The Spanish Property Market: What Foreigners Need to Know

26 July, 2023 | Alba Tebar

The Spanish property market is a popular choice among foreigners, both from an investment and living perspective. Since the financial crisis of 2008, the market has shown signs of recovery. Property prices have been steadily increasing, particularly in major cities and coastal areas.

On the one hand, there are the coastal regions such as Costa del Sol, Costa Blanca, and Costa Brava, which are traditionally popular among foreign buyers looking for holiday homes or investment properties. And, on the other hand, there are major cities like Madrid, Barcelona, and Valencia that also attract buyers thanks to their economic opportunities and cultural attractions.

Both options have a big rental potential, due to Spain’s popularity as a tourist destination. In that sense, some foreigners decide to buy a house in Spain to live in during some months of the year, and rent it during the rest of it. By this way, they can get some extra money and enjoy the house, both at once. It’s a win-win!

Furthermore, lifestyle factors make of Spain one of the greatest places to settle down. Its good weather, its beautiful beaches and landscapes, its rich culture, and its amazing food, make of Spain an attractive destination for property buyers. Whether it’s for retirement, a second home, or an investment, many people are drawn to the Spanish way of life.

So, if you are a foreigner looking for a property in Spain, there are some things you need to know beforehand. In this article, we’ll explain to you some of the key factors you should be aware of when it comes to the Spanish property market. Let’s see them!

NIE Number

The NIE (known in Spanish as “Número de Identificación de Extranjero”) is a must when it comes to buying a property in Spain as a foreigner. This number is unique to each individual and will be required for various legal and financial transactions, including property purchases.

The NIE is not difficult to get, but it takes some time and you’ll need to have some knowledge about the legal steps to obtain it. So, it is recommended to ask a real estate professional. In that sense, remember that in Hipotecasplus we are used to working daily with foreigners, so we know exactly how to obtain it and will be able to easily help you too.


Moreover, apart from the NIE Number, it is also very important that you gather all the necessary documentation before applying for a mortgage. Shortly, apart from the NIE, further documents will be required for the mortgage application.

We are talking about employment contracts, tax returns, income registrations, debts, etc, and also about identification documents, proof of address, and assets or liabilities.

Market Conditions

Before making a purchase, it’s important to understand the current market conditions in Spain. We are talking about factors like property prices, supply and demand, and regional variations.

For example, consulting with local real estate agents or conducting online research can help you stay properly informed. So, do not hesitate to contact our team of professionals, no commitment will be required!

Taxes and Fees

As you might know, you’ll have so pay some taxes and fees associated with your property in Spain. Every country has its own ones, so you’ll need to familiarize yourself with the Spanish ones.

These include the property transfer tax (ITP), value-added tax (VAT), stamp duty, notary fees, and registration fees. Additionally, factor in ongoing costs such as property taxes (IBI), community fees (where applicable), and maintenance expenses.

What’s more, in terms of legal conditions, it’s advisable to engage a qualified lawyer who specializes in Spanish real estate law to guide you through the transaction. They can help with due diligence, contract review, and ensure that all necessary paperwork is in order.

Deposits and mortgages

You must know that, in general, banks will only finance 60% or 70% of the total value of the property for foreigners. So, it is recommendable that you have beforehand a minimum of 30% of the price of the available property.

Apart from that, it is also recommendable that you have some extra money to afford the taxes, lawyer’s fees, or notary fees associated with the property.

In a word, and, according to what Bank of Spain says, your mortgage payments should not exceed 30-35% of your income. Because, if not, you’d run the risk of being in debt and could not afford the mortgage payment at some point.

Location Considerations

Spain is a diverse country with regional variations in terms of lifestyle, climate, and property prices. Consider factors such as proximity to amenities, transportation links, healthcare facilities, and leisure activities when choosing a location that suits your preferences and needs.

Nevertheless, remember that the price you’ll pay for buying a property will not be the same everywhere: there are cheaper cities than others, depending on the location. For example, you’ll find the most expensive houses in Madrid (the capital of Spain), Barcelona, and Valencia, closely followed by Alicante and Palma de Mallorca.

Property Management

If you don’t plan to live in the property year-round, consider the option of hiring a property management company to handle rentals, maintenance, and other property-related tasks. This can be especially beneficial for non-resident property owners.

Get a mortgage-pre approval

A pre-approval is a letter in which your bank entity affirms that they are willing to approve the mortgage. So to say, your bank gives you the vote of confidence to lend you money and flatten the way to make it easier for you to obtain a mortgage for your dream house.

So, getting a pre-approval will give you a clear idea of your budget and enhance your negotiating power when making offers on properties, especially if you are a foreigner.

Finally, remember that, although there are some aspects you’ll need to consider before buying a property in Spain, you’ll always have the help and advice of Hipotecasplus. We are a group of experts that are used to working hand in hand with locals and foreigners, so we can be very helpful to guide your trough the Spanish Property Market. Do not think it twice and contact with us whenever you need it! We’ll be more than happy to help you!