Would we be making a really stupid financial decision buying a house in Spain?

[Morgandetoi]

Apologies in advance if my wording isn’t quite right, I am not the most articulate person.

I really need an outsiders opinion.

Me and my husband (30 & 34 & 2 children) have been offered the chance to buy a house in Spain it’s 35,000 euros about £30000 give or take.

This house is absolutely amazing and would be a once in lifetime opportunity for the price and location. I doubt we ever find something like this ever again. Buying in Spain is a long held dream that we thought we wouldn’t be able to achieve to lot later down the road. This house is in area that is becoming more popular and I have no doubt that the property value would increase over the years.

We have about 80k equity in our house and owe £96k on our mortgage. No other debts other then a car payment.

We have £15k in savings, our savings were a lot higher pre COVID but my husband had time off work as I was pregnant,so we used our savings to live off. This is steadily building back up and we are saving around a £1k per month.

We would be able to put down £10k and we are thinking of remortgaging and taking £20k of equity and putting it on the house in Spain.

If we buy this house it would effectively wipe out our savings, as we would have to pay tax, lawyer fees etc. which would total about £5k

My heart is saying buy it, as it would just be fantastic for our children and we would never get such a beautiful place again for the price. What has happened this year has really changed my perspective of life and I am trying to live more of a full life rather then “well we will do that when we retire” who the hell knows what’s going to happen next week and you can always earn more money.

But my head is saying no. It’s stupid, a pie in the sky idea and something that could be a financial drain.

From an outsiders perspective would it be a bad financial decision?

We dd it 15 years ago
We do (did) enjoy it there but it has cost so much money. The taxes are very high and the red tape can be a nightmare. I speak Spanish which makes things easier but it takes so much more time and effort to sort things out than here. Spanish banks in particular can be difficult and dint have much idea about customer service.
Although there have been no major issues with hindsight I wish we hadn’t done it

I’m so jealous of the price my tiny Spanish city centre flat was 500k! Even my holiday home in a non touristy middle of nowhere is still 80k for a 2 bed flat... why is it so cheap!!?

But yes, why not. Although at the moment there is a big question mark going round about brexit meaning that you (as a non resident home owner) wouldn’t be allowed to let anyone else stay in your property (eg like your kids when they’ve grown up) unless you register it as a holiday let. Another new brexit rule means that Brits can’t buy within a certain amount of metres of a military base so you’d need to check that. There are a LOT of property pitfalls in Spain and you can very easily fall into horrible traps and find yourself owing thousands. Make sure you get a specialist local lawyer.

If flexi school is realistically an option and you’re self employed then go for it. My concern would be more around always having to do maintenance etc when you’re over there. My friend had a place in Spain and that was the reality for her. For the cost you could hire an Air B&B for low amount and get cheap flights (which you’ve had to pay for anyway). But if it’s a dream. Go for it, it’s pretty cheap, may increase in value so could be profitable

My mum bought in Spain a few years ago. Bought a plot and built a house. When she bought there were regular reasonably priced flights from our local airport and in the property market at the time it was fairly priced. Fast forward a few years, no flights from our local airport, flights are more expensive and a significant distance from either home or the Spanish property. Brits have stopped buying in the area, 40% youth unemployment in the area the house is in, surplus of housing, its worth significantly less than the cost of building it.
It's been on the market for 4 years now and still not sold.

Get rreally good legal advice. Some brits in Spain have lost property because the area they are in never got proper planning . mum did all relevant searches and got legal advice but mayor of the town decided she was responsible for an unpaid electricity bill from the 1980s her solicitor said she wasn't but mmayor cut off electricity until she paid !

PProperty in the UK is always a sound investment , but in Spain that isn't the case.

You'd be better off looking for short term lets.

Sounds like an obvious thing to ask but do you speak any Spanish? My grandparents had a holiday home in Spain and believe it or not the language barrier was a real problem, especially when it came to things like trying to sort out water leaks, plumbing issues and eventually trying to sell the property from the UK when my grandad got ill. My uncle also had a property in Spain which also unfortunately ended badly when his house got completely ransacked so he ended up selling too. I’m sure there are plenty of success stories but I can only speak from family experiences.

If I was you, could afford it (really), really liked the area it was in and genuinely wouldn't get bored of going to the same place every holiday, I would just buy it. You will have to be prepared for hassles but you only live once.

You won’t be able to work there, though, even if self-employed - if you were thinking you could.

I wouldn’t but that’s because we like to go to different places and would hate to feel like we ‘should’ be using it.

Mil had a villa in Spain and on the couple of occasions we visited we spent a time either side of the holiday opening up, cleaning, doing maintenance/odd jobs etc. So less of a holiday for us.

