The Costa Blanca has long been a hot spot for buyers seeking a permanent residence, second home, or buy-to-let rental in Spain, reflecting its stable and growing investment market.
Located in the southeastern province of Alicante, the Costa Blanca spans over 200 kilometres of beautiful Mediterranean coastline. The southern section of the Costa Blanca borders the Murcia region and includes many popular resort destinations such as Santa Pola, Guardamar del Segura, and Torrevieja.
Geographically, the expansive open plains of the Costa Blanca South contrast sharply with the mountainous skylines of Costa Blanca North. Costa Blanca South is known for its stunning Blue Flag beaches, swaying palm trees, and glistening saltwater lakes, and visitors to the area value the mild climate and excellent transport links that typify this corner of Spain.
For investors, Costa Blanca South is a popular choice, and over the years, we’ve helped many buyers find their perfect property while guiding them through the intricacies of the Spanish market.
Even seasoned investors can find navigating the practical and legal aspects of purchasing Spanish property challenging – especially when Spanish is not their first language. So, we’ve compiled our 10 top tips for property investors looking to buy in Costa Blanca South to help you avoid some of the common pitfalls.
Armed with these tips, we hope securing your Spanish dream property will be an enjoyable adventure – not a stressful journey!
1. Do your location homework
It might seem obvious, but doing plenty of research on all aspects of a potential investment location is essential. While you might feel tempted to rush ahead, time spent now will pay off later – you want to be sure you’re investing in the right location!
This initial stage is also the perfect excuse to explore your selected area’s culinary, cultural, and leisure activities. Considering practical factors, such as the local infrastructure (including medical, transport, and education), is also important, as all these elements impact a property’s rental potential and/or long-term value.
Taking a property viewing trip is an excellent way to capture all this information, and benefit from our experienced team’s local knowledge, to help you make a well-informed purchase decision.
2. Understand the local real estate market
Across the Costa Blanca South, the current combination of low interest rates and favourable market conditions is driving a growing demand for luxury properties and rental properties, particularly from overseas investors.
Talking to an expert in Costa Blanca real estate will help you to build a realistic picture of the level of local demand, expected purchase prices, and, if relevant, the anticipated rental income for properties in your chosen area.
Considering their views on local market trends will help you pinpoint an investment opportunity well-suited to your budget and long-term goals.
3. Choose your property type
From beachside apartments with unrivalled sea views to luxury new-build villas or bungalows overlooking one of the region’s fantastic golf courses… Costa Blanca South has it all.
With such a broad range of properties in Costa Blanca South, investors are spoilt for choice. The question is, what do you want from your investment? Are you buying a permanent or second home? Or are you searching for a profitable holiday let or long-term rental?
A luxury villa might seem appealing, but a more efficient, smaller property could be a better fit if you have limited resources for maintaining a larger property with a private pool. By seeking the advice of a local real estate agent, you’ll be able to match your unique situation and goals with the best investment opportunities in the area.
This process often throws up new possibilities and options you may not have otherwise considered – so it’s vital to ensure you make a sound investment decision.
4. Be aware of unexpected costs
Once you find the perfect property, we recommend you take a moment to pause and understand the true cost of your investment. It’s easy to miss the financial intricacies of the Spanish system, and it’s crucial to seek expert advice to ensure you have accounted for all relevant taxes and fees – both during and after purchase – to avoid any hefty fines!
For example, non-residents of Spain can only purchase a property with a Spanish fiscal tax identification number (an NIE). While obtaining an NIE only costs around €20 (depending on your application type) – your purchase cannot proceed without one.
In addition, once you’ve placed an offer and it has been accepted, you’ll need to pay a non-refundable deposit to guarantee the purchase, which is usually around 10% of the property price.
There will also be the Spanish property tax to consider (typically around 8–10% of the property value), notary fees, and land registry fees. Taxes and fees will vary depending on the property type and the region.
At Micasamo, we consider it essential to provide our clients with all the current knowledge and expert advice about the unique Spanish financial system when purchasing a property. It’s all part of our exceptional service, which makes the buying process simple and safe for you.
Treading carefully and in line with expert advice at this stage will ensure you avoid any unpleasant surprises further down the line and allow you to budget more accurately… which leads us nicely on to exchange rates.
5. Check exchange rates and currency transfer options
It’s very important to consider the impact of the exchange rate on your final purchase price. Even a tiny shift in the exchange rate can significantly impact the amount you have to spend.
As an example, if you’re exchanging and transferring £100,000 at a GBP to Euro exchange rate of £1.00 to €1.15, you’ll receive €115,000. If the exchange rate shifts during the week to a rate of £1.00 to €1.20, you’ll receive €120,000 – giving you