Pitfalls of buying property in Spain
Thousands of foreigners dream of buying a house and making Spain their second home. The climate, the country’s legal security and the quality of life are some of the reasons why Spain has become one of the favourite European destinations for investment, especially among the British, French and Germans. However, more and more people from outside Europe are choosing Spain to buy their second home.
According to data from the Association of Registrars, more than 13% of homes sold in Spain in 2024 were purchased by foreign buyers, with the provinces of Alicante, Malaga and the Balearic Islands being the most sought after.
However, it is not all plain sailing. When buying property in Spain, foreigners can make mistakes if they do not have the right help, for example when it comes to paying property tax in Spain or dealing with urban planning legislation. Therefore, before making a hasty decision, here are the main risks you may encounter if you do it on your own.
Why buying a property in Spain Is attractive but risky?
The fact that Spain is one of the favorite countries for investment has also brought with it some drawbacks. Many take advantage of foreigners’ enthusiasm for buying a home, acting unscrupulously and with opaque intermediaries.
Foreigners’ lack of knowledge means they can fall victim to fraud, cost overruns or even litigation that can last for years. It is therefore important to understand the current Spanish market and have independent legal representation to reduce these risks.
Legal and administrative pitfalls
One of the most common risks faced by foreigners who decide to purchase a property in Spain relates to the legal and administrative framework.
Not hiring an independent lawyer
If you are wondering how to buy property in Spain without any risks, you should know that the best way is to seek the help of an independent solicitor. Without professional help, you may make the mistake of hiring a real estate agent who does not guarantee that the contract you sign complies with Spanish law or who only looks after their own interests and not yours.
Overlooking due diligence on property titles and urban planning
Another risk that may arise when purchasing a property is failing to check beforehand whether it has any encumbrances, mortgages or litigation. In recent years, there have been cases of properties being sold that were not on developable land, especially in coastal and rural areas of Spain.
Risks of buying off-plan properties
Many foreigners buy off-plan. This can entail unforeseen risks, such as developers not guaranteeing the return of sums paid on account. In Spain, Law 38/1999 requires developers to insure advance payments by means of a guarantee or insurance; however, many foreign buyers are unaware of this right.
Financial pitfalls when purchasing a home
There are also financial risks involved in buying a property in Spain, especially if you are not familiar with everything related to the subject.
Underestimating hidden costs and fees
You will not only have to pay VAT when buying a property in Spain. You also have to take into account transfer taxes, registration fees, solicitors’ fees, among others. On average, these expenses account for between 10% and 14% of the value of the property.
The property tax in Spain
The IBI (Property Tax) is an annual tax levied on property. The amount varies depending on the municipality, but it can represent a significant sum in the long term. In addition, non-residents must declare non-resident income tax even if they do not rent out the property.
Mortgage challenges for non-residents
The IBI (Property Tax) is an annual tax levied on property. The amount varies depending on the municipality, but it can represent a significant sum in the long term. In addition, non-residents must declare non-resident income tax even if they do not rent out the property.
Practical pitfalls for foreign buyers in Spain
Beyond the financial and legal aspects, there may also be some practical risks involved in buying a property in Spain if you are a foreigner.
Language barriers and misunderstood contracts
Language differences can cause serious confusion in contracts. A simple mistranslation can alter the rights and obligations of the parties.
Ignoring community rules and property restrictions
In Spain, many housing developments and homeowners’ associations have their own statutes that restrict the use of the property (e.g., holiday rentals or structural alterations). Ignoring these rules can lead to legal disputes or administrative penalties.
Buying in the wrong location without long-term planning
It is important to know where you are buying your home, as the surrounding area has a direct influence on your quality of life and the value of your investment. If you do not take this into account, your home may lose value in a few years’ time.
Avoid these mistakes with Pellicer & Heredia
One of the most influential law firms in Spain is Pellicer & Heredia. They have more than 25 years of experience advising foreigners who want to buy a home in this country. They have a team specialising in real estate, tax and immigration law to ensure a safe, transparent purchase with no surprises.
From the legal verification of the property to obtaining your NIE, managing taxes or applying for residence visas, they will accompany you every step of the way.