Does anyone regret their holiday home purchase?

Does anyone regret purchasing a holiday home in Spain? I had a nightmare with the last housing crash in Northern Ireland in 2007 and lost my life savings and had start on housing ladder again. In a good financial position now and considering purchasing holiday apartment in Costa Blanca. Am I mad? 

Coming over shortly to view apartment properties in Costa Blanca, with a view to purchasing. Considering using property for future holidays, and maybe spending two 2 week periods there over the winter. Would also make property available to family members for their holidays. No plans to ever try and become resident of Spain. While retired, I'm heavily involved in my young grandchilden's lives and help out with child care etc which I enjoy. I hold both Irish and British Passports, and live in Northern Ireland. I'm aware of the 90 day rule. My question relates to monthly costs after making such a significant property investment with my hard earned savings.

In respect of any prospective properties, I have to tried research relevant communal fees, SUMA Tax, Property tax etc. Looking at properties in 140k euro region. Am I correct that property tax per annum would be calculated as follows:-

140K x 1.1% x 24%

What would I be charged approximately for a locally based professional to complete Spanish tax return? I did try to research potential of rental income, but put off by the quarterly tax returns, and amount of tax possibly payable at the higher non EU resident rate. Rental income over the summer, whilst appealing, sounds like endless red tape  and taxes! 

In relation to a potential purchase, I was trying to allow an extra 13% for associated fees? Does that sound reasonable?

Before I make such a significant investment in an overseas property, I want to be totally clear about the associated monthly cost. Is mould an issue in the winter? If yearly associated costs are something like £2000 to £2500 a year then it's not worth the hassle.  Also concerned on whether property would increase in value in the next 5 years if I sold again.

A couple of things. The SUMA and property tax is the same thing. SUMA is the name of the agency that collects the tax which is about the same as UK council tax as it goes to the council.

No, the property value is not the actual value of the house but the rateable or Cadastral value listed on your bill. Often very much less than the actual value. The cadastral value on my property at just over 200k is only 48k which is what the IBI is based on.

I would suggest you add 14% costs to the price of the property in that price range. 

Communal fees will depend on what is available where you buy. Swimming pools, gardens, street lighting, lifts, tennis courts etc. I know one community that pays just 180 euro a year and another with almost a thousand. Ours, with 5 pools, extensive gardens. electronic gates but no lifts or tennis court, comes to 60 euro month. It also depends on the size of your property and outside area. The 2 bed apartments on our complex only pay 32 euro a month.

There is a also a bin collection tax on top of the council tax currently around 80 euro a year but going up next year by over 10% and possibly 20. 

We pay a solicitor 183 a year to handle all our legal details and covers everything including tax returns both income and assets declarations (you won't have to do the asset one as a non resident).

Don't buy as an investment. Many properties are only worth the same as they were 10 years. If they go up then they go up very slowly. 

Mould is caused mainly by a lack of airflow. If you have a good airflow mould is not such a problem. Just remember to leave internal doors and wardrobes open when you are not there. Also a good dehumidifier (which comes with aircon) or simply a tray of salt in each room to suck up the moisture.

Yes, renting is a pain as you need a licence and many places are over subscribed so they aren't issuing any further ones. If the place you buy already has a licence then you can continue with it. But be aware there are very many properties to rent so the competition is very strong. 

Then there are electricity and water standing charges. Electricity depends on how much power you are contracted for but will probably cost around 16 to 20 euro a month for an apartment on a low power contract. Water would be around 12 to 15 euro a month even if no water is used.

You annual running costs, including house insurance, will be far below the 2500 you mentioned especially as the council tax, based on cadastral value, will only be about 250 euro a year but councils vary.

Good luck on finding a place that suits you.

Emerald6273, I found MarieDav’s reply to you very is very useful, but I’ll try to add to it.

Regrets? No, even though the timing of our last purchase was not good.

Yes 14% purchase costs and taxes is a realistic budget – ongoing taxes tend to be far less than UK and there seems to be a move to keep them that way.

Property prices vary massively – choosing the right place/Region etc is obviously key.  Never buy in a hurry!  

