Discover the Advantages of Buying an Off-Plan Property in Spain

Buying off plan property in Spain

Image: Shutterstock/Luis Viegas

Spain has always been a hotspot for real estate investment, drawing attention not just for its beautiful scenery and Mediterranean lifestyle but also for the promising prospects it offers to potential buyers. With many buyers choosing the coasts of Spain as an investment opportunity some look to off-plan properties to maximise their investment.

In this article, we will explain exactly what an off-plan property is, how to buy an off-plan property, what the advantages are, and some things to keep in mind when thinking about purchasing one.


Buying off plan property Spain
What is an off-plan property?

An off-plan property is a piece of real estate (a house, villa, apartment…) that is offered for sale before it is constructed or completed. You essentially purchase a property that exists on paper or in the planning phase, with construction yet to begin or in progress. Buyers make their purchase based on architectural plans or models of the property rather than physically seeing the finished product. In Spain, finding a completed new property is very challenging. Foreign buyers prefer to purchase new build homes that match their preferences. However, due to the dynamic nature of the Spanish market, houses are sold even during the construction phase. Therefore, it is more comfortable to buy a property during the construction phase.


Buying off plan property in Spain

How to Buy an Off-Plan Property in Spain?

Once you have researched and found a project that you like and that matches your budget you should research the developer and the potential for growth in the property value if this is important to you. You should seek legal and financial advice to understand the implications of buying an off-plan property in Spain.

Once you are happy to move forward you may need to pay a deposit to secure the property. After the reservation, the developer will provide a sales contract that outlines the terms and conditions of the purchase, payment schedule, completion date, specifications of the property, and any penalties for non-compliance.

In Spain, developers are required to also provide bank guarantees or insurance to protect payments made by the buyers in case a developer fails to complete the project or violates the terms of the contract. Make sure you receive these guarantees.

Upon completion of the property, you will need to complete the final payment and sign the deed of sale before a notary. At this stage, the property ownership is passed to you. Post-purchase you are then required to register the property at the Land Registry and handle some other administrative tasks like connecting utilities.

A reputable real estate agency can be instrumental in guiding you through the process of purchasing an off-plan property in Spain. Real estate agencies specialising in the region typically have extensive knowledge of local developments, builders, legal requirements, and market trends making them valuable partners in this journey.


Buying off plan property Spain
Image: Shutterstock/Production Perig

Buying an off plan property in Spain

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Buying off-plan property in Spain

What are the Benefits of Buying an Off-Plan Property?

Investing in an off-plan property can offer several advantages:

Potential for Lower Price: Buying off-plan can often be cheaper than buying a completed property. Developers may offer lower prices or discounts to early buyers due to the developer’s eagerness to secure sales early on in the construction process. As the project progresses and the property nears completion, the value is expected to appreciate, making it an attractive investment opportunity. It is approximately 15 per cent cheaper on average than buying a second-hand property.

Customisation: Unlike purchasing a resale property purchasing off-plan allows you to have a say in the design and layout of the property. You might be able to choose finishes, fixtures, and sometimes even minor structural changes, tailoring the property to your preferences.

Modern Amenities and Technology: New off-plan properties often come equipped with the latest technology, energy-efficient features, and modern amenities that might not be available in older properties.

Wider Range of Properties and Locations: Off-plan developments offer a broader selection of properties, including apartments, villas, townhouses, and penthouses. You may also have the option to choose from a variety of locations, from lively resorts to tranquil coastal villages, from corner plots to a more secluded area on a golf resort.

Payment Flexibility: Developers typically offer flexible payment plans for off-plan properties, allowing you to pay in instalments during the construction period, which can ease the financial burden.

Potential for Capital Appreciation: As the property is purchased at today’s prices but delivered in the future, there’s potential for its value to increase during the construction phase or after completion, leading to capital appreciation.

Good Investment Opportunity: Buying in a developing area like the Costa Blanca or Costa del Sol could be a good investment as property values may increase as the area develops further, especially in popular tourist destinations.

Legal Guarantees: As we mentioned above in Spain, there are specific legal protections for buyers of off-plan properties, including guarantees for deposits, construction quality, and completion deadlines.


Buying off plan property in Spain
Image: Shutterstock/Greens and Blues

Buying off plan property in Spain

Things to Keep in Mind When Buying an Off-Plan Property

Investing in off-plan properties in Spain can offer plenty of benefits as we have just mentioned. However, it comes with specific risks unique to this type of transaction that demand careful attention and precautionary measures.

Financial Risks: Developers can encounter financial difficulties during construction, risking the completion of the project. To safeguard your investment, seek bank guarantees (avales bancarios) from your bank for the specific property you’re buying as mentioned above. These guarantees protect your deposits in case the developer faces financial issues.

Legal Documentation: Ensure that the developer has obtained planning permission and that all deposits are secured with a bank guarantee, as required by law. Verify this information either through the developer or by checking the Land Registry to confirm the developer’s legal compliance.

Structural Insurance: Confirm that the developer has separate insurance covering structural damages to the building. This information should be available in the property manual (libro del edificio), providing you with assurance regarding potential structural issues.

Land Information: Obtain a Cadastral certificate to ascertain accurate land boundaries and a certificate detailing the property’s planning situation. These documents, available from the cadastre offices and local town hall (ayuntamiento), respectively, inform you about any restrictions or future construction plans on the land.

Contract Details: Before signing any contract, ensure it specifies the payment terms and construction completion deadline. Verify that the agreed-upon conditions align with your expectations and legal requirements.

Completion Certificates: Upon completion, request a finalisation certificate (certificado final de obra) and a license of first occupancy (licencia de primera ocupación) from the seller, confirming the property’s readiness for occupation. Consider hiring a chartered surveyor to assess the property’s condition as promised by the developer.

Legal Recourse: In case of developer-related issues such as missed deadlines or failure to meet contract standards, understand your rights. You have the option to extend deadlines or rescind the contract, leading to the return of deposits with interest. A lawyer’s assistance may be necessary for documentation and legal proceedings, should disputes arise.

While investing in an off-plan property in Spain presents numerous advantages—such as customisation options, potential cost savings, and modern amenities—it also demands cautious navigation of associated risks. Navigating off-plan property purchases demands diligence, legal understanding, and proactive measures to protect your investment and ensure a smooth transaction. Engaging in thorough due diligence and legal processes ensures that the dream of owning a tailored property along this Mediterranean haven becomes a secure and fulfilling reality.


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Written by

Catherine McGeer

I am an Irish writer who has been living in Spain for the past twenty years. My writing centers around the Costa Cálida. As a mother I also write about family life on the coast of Spain and every now and then I try to break down the world of Spanish politics!

Comments


    • Nick Dunn

      19 February 2024 • 21:30

      Catherine, Stop posting estate agent adverts as it’s not news. There are dozens of Spain property related articles on Idealista which are of more interest, without selling yourself to the highest bidder. As there are thousands of estate agents, do you want them all to send you adverts, or are you going to be a journalist.

      • John Smith

        20 February 2024 • 11:24

        Thank you for your comment, but as it says on the article this is sponsored and in order to allow us to produce our seven editions of the newspaper which is distributed free of charge and also allow us to run the web site which is predominantly full of news then we have to sell advertising to allow us to pay for the writers, the newsprint, the designers, distribution, the cost of the website etc. We would be delighted if other estate agents see advertorials like this and also place sponsored articles but readers may be assured that these sponsored pieces will always be a small part of the content of the website.

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