Spain has experienced a “building boom” in the last decade, with over 30% increase in land being developed. New properties have appeared of every kind, from beachfront penthouses to trendy townhouses to enormous villas in the mountains, and most have been sold as off-plan projects.
For some property investors, investing in a new-build can seem like a risky investment. However, thanks to recent updates in Spanish consumer law, if you choose the right Developer the risk involved is minuscule and you will be rewarded with a brand new home at a very affordable price. Does an off-plan home not appeal to you? Some people will take the route of purchasing a resale property, which also has its risks but means they can view the home in person before coming to a decision, as opposed to a show house or digital plans given to them by a Developer.
Off-Plan Properties: Why are they so popular?
The two golden rules to buying off-plan are 1) Pick your Developer carefully and 2) Hire a lawyer.
When choosing a Developer, make sure to do your research. If possible, read reviews from previous client and investigate what their reputation is in the Property World. The last thing you need is to hire an unreliable Development company that will go bankrupt half-way through construction or fail to deliver the product as promised (just in case, always make sure each payment made is secured by a Bank Guarantee).
Once you have found a sound Development company, hire a lawyer. An independent (NOT one recommended by the Developer), experienced lawyer will assist you from start to completion by scrutinizing each and every contract and carrying out due diligence on the property such as ensuring all building permits and licenses are in order, that the land is buildable upon and that everything is registered correctly in the Developers name.
When buying off-plan, you can be reasonably sure that the area you are buying in is in a good, in demand location. If you are looking to purchase the property as an investment, this can likely guarantee you to make some money on it when you decide to sell. When purchasing a resale house the location scouting is all down to you and your Estate Agent, but with off-plans Developers will typically build in an area with high-demand for the type of property under construction.
Another positive to buying a new-build is that you can expect your new home to be built with the latest design, technique and materials, particularly when it comes to meeting the newest energy-efficiency standards. This in a way ensures your property will pass any Energy Efficiency Test within the foreseeable future and avoid any hassle a few years down the line if you decide to sell. Older resale properties unfortunately sometimes come with faulty wiring, out-dated piping or crumbling and unstable foundations that can be very costly to fix before selling or after purchasing.
One last pro to buying off-plan that is worth mentioning is the money you save. Although the downside to a property that is not yet built is that obviously it is impossible to physically view the exact home you want to buy, the upside is that you will pay around 30% less than you would if the property was already finished. Provided everything goes to plan, you will be the proud owner of a brand new, unused property built to the latest standards and using modern materials and design.
Re-sale homes: Are they a better option?
Thinking of buying a resale home instead? There are definitely some advantages to doing so, such as being able to view the finished property in person and move in straight away as opposed to waiting 12 to 18 months for the home to be built.
Older resale homes are often larger than new-builds, with bigger gardens and a large plot. You can also negotiate a good purchase price and the process is a lot quicker. Whilst with off-plan homes you can work with the Developer to customize some fittings and designs, with a resale home you can carry out a renovation as you see fit and work with a construction company you chose yourself.
In a nutshell, both off-plan and resale properties have their pros and cons. At the end of the day the option you choose will come down to not only your budget but also your personal style.
Either way, and as always, we strongly recommend that you hire an experienced lawyer to advise you every step of the way. Make sure they are independent and unbiased and the road to owning the property in Spain you always dreamed of will be as smooth as can be!