Locations adjacent to the coastline usually attract a premium of 30/40% or more, but against that they can be a better investment and easier to sell.

A UK based professional firm like Spanish Tax forms provide an excellent service/advice for income tax – charge around £30 or so pa.

Renting out in Spain is not simple – lots of hassle, expenses and hoops to jump through to do so legally.  Possibly best not to rely on any income expectations, unless you really know otherwise.

Mould should never be a problem if you buy a solid modern well constructed property and use common sense.  When I was an employed person I often left our place empty for most of the winter without any issues whatsoever.  But there is an absence of meaningful building regs in Spain, so caution is needed, particularly with new builds.

You reasonably ask about the possible negative features, but there are loads of positives not raised.  Invariably the most vital depends on your selection of the property – location, location, location etc.  Very much including being in the community (or not!) that suits you. 

As time goes on we’ve gone “more local” and found we eat better food and drink for a fraction of UK costs – and also learnt how to minimise other costs – eg our electricity bills are also a fraction of what we’re used to.  Also the labour costs are often stunningly cheap, so building and maintenance costs are often surprisingly well priced, yet with generally good expertise, pleasant people and work ethic.

The exception being certain “professional” sectors where agents, banks, solicitors sometimes have lower standards than you might expect.  They can see their role more of being just a functionary, part of the system, rather than providing meaningful advice to their client.

I hope the above is a useful addition and not patronising – some items cannot be over emphasised.

Good luck!

We are on our third so we are not going to say don't do it!

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First was off plan.

Place was fine (unlike some off plans) but the developer never honoured his promises or timescales.

Don't recommend it but if you do - do not take posession without an escritura - do not pay anything without a bank guarantee (in your hand) and make sure the building permission was for full time occupation.

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Second was old and close to golf course. 

Liked it, it needed a lot of maintenance, but the on costs were quite low. Sold it because it had two flights of steps, we were getting old and needed hip & ankle surgery. Dodgy neighbours (some, others were great).

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Third on a 12 yr old develop ment. 

No problems, on costs reasonable. Pool and gardens surrounded by 100 houses and flats. Great.

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Chose your neigbours if you can. If you know someone on a place you fancy and they say the neighbours are fine go for it.

Golf developments are expensive, you have no control of on costs or prices on the development.

If you want to learn Spanish don't go to the holiday areas. Conversly if you want to speak English and are no good at languages go to the costas.

We buy because we like to have our own place and things and value not having to heave cases or wait at carousels but if you come in off season, it can work out cheap to rent. The rental should be the same for a month as the weekly high season cost if you are staying more than a month at a time (negotiate!). We had friends we saw each year, they rented for peanuts and their costs were a fraction of ours and the owner, after a couple of years, allowed them to leave clothes in a stroage room (trastero).

Good Luck

Hi. First of all, a bit of history, I bought my first property in Spain in 2001, in Ronda (Malaga). Having discovered Andalucia the year before, my then wife and I thoroughly researched the area around Ronda and viewed lots of properties. The one we bought had literally come onto the market the day we viewed it. We were smitten and within half an hour had agreed to buy the apartment.

We had no regrets. In fact, two years later, J and I bought a house around the corner for me to do up. I was about to retire early from my career, aged 55, so was still young enough to do most of the work myself. These two properties are/were in the Barrio San Francisco, to the south of the town.

Fast forward to 2005 and I was divorced and got the two above-mentioned properties as part of the settlement. With my new lady, M, we bought a do-er upper in the centre of Ronda, in Barrio Peñas, which I was able to work on once I'd retired.

In the intervening years I sold the house in Barrio San Francisco to fund another project.

My next purchase was in 2011 when I bought a chalet in the campo outside Ronda with my new wife, R. We still live there 13 years on. We are both residents of Spain and NOT subject to the 90 day rule.

By 2019 I had also sold the apartment and, in 2020, used some of the money to buy an old house in Montejaque, a small village not far from Ronda. Through the pandemic and lockdowns, I reconfigured this house and brought it back up to scratch. It's now up for sale.

As you can sense, I have no regrets at all about buying property here. I've not had a bad experience yet.

