Gecko Towers
Demand for properties in the Marbella region of the Costa del Sol has remained reasonably consistent post Covid. Although there were many transactions in 2022 and 2023, there is evidence of some stability in the higher-end market heading into later Summer 2024. However, prices for all manner of property are continuing to rise, with the high-end experiencing consistently large increase.
Let’s not beat about the bush. Properties in Marbella region tend to carry a higher price tags, indeed recent reports say that several of the priciest properties in Spain are to be found here. There are still many locations in the Marbella region that offer, particularly compared to the UK, excellent value for money and appreciably greater amenity than other regions of Spain and its fellow Mediterranean countries.
Coming from the UK, where, for the last thirty plus years, property prices have largely benefited from an upwards curve, a family property, held for a number of years will usually enjoy substantial equity. Outstanding mortgages will often have been paid off and you may have considered downsizing, buying a smaller property in your home market as your need for a smaller property increases – empty nest etc – which now gives some freedom to consider an overseas purchase to support your evolving lifestyle.
Alternatively, there may be some sense in topping-up an insufficient pension provision by using some equity from your principal property’s sale, with the balance funding your long dreamed of “escape to the sun” home.
By contrast, there has been quite an uptick in Marbella property purchases being made by a much younger demographic. Young entrepreneurs seeking a more balanced work and life dynamic especially to provide a young family with a materially increased quality of life – which is really the essence of a Costa del Sol relocation. Please see here a previous piece Are younger property buyers really disinterested by cheap booze and all day breakfasts?
You selected estate agent is well placed to guide you as to available properties in your price range but the key to achieving your goals is by setting a realistic price that you are prepared and able to pay. In many cases sellers build in a few percent to the asking price to accommodate for sales commissions and taxes. It’s fair to assume that in a “buyer’s market” that around 10 to 15% of the proposed sales price is “fat” and the seller may well be expecting some negotiation on price. Conversely, in a “seller’s market” – that is currently influencing the Marbella property market as there is an overall lack of available property for sale – we have seen examples of properties being sold above asking price.
For some, a discussion concerning funding of your chosen Marbella property brings discomfort. Your chosen estate agent will conduct various enquiries concerning your resources and your ability to purchase the property you have set your heart on. There are three key reasons for this.
Firstly, they will want to make sure that you can satisfactorily complete your purchase. This may involve you obtaining simple proof from a bank or similar that you have the funds required to purchase.
Secondly, if there is a need to seek additional funding, by way of a mortgage, for example, which will usually be available to a non-Spanish resident between 60% and 70% loan to value or purchase price – that you have to hand or can collate reasonably easily the essential materials required to demonstrate your income and current borrowings. The aim is to show the potential lender that you can demonstrate that the mortgage being sought is affordable for you. We have contacts with several large Spanish mortgage lending banks who, having reviewed your data, may be able to give a non-binding “approval in principle”. They recognize its value to those seeking to advance their purchase negotiations. We will delve a little deeper into Spanish Mortgages – as this is a favourite means of funding local purchases – in our Guide 5.
Finally, and this may seem a little presumptuous. The Bank of Spain has very strict rules regarding the source of your funds. Please do not be offended when you are asked to prove how the funds came into your possession, a property sale, inheritance, employment bonus/dividend, share-sale or similar will have a paper trail which you will be asked to provide and this is entirely usual.
From the lawyers point of view, if they fail to conduct such enquiries in the required depth, unlike some other jurisdictions where penalties for failure are merely administrative, in Spain sanctions against them can be criminal resulting in a prison sentence in the most severe cases. So, the lawyers are particularly diligent in making sure questions as to the sources of your funds are comprehensively answered. This should not be seen as any form of personal offense.
Having found a property and you’ve made an offer which after some haggling has been accepted. You will be asked, if the selected property is not off-plan and yet to be constructed, to sign a Reservation Contract, this usually obliges the buyer to pay a deposit – a contribution towards the final purchase price – of €6-€10,000, depending on price. This is unusual for many Northern European purchasers but its impact is to remove the property from the market.
Sensible advice would be not to sign any agreements until they have been reviewed by your local Spanish Lawyer (Abogado) to ensure that the deposit lodged is repayable in the event, for example, that you are unable to secure mortgage funding.
Your next step will be to ensure that you have a minimum of liquid funds available to pay the 10% deposit which is usually required some weeks after the signing of the Reservation Contract – at stage two of the property buying process – the signing of the Private Purchase Contract.
You’ll also need to budget for the buying costs associated with your property purchase. These can be a further 10% to 12% in addition to the purchase price. In a later part of this MarbellaPropertyLawyers Guide, we will consider in more detail the usual buying costs associated with your property purchase.
Should you be interested in discussing the process involved in buying a property in the Marbella region, we would be delighted to assist you. Please contact me to discuss your precise requirements.
Please note that our posts are for general interest. There is no substitute for proper advice tailored to your specific circumstances as provided by a qualified Abogado who is experienced in the application of the Spanish Law.
Nothing contained in this article should be seen or taken as the writer or the publisher providing legal, tax or financial advice. All details have been reasonably fact-checked and all efforts have been taken to ensure that facts are accurate as at the date of publication.
My details: Mark FR Wilkins, during usual business hours on +34 600 343 917 or e-mail me at mark@therightsgroup.com
You may also be interested to join and share in the FaceBook Group “Costa del Sol – The Best Place to Live in Europe” – please click this link – Costa del Sol – The Best Place To Live In Europe
© Mark FR Wilkins 2024. All rights reserved.