If you’re happy with visiting the same place then it sounds like it could be worthwhile but most people we know who have had a place abroad seem to tire of it after 15/20 years and then it’s whether you can sell it.

Bear in mind it’s a maximum of 90 days in a 180 day period. Don’t rely on flights from your local airport to the Spanish airport to last long term and timetables change regularly.

As a family with property abroad, finances are only part of the decision - our place in France wasn’t bought as an investment, it was bought as someplace to have great family holidays.

If I was confident I understood the rules around non-EU citizens buying property and taxation, I would do it - I am an EU citizen so only have to worry about tax across jurisdictions, not stay length restrictions.

Go for it! Sounds like it is your dream and that is a good price. Dont forget houses can be sold if they dont suit you anymore, and if you are getting a good deal now, you should be able to sell on later without losing out.

Part of the excitement of holidaying abroad when I was growing up was visiting different countries, beaches and areas each time. I would have hated to return repeatedly to the same place just because my parents had a place there. Particularly rural. My friend went to the same place in France for nearly twelve years in a row because they were tied to property. She hated it.
It may be different in retirement but I wouldn't do it with children.

How often do you plan being there? What would be the cost of renting for those periods?

It's very subjective, but to me a second home makes sense if you can go frequently for short breaks (eg you live in London and have a house in Brighton) or if you can go once or twice a year for extended periods (eg a 5-6 week break at the very least).

What are transport links like? If it's outside Barcelona there will always be flight. But it's not, is it? if it's a rural area there's the risk that airlines might reduce or cancel the route altogether in the future.

Others have already commented on all the risks and unexpected costs so I won't be repeating those points. I'll just add that, compared to the value of a property, maintenance is much more expensive for cheap properties. Replacing a window or fixing a roof etc will cost about the same whether the property is worth £1m or £50k (labour will be cheaper in cheaper areas, materials will cost the same). But spend £10k on repairs on a £50k property, and that's 20% of the value of your house.

That’s true, renovation work is much much more expensive in Spain than in the UK. And tradesmen aren’t interested in small jobs when so many people will do up their whole houses at once. Older houses are money pits.

@daisypond

You won’t be able to work there, though, even if self-employed - if you were thinking you could.

Why not?

If you didn’t own the place world you still like to go there a few times a year? This is the question I’d be asking myself.

Personally I wouldn’t want to be tied to one particular place for holidays.

My friends parents bought a flat in Spain and it was well used (she is one of 4 siblings, not all with kids at the time) and someone was there almost monthly.

Then the flights changed and it became a pain to get to. They still go but not the quick weekends they once did.

No, I would not risk it with the current climate. I would imagine that Air fares will climb rapidly for lost revenue soon that’s if the Covid variants are controlled. If it’s too good to be true, it generally is too good to be true. Very high taxes and red tape, don’t take the neighbours word totally for why they are saying they want to move. There could be crime etc locally that you don’t know about.

I disagree with everyone and think you should absolutely go for it.

1 of my colleagues has just moved to his house they previously owned in Spain.

And one of my friends has just bought a place and moved over there. Both incredibly smoothly.

I know two people who were absolutely rinsed buying property in Spain. I would never chance it personally.

No, I definitely wouldn't and I speak Spanish and am married to a Spaniard.

35,000 is not that cheap for rural Spain in a town house. Have you looked at local websites for similar properties? Then halfed the price?

I am sure the guy just wants to get rid of it! I want to get rid of my beautiful, yet money pit of a villa.

The heat in the summer, the mould and bitterly cold winters.

You have NO idea of the pitfalls involved in the legalities/practicalites/insurance issues/banks/inheritance issues, it goes on and on and on.

We also had to pay unpaid debts as a PP said. (This was 20 years ago)

Right now it is 100% not the time to buy in Spain.

But go for it if it is your dream. I think it would be foolish.

No way. The last thing the planet needs is people flying back and forth to holiday homes for long weekends.

"You won’t be able to work there, though, even if self-employed - if you were thinking you could.
Why not?"

That's not necessarily true either. Working in Spain is possible, although red tape bureaucracy is painful.

Or, my colleague has set himself up self employed, invoices us, an English company, and he and we have all already made arrangements with a Spanish accountant to sort everything, the tax and the legalities, from his POV. And he'll be occasionally returning to uk and running training programmes and all this has been discussed and agreed.

So, not totally impossible.

Travel is going to remain difficult for the forseeable future. And it will get more expensive.

Until the whole world is vaccinated new variants are going to arise and countries will clamp down periodically on tourism.

The push for carbon neutral economies by 2050 means that the cheap weekend flight model is dead.

Throw Brexit into the mix and you see why Brits are selling their overseas holiday homes.