent your chosen property. Whether you want to achieve long or short-term rentals we will be happy to introduce you to the people who we believe will get you the best results.
Is it best to rent my property long term or for holiday rentals? Back to top
It depends. Long term is normally a renewable 11 month contract, so you have the security of a regular payment each month. Also it is possible to rent a property unfurnished on a long-term contract whereas if you are renting short-term obviously you need to furnish your property. The compensation for this is that you should achieve a better income, and you have the option of using the property when it is unoccupied, either for yourself or maybe for family and friends or as a business incentive.
How do I view the property I want to buy? Back to top
The type of properties we find don't usually sit around on the market too long. By the time you have organised a flight to Spain to view the property you will often find that the property is already sold. For this reason, on receipt of a copy of the prospective buyer's passport (to meet money laundering regulations) and a reservation deposit (held securely in a lawyers client account) we will reserve a property for you to allow you enough time to come over and see it for yourself. Although many of our regular clients trust our judgement and are happy to commit to buy on the strength of photographs and floor plans sent as a pdf document, if you are new to us we recommend that you spend a day with us in Spain so that we can show you how we work, give you a feel for the area and answer all of your questions properly.
Do you do inspection trips? Back to top
We know that many companies offer free or heavily discounted property inspection trips in return for sitting through high pressure sales presentations. Whilst we will be happy to point you in the right direction for cheap flights, car hire and accommodation, we have decided not to organise inspection trips for potential clients so you are free to follow your own agenda, and make your own mind up about what we have to offer. This also helps us to keep our costs down and provide you with what we believe are the best deals around.
Do you sell off-plan property? Back to top
Not in Spain. Occasionally we will work with an associate to promote an off-plan project in another part of the world if we think that it is a particularly good deal. Buying off-plan in Spain now doesn't make much sense. While there are good deals to be had, we specialise in looking for as-good or better deals on property that is already built. So why tie up your capital for 2 years for no reason? Many of the deals we are picking up are from investors who bought off-plan on the promise of some quick cash and are now desperate to sell.
What if I want to sell? Back to top
Due to the relatively high transaction costs in Spain (as in many other parts of Europe) it is not as easy to buy and sell property quickly. We recommend to our clients that they hold on to a property for 5 years in current market conditions before considering selling. "Flipping" properties is not a good strategy here, our properties are suitable as a medium to longer term investment.
What are the transaction costs when buying a property in Spain? Back to top
IVA (Government tax) is the main cost when purchasing in Spain, currently 7% of the declared price of the property. In addition there are notary fees, gestoria fees (to prepare all the paperwork for the notary), the lawyer's fee, usually 1%, land registry fee and other disbursements. If you are buying with a mortgage, as most of our clients do, there is the bank opening fee (up to 2%), mortgage stamp duty (around 1.9% of the loan amount), valuation fee, and broker fee making a total of 12-14%, considerably higher than the UK. Many of our deals are packaged to include some or sometimes all of the costs in the mortgage.
What about "land grab"? Back to top
Land grab is a term used to describe the practice of siezing land essential for particular developments, with much publicised stories of landowners not only having to give up their land but also being forced to contribute to the cost of the local infrastructure. There have been a handful of incidents, most notably in Valencia along the East Coast, involving property owners with very large plots of land, and legal issues with the registration of their land. The properties we source have never been affected by this and because we are using mortgages to buy them the bank ensures that due diligence is carried out to avoid this situation even if it were to happen, as does the lawyer.
What about the Marbella corruption scandal? Back to top
Marbella has been in the news recently because of a building licence scandal. The mayor of Marbella was arrested on suspicion of corruption for allegedly taking payment in return for the granting of buildling licences. Previously, it was common practice for developers to start building a project before being awarded a building licence, knowing that they could get retrospective planning permission "one way or another" at a later date. Work on these developments has now been suspended by the police and no new building licences are being issued in the Marbella region. As a result there are a number of half-finished developments and "illegal buildings". It is now expected that most of these will eventually be granted licences by the new administration but the amount of time this will take is not known. Either way, the scandal has restricted the supply of new property coming on to the market, while the demand for property continues to grow.
If these deals are so good, why don't you buy them all yourselves? Back to top
We work on the principle that we will not promote a deal to a client unless we would be willing to buy it ourselves, so the buying criteria is largely the same. Whilst it can be tempting sometimes, it is not possible to buy every good property that comes along due to practical considerations.
Do I need to speak Spanish to invest in Spain? Back to top
No. We work with English speaking lawyers, banks and notaries and there are plenty of English speaking businesses all along the Coast. Having said this, we recommend at least learning some basic Spanish, as you will find the attitude of the local people changes dramatically when you embrace their culture a little. If you travel away from the coast or into the mountains you will find that very few people speak English, and you will need a basic vocabulary if you want to get food, drink and other essentials.
