Guide for Germans looking to buy in Spain

Germans bought 4,900 Spanish properties in 2018

Germany was the #2 biggest foreign buyer in Spain in 2018. Indeed, 4,900 Germans purchased a Spanish property. In other terms, German people buy 13 real estate properties per day in Spain.

The 10 things to know to buy in Spain if you are German

Here is a quick guide to help you, the German buyers in Spain, with your real estate acquisition. What should you know before you buy your dream house in Spain? Is it very different from buying in Germany?

Property prices in Spain are on their way up!

Spain’s real estate crisis is over

2,048€ per square meter at the end of 2007
1,349€ per square meter now (May 2019) meaning -34% compared to the peak => opportunity for investors who can buy now and sell in 3 to 5 years
+8,2% in 2018 => good timing to invest as prices are recovering

Do you want to receive an analysis of real estate prices in Mallorca? Valencia? Reach out to us!

Comparing Germany and Spain’s real estate markets

According to the European Central Bank, residential property prices in Germany have grown by 52% since 2010. Therefore, the time to buy in Germany was ideal in 2010. Also, the Bundesbank shows that in the 7 major German cities, the growth is close to 100% since 2010. Therefore, when was a good time to buy in Germany? Probably 2009, 2010. If you’re looking to buy in 2019, Spain seems like a better choice for geo-economic reasons.

Property prices in Munich, Berlin, Dusseldorf, Frankfurt, Hamburg and Stuttgart

Let’s compare property prices in German’s biggest cities, with property prices in Spanish biggest cities.

Berlin: after several years of double-digit growth, the median residential Berlin property price is around €4,150 per square meter.
Stuttgart, Hamburg, Frankfurt, Dusseldorf or Munich are all more expensive than Berlin. Munich (München) is the most expensive, with property prices mostly around €6,000 to €8,000 per square meter.

What about property prices in Spain?

Mallorca €2,100 per square meter
Balearic Islands (region) €2,170 per square meter
Malaga (province) €1,635 per square meter
Canary Islands (province) €1,330 per square meter

German buyers’ average loan is €245,000

Although German buyers represented 7,5% of foreign buyers in Spain, the Germans represented “only” 3,7% of the mortages. This shows that some Germans buy in cash. However, most take a loan to finance their acquisition. Indeed, German buyers took an average loan of €245,000 to buy a Spanish property.

Germans pay €2,065 per square meter

Germans pay on average €2,065 per square meter
Compared to the average (€1,373/m2), the Germans pay 50% more

What type of Spanish properties do German buyers purchase?

Germans buy mostly 2nd hand homes (84%), meaning that 16% buy New Homes. This is for example quite different from buyers from Belgium, who chose New Homes more often (33%).

Where do Germans buy in Spain?

Although Mallorca (Balearic Islands) is the #1 destination, German buyers are also very active in other regions. Here is the top 6 areas where German buyers are most active:

Balearic Islands
Canary Islands
Valencian Community
Andalusia
Catalonia
Murcia

What are the fees and taxes to pay?

When buying a Spanish property, you will have to pay between 8% and 15% of the property price in taxes and fees. Let’s take the example if you buy a 2nd hand home as 84% of the Germans do. In that case you will have to pay, on top of the property price:

6% to 10% for the transfer of property rights (“impuesto de transmisiones patrimoniales”)
1% to 1,5% for legal documents (“Impuesto sobre Actos Jurídicos Documentados”)
300€ to 700€ for notary fees
1% for a lawyer: not mandatory but it should be for all foreign buyers! It’s the only way to avoid the bad surprises, and have someone who will verify in the contracts, make sure there is no debt attached to the property…
300€ to 1000€ for property valuation : mandatory in Spain only if you take a loan!

Do you need contacts? Don’t hesitate to reach out to ask our contacts (German speaking lawyer in Spain)

Mortgage to buy in Spain

As a German resident, you can either take a mortgage in Germany, or in Spain. However, only a few German banks finance a real estate purchase in Spain. Unless you already own a property in Germany, and can use it as a guarantee.

If you take a loan in Spain, you should know that:

Spanish banks will finance only 60% (or 70% maximum) of the property price
Buying in Spain is very capital intensive. Indeed for a property of €300,000, you will need to pay 30% of the property price in cash, plus all expenses. Therefore this could mean that you’ll need to bring €120,000 approximately, the other €210,000 being financed by the Spanish bank.

Do you need contacts of banks? Don’t hesitate to reach out to ask us the contact of French speaking bankers in Spain!

Formalities when buying in Spain

Learn here about the specifics of buying a property in Spain, about the different formalities and administrative things to consider.

NIE (Spanish tax code)

To buy in Spain, you will need to have a NIE (“Número de Identificación de Extranjero, identification for foreigners”). It is required for all major legal transactions (rental agreement, purchase of real estate, purchase of cars, conclusion of insurance and bank contracts). A NIE can be applied for at local immigration offices as well as at Spanish consulates in Germany. There are also service providers who do all the work for a manageable fee from 150 euros, without you having to travel to Spain .

Secret tip: obtaining a meeting with the local immigration office may take 3 to 6 weeks.

Spanish bank account

A Spanish bank is not mandatory. However it can be more practical, to pay things such as the water, internet, electricity fees. If you plan to do a rental investment in Spain (buy to let), or to renovate a flat, it may also be easier to avoid international bank transaction fees.

The reservation fee

As a buyer, you will probably be asked to pay a reservation fee (several thousand euros) to book the property. If the interested party decides to buy within the time limit, the reservation fee will normally be credited towards the the purchase price. If the buyer decides not to buy, the reservation fee is usually lost.