As for the costs, I don't recognise the figures quoted by others. They seem very inflated. Here in Andalucia the associated costs connected with buying a property have never exceeded 10%, often less. I don't get clobbered for tax, partly because I am a resident and largely because I have a good gestor (fixer). The fact that I am a fluent Spanish-speaker also helps when it comes to dealing with the bureaucracy.

All these properties have "earned their keep" at various times, when I have rented them out, either to tourists or long-term. I don't agree that renting is a hassle. Getting a tourist license is straightforward, especially if you use a gestor, and registering with the local police is also not a problem.

Tax returns are also not a problem, if you use a gestor. Mine, Daniel, charges me 50€.

As for selling on, I have always made a profit. At the moment prices are rising again and houses are shifting.

So, I would recommend buying property here, but then, I'm a hispanophile. And a committed European. I shall be applying for Spanish  citizenship and a passport this year. I'm fed up with not having the vote in national, regional and European elections!

The reason your costs are less is because Andalusia has a 7% ITP as opposed to 10% in other regions. So adding 3% to your 7% is 10% whereas others have to add 3% to their 10%.

Bought off plan in 2008 in the Costa Calida, was meant to be a rental cum long term holiday home then the crash happened.  Lost half the value and its never quite recovered.  I did some research on the rental market a few years ago and decided not to bother as not worth the hassle.  I get over as much as I can,  normally for weekends and more and more a cheeky week incuding a fortnight pre summer. 

Love going to a place that I have become familiar with and feels comfortable without having to put lots of pre thought into visiting.  I mainly go to beach but loads of places in my area still to explore so will save that for when I get older, although all my family use it for holidays and they have done far tourist stuff than me.    Not something I plan to sell.  If you are anxious about buying test the situation and do a long term rental and see if that works for you.

I also have no plans on geting the residency the 90/180 rule will just be managed but you at least are in a more fortunate position if you have an Irish passport.

You have other questions on money which others are more knowledgable on although I also use Spanish Tax Forms, makes life easy.

I have never had mould issues, never even occurred to me and I have locked up and left it for 6 months in the past due work demands and not getting over.

Good  luck.  :)

janiceross - yes, similar to me on several counts, including the Costa Calida choice.  A few years ago I bought a second property - a small, quite lovely flat as an investment, but then liked it so much decided not to rent it out, but then sold it when Brexit came along, making a small profit.

I pondered renting, but I'm happy staying non-res and reckon there's too many risks and hassle to make it worth while.  If you're not a resident you obviously need to emply help, so just not worth it, but each to his own - but perhaps I'm getting lazy.

Costa Blanca is very beautiful and to own a house there seems like a wonderful dream. Because you do not have plans for living there all the time, it is wise of you to consider every financial detail such as the taxes on property and other costs. Your calculation for property tax seems spot on!

Regarding the monthly expenses, it is smart to consider all things, even possible tax services. You could think about asking for price estimates from nearby experts to have a better understanding.

Yes, managing rent income and tax matters is somewhat troublesome, particularly because of the many forms required. However, if it's mostly for your holiday use and family stays, perhaps the trouble isn't justified.

It makes sense to add about 13% more for the extra costs. It is usually better to guess too much rather than not enough, yes?

Worrying about mold during winter time is reasonable, especially if you live near the sea. Perhaps having a detailed check of the place before purchase would help relieve worries regarding possible problems.

Regarding the value of property, it is somewhat uncertain, but usually Costa Blanca maintains its worth quite well. Also, considering how much tourists like this place, there is a strong possibility that its value may increase in the coming years.

Average student - you say "Worrying about mold during winter time is reasonable, especially if you live near the sea." - no, this your comment re mould is doubly awry. 

You will not suffer from mould, if the property is of modern sound construction and heated and ventilated whilst occupied. When it is not to be used for a few months it needs to be fully aired before you close it down - for example don't shower and lock-up immediately before you leave!   I've found owning a property right on the beach/coast makes no difference - never had a even speck of mould.
 

The vast majority of Spanish property is excellent, but a small amount is intended for summer tourists, often cheap "single skin" construction. which is a different matter - so don't buy it!