This is a reply from a Spanish solicitor who works in Manchester:
This week a client who lives in the UK asked me if he can pay in sterling the purchase price of a house he is buying in Spain. The truth is that this is not an impediment. On the day of the signature of the purchase deed, the Notary will request evidence that the payment has been made i.e. a copy of the cheque. The purchase deed will also reflect the fact that the price has been paid in sterling and will show its equivalent amount in euros, which at the end of the day will be the one used for tax purposes and for the calculation of the transfer tax.
This is a scenario that is more and more often these days. Many Brits have bought properties in Spain and they are now willing to sell them. At the same time, other Brits who are currently cash privileged are still interested in buying in Spain and very often the transaction involves UK nationals on both sides. In this type of transactions, the parties might be interested in securing the deal in sterling in order to avoid currency fluctuations so this is something that I am seeing with enough frequency.
Food for thought if you are planning to buy in Spain and do not need a mortgage.
When we bought our first property in Spain (when the dinosaurs were still roaming the planet and going under the name of Atlas) we paid the deposit with a UK cheque. In fact, the whole cost was in sterling and we transferred money from a UK bank in sterling when the payments became due.