Valencia is to be considered a place for wise investment. Being the third biggest Spanish city by the Mediterranean sea with its laid back life style, offering loads of cultural, economic and professional opportunities, Valencia has become a very attractive place to invest.
Property investment Valencia: before buying a property in Valencia, it is vital to know how the real estate market works. The Valencian scene operates in a remarkable way, and is often completely different from what most foreign buyers are used to. To describe it gently: The real estate scene in Valencia can be quite confusing so you need proper guidance and surround yourself with professionals. We know that making a decision is a hard process, especially if you are buying a property. Here are some tips when property investing in Valencia.
1. You need a lawyer
The Valencian real estate scene can be chaotic for foreigners. It is completely different from what most buyers are used to. As a foreigner it is important to surround yourself with good professionals. The market can lead to unpleasant surprises so be sure to contact a lawyer.
The typical buying process of a property consists of 3 steps:
- Reservation contract
- Arras contract
- Signing at the notary
You need to engage with a lawyer before the first step: Once you have seen a property that you like and that you would like to bid on!
2. Registry of the property
With property investment Valencia, it is vital to find out if the property that you are interested in is registered in the Land Registry. You will find out sooner or later that many houses in Valencia were never registered. This comes because lots of properties have been built in an area zoned as a natural park, or too close to the beach,.. Etc.
Some of these properties will be legalised, but others won’t. You should get a lawyer to verify this for you before signing any reservation documents.
The property should also appear in the Catastro register. This is where all details of the houses are registered in Valencia. It is managed by the Tax Agency and it is used to calculate bills, inheritance taxes etc. However, problems can arise if the details on both registers don’t coincide.
3. Permits and licences
In Valencia, you are required to have a building permit in order to build a legal property. They vary in type and nature, of course. However, you will need your lawyer to ensure that the property was built in compliance with the legal requirements and regulations.
Entire urbanisations have been questionably built in the past, which has led to resale issues and loss on investments. Working with a lawyer and maybe a local architect, will provide you with lots of information and advice which will help you to proceed in a safe way.
The main rule for avoiding risks in property buying is to make the right situation analysis. Below mentioned items should be double checked:
- The legal situation of ownership and property
- Exemption of property from debts and fees
- Public services to be up to date
- Availability of property
4. Cost of buying the property
The fees vary depending on the area. However, many will be negotiable as there are no fixed fees for lawyers or estate agents. The majority of the costs must, of course, be paid by the buyer. In general this is as follows:
- Transfer tax of the property → More or less 6-10% + VAT
- Notary cost, taxes and registration fee → More or less 2%
- Legal fees → More or less 1-2%
The estate agent also receives a fee in Valencia, This is typically around 3% of the final sale price.
5. Financing a purchase in Valencia
You can obtain a mortgage to buy a home. However, as an overseas buyer, you can borrow at a lower loan.-to-value rate. This means that you will need a bigger deposit. As a Spanish resident you can obtain a loan up to 80% of the properties assessed value. Non-residents are often limited to 60%-70%.
Until you effectively own a property, mortgage lenders will not complete an agreement. Therefore, it is super important to include a clause in the purchase agreement that allows you to pull out if you cannot acquire the mortgage.
Any debt that is tied to a property, is automatically transferred to the new owner when it is sold. You can only imagine how important it is to ensure that there are no debts attached.
6. Estate agents in Valencia
Estate agents are a good help as they can provide lots of information about the neighborhood etc. The only flipside is that there are almost no regulations. Be wary of anyone who asks for upfront payments or suggests cutting corners.
In Valencia, anyone can (claim to) be a real estate agent. Real estate agent is not a licensed or regulated profession. For many years it was necessary to be registered as an API to be able to exercise as an agent, but this regulation was repealed. Currently anyone can call himself a real estate agent. It is not easy to identify the cowboys from the professionals.
All the players (estate agents) are chasing exclusivity but rarely get it. It is not common in Valencia that a seller gives the exclusive selling rights to 1 real estate agency. The larger players sometimes get away with it but most properties for sale end up all over the internet published by several real estate agents. Expect to find the same property listed on different platforms at different prices. Very confusing indeed, this property investment Valencia.
7. Viewing properties and making an offer
Once you find your dream home, you will have to make an offer through the estate agent. Prices are almost always negotiable, unless you are competing with others or the price is attractive. It will depend on the agency you deal with, but some real estate agencies may request an initial deposit between 500 and a couple of thousand euros to make a formal offer. If your offer is accepted, that amount of money will be deducted from the total of the purchase, but if rejected – it will be refunded. In most of the cases some negotiation is expected, but the exact amount will depend on each individual case.
The negotiations are often done verbally. Once you reach an agreement you should get your offer summarized in writing by a notary.
Conclusion
Once you have completed the process of buying your dream property in Valencia, you should set up utilities in your name, notify the board of neighbours about the change of the ownership and follow up on the registration process to make sure the property is registered in your name and the taxes are paid.
As you can read, is property investment Valencia quite a hassle. You have to surround yourself with professionals, even if you speak the language. There will be setbacks but once you obtain your dream property in Valencia, it will all be worth it! On the other hand, if you are considering buying an apartment in Valencia you should not worry too much about the area in terms of safety as Valencia is a safe city.
Don’t hesitate to contact us by filling in the form below. Blue Key will help you from start to finish.
Blue Key helps you find an apartment in Valencia
So how can Blue Key help you find the property of your dreams? First of all we must clarify that Blue Key is not a real estate agency. We have no listings and charge no commissions on the property that you buy. In fact the “property search”-service (helping you find an apartment in Valencia) that we offer is a completely free service.
We offer independant advice, free of charge, to potential buyers. Why is this service for free? Very simple: We make money with the other 3 services: legal advice, property management and rentals. The “property search”-service is a free commercial service that will convince you of our expertise and market knowledge.
At Blue Key we have the right contacts. We can bring you in touch with reliable real estate partners, but we operate completely independant from any real estate agency. Our mission is to give you independant advice and explain to you how to buy an apartment in Valencia.
We explain the process and we guide you in your search.
Why foreign investors prefer property investment Valencia over Madrid or Barcelona
At Globexs / Blue Key we have written several articles already comparing Valencia to Madrid or Barcelona. Personally I am still convinced that Valencia is the best place to invest in Spain, because it is simply the best place to live in Spain. Of course that is a very personal opinion, and we totally respect people who disagree with this. We are also very fond of the north of Spain, and we love Gijon and Bilbao. They are great cities with lovely people but the weather is not great. Valencia seems to have it all: Metropolitan city, low crime, beaches, fabulous climate, large expat community, reasonable property prices, etc…
In this Blue Key blog you can read the article “Why foreign investors prefer Valencia over Madrid or Barcelona“, in which Clive Welland talks about the property prices, the local government and main attractions in Valencia. One of the most popular Globexs blogposts is “Why is it better to live in Valencia than in Madrid or Barcelona“. This article was first published in 2017 and updated in 2020. Every day we receive questions from foreigners who want to move to Valencia or buy an apartment in Valencia. We are committed to helping anyone with an interest in Valencia. We have created a webpage with useful information for expats and digital nomads in Valencia.