What do I need to pay up front? Back to top
Although we do not charge any fees up front ourselves, we ask that you pay a deposit into a lawyers client account before we will take any of our properties off the market, subject to contract. This is firstly to show commitment, and secondly so that we can show proof of the transfer to the vendor so that they know we have a serious buyer. The amount will depend on the deal, but will usually be in the region of €3,000 (£2,100). Once your mortgage has been approved in principle, a valuation will need to be carried out. We will normally request that this is paid out of the reservation deposit held by the lawyer. The amount varies depending on the value of the property, and can be anywhere from €400 upwards. Depending on the deal we are offering you, if there is a deficit your lawyer will request that you transfer the required funds in order to complete. If there is no deficit then you will need to pay nothing further, just the mortgage repayments. Any balance payable to you will be deposited in your new Spanish bank account, set up by the bank with whom you have your mortgage.
What fees do you charge? Back to top
We are paid our commission by the vendor of the property, and package our deals to include our fee. We do not charge an additional fee to the client.
What are the ongoing costs? Back to top
Once you have completed on your new property you will be responsible for monthly community fees, payable to the urbanisation for upkeep of communal gardens, swimming pool, lighting, security of the complex etc, normally in the region of €80-€100 pcm depending on the number of properties and facilities available. Property insurance is relatively inexpensive, in the region of €150-€200 per year. Your lawyer can arrange for these payments to be debited from your Spanish bank account automatically. You will also need to pay local taxes annually and wealth tax on the value of your property. This is based on a nominal value, and should be only a few hundred euros but may go up if you have a larger property.
What about furniture? Back to top
If you would like to furnish your new property we can recommend some good, reliable and good-value furniture companies who will bring your property to a key-ready state, down to cutlery, bed linen and patio furniture. Buying a furniture package will be much quicker and less hassle than trying to organise it yourself, particularly if you are new to Spain. It is also often cheaper because you are buying everything at once.
Should I buy a big villa or smaller units? Back to top
Of course this depends on what you want, but as a general rule if you are buying to rent you will get a better yield on the smaller units. A 2 bed 2 bathroom apartment is the favourite, as it can sleep 6 people if necessary. It is possible to get good rents at the luxury end of the market too, as sometimes there is a shortage of larger villas and people are willing to pay for them. If you are buying to rent, properties on or near to golf courses or near to the beach are always easier to rent and sell, as are properties with golf and sea views. We will also consider 3 and 4 bed properties as they are good for families for long-term and also groups of golfers.
What's the weather like? Back to top
The Costa del Sol is a microclimate due to the placement of the mountains by the sea. The region averages over 300 days of sunshine a year. It's very hot in July and August and you will need plenty of sun screen and air conditioning or a fan to sleep at night. This makes it ideal for sun and sand holidays as good weather is virtually guaranteed. In Winter it is warm when it's sunny, it is sometimes cloudy and the evenings can be a little chilly. It rains occasionally, and when it does it can rain very heavily.
Do you have any commercial property? Back to top
Although we focus on residential property, in the course of what we do we are often offered commercial property, such as hotels, bars and locales. Please contact us to discuss your requirements.
Do you invest in any other countries? Back to top
Yes, we have personally bought property in other countries in Europe and further afield, and occasionally we will promote property outside Spain that we think is particularly worthwhile. However, for the type of deals we are putting together we have found nowhere else in Europe, and very few places in the rest of the world that we can work in the same way. If you find anywhere please let us know!
I want to build my own villa, can you help me? Back to top
Whilst we believe this is not a sensible way for the majority of our clients to proceed, we will be pleased to put you in touch with the right people if you are sure this is what you want to do. Please contact us to discuss your requirements.
Does everything always work perfectly? Back to top
We have learned that dealing with the unexpected is part and parcel of the property industry. Whilst we do our best to ensure a smooth and problem-free purchase, sometimes things can happen that are outside of our control. We will always work hard to find a way forward that protects your interests.
I want to buy one of your properties, what do I do now? Back to top
Please contact us to register your interest. Please don't be too disappointed if the particular property you are interested in is no longer available as the stock can move very fast. If you have a good idea of what you are looking for we will do our best to find it for you.
How long before I get the keys? Back to top
The completion time is fairly similar to the UK, so assuming there are no unexpected delays you can expect your keys in about 6 weeks. The process sometimes happens much sooner, but equally certain times of the year (particularly August when most of Spain takes a holiday, and December/January) can be very slow.
Not found the answer you were looking for? Contact us with your query.
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