Buying Guide for off-plan properties or new developments in Costa Blanca
The process of buying in Spain:
How does it work?
Buying a new development or an off-plan property either a villa
or apartment, is fairly straight forward, once you have
identified the type of property you would like to invest in, the
developer will normally require an initial
reservation deposit of €3000.00.
The contract should state the proposed completion date and the payment terms until the signing of the property at the Notary, sometimes these are stage payments, other times the developer will not require another payment until completion.
Some developers will allow you to sell the property before completion, but this needs to be stated in the contract at the initial stage. Also a bank guarantee should be offered by the developer by Law, this guarantees that should the developer not have the funds to complete the project the bank will step in to assure completion.
On some new developments the developer only requires 10% initial payment and 90% on completion, coupled with the option to sell on before completion, for a very small investment the potential is attractive.
When buying an off plan villa some developers prefer you to purchase the land first, coupled with a bank guarentee this gives total security to a building project. Also banks will now lend to build, if you hold the title to the land you wish to build on.
Equity release schemes by on existing property can release capital for off-plan investment . Click Here for more informaiton on Equity Release
Re-Sale Investment
Buying off plan as soon as plans are approved, allows an
investor to pay an initial deposit of between 30% - 40% with no
more to pay until completion, which may take up to 18months - 24
months during which time the property should appreciate in
value.
Most developers will then allow you to re-sell the property
before completion avoiding tax and capital gains implications.
For example a property purchased at 100,000 € would entail a
deposit of only 30,000 € plus IVA (7%) and legal fees. If the
property is sold on before completion at 130,000 €, the
original purchaser recoups the full deposit of 30,000 € and
the increase of 30,000 € on the property sale - a return of
nearly 100%.
Property for Holiday Letting
Letting your property for holiday accommodation can be an
excellent way of making it pay for itself. A two bed room
apartment with a communal pool should generate a rental income
of approx £450 per week in the high season going up to approx
£1000 per week for a three bed detached villa with private pool.
Prime Locations can provide a letting service,
or it is very easy to organise and control yourself though your
own web page.
Prime Locations offer free advice on buying in Spain from Alicante to Valencia. Call us now:
