Spain remains a popular vacation destination for many Belgians. In fact, more and more Belgians are heading south to buy property there. But what should you pay attention to when buying a vacation home in Spain?
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The recent official report on real estate transactions by foreigners in the Spanish province of Alicante shows that Belgians are now the main buyers of real estate there. This has overtaken our country in the United Kingdom. While the British still buy more houses than we do, the Belgian's investment amount is greater.
That Spanish real estate is becoming increasingly popular with Belgians has also been noticed by Carl Vorsselmans of Nieuwbouw in Spanje, an estate agency specializing in Spanish real estate. "Since the start of 2021, we feel that people want to proceed with the purchase of a property in Spain as soon as possible," he says.
Warm climate and extra buying power
"Based on our customer base, we can say that the majority of property buyers buy a Spanish home to enjoy it themselves," Vorsselmans emphasizes. "We do notice that there is a lot of demand for properties in so-called AAA locations. In the past, people would have mainly looked for homes in their own country, but due to internationalization, more and more people are considering investing in foreign real estate. In this regard, location plays an important role."
According to Vorsselmans, there are a variety of reasons why people are looking for a vacation home in Spain. "Obviously, the good climate plays a crucial role. But we should not forget that Spain is also very easy to reach. There are a lot of flights towards the southern vacation destination. Among others, you can fly to Spain from Brussels, Ostend, Deurne and Charleroi," he clarifies.
He further recalls that life in Spain is cheaper than in our country. "That way, you basically see your quality of life increase, because your purchasing power increases," Vorsselmans said. He also adds that property prices on the Spanish costa are on average lower than on the Belgian coast. "Spanish real estate prices have increased systematically since the 2008 crisis, though. We expect this trend to continue in popular destinations. Rising commodity prices are likely to have an impact on property prices," the broker adds.
Furthermore, low mortgage rates make it cheaper to finance such a purchase. In our country, the interest rate on a residential loan with a 25-year term and a rate (ratio of the loan amount to the current value of the home) higher than 80 percent hovers around 1.8 percent, Immotheker's interest rate barometer shows.
What to look out for.
Those dreaming of a house or apartment on the Spanish costa do need to take a few things into account. For example, Vorsselmans reveals that the purchase cost in Spain can vary greatly depending on the region where you purchase a home. "Spain is divided into different regions that determine their own tax rules. For example, VAT on new construction in the Canary Islands is 7 percent, while on the mainland it comes out at 10 percent," he clarifies.
In addition, don't forget that in Spain you have to pay taxes on rental income. That rate is 19 percent for non-residents. "On top of that, you have capital gains tax. This is not time-limited, like in Belgium. In our country, you pay a capital gains tax (16.5 percent) if you sell a second residence within five years. So some people are shocked that they are taxed on capital gains if they sell the property after several years," said the broker.
Finally, he warns that the real estate profession is not regulated in Spain. This, of course, can pose some risks. "It is therefore important to inform yourself well before plunging yourself into a Spanish real estate adventure. That way you won't have any unpleasant surprises," Vorsselmans concludes.
Source: Niels Saelens - Business AM