Buying off-plan in Spain got a bad reputation in the recession years – too many homes either didn’t get built, or were never paid for. But with Spanish property on the upswing the benefits of buying off-plan property are revealing themselves again
Certain about buying in Spain but uncertain what type of property to buy? One decision you need to make is whether to buy brand new or a “resale” (an older, pre-owned property). The problem with buying brand new is that these properties are usually more expensive than resales. A way to get brand new but cheaper is to buy off-plan. This is where you choose a plot and villa design, or an apartment within a block, and pay for the building in stage payments as it is built.
Here are six reasons why off-plan makes sense:
1. Buying into a new development early increases the opportunity to benefit from capital appreciation, as units are often sold at a discount. Once a project becomes established demand typically increases along with the price, especially as desirable new development sites become harder to find.
2. Developers often offer attractive finance deals or payment schemes, which you won’t get when purchasing a resale property. This is especially applicable at the moment, as interest rates are at record lows in Spain and new mortgages are now cheaper than the Eurozone average.
Buying off-plan gives the new owner a certain amount of control over the design of their property.
3. New property in Spain, like in most countries, comes with a guarantee from the developer, who will also be obliged to take care of any faults when the new owner takes possession, so-called “snagging”. Also, new property is built using more energy-efficient materials than you find in older resale homes.
4. Buying off-plan gives the new owner a certain amount of control over the design of their property, allowing them to choose the style and colour of fixtures and fittings. Developers will typically present furniture pack options too.
Brand new properties are often easier to rent to holidaymakers.
5. VAT (IVA) levied on new properties in Spain is 10 percent, which is the same rate as transfer tax levied on resale purchases in some regions, including the Valencian Community, home to the Costa Blanca. This means there is little difference in buying costs between new and resale purchases there.
6. Brand new properties are often easier to rent to holidaymakers and command slightly higher rates than comparable resale holiday properties. Wouldn’t you prefer to pay to stay somewhere that was sparkling new with all mod cons and no wear and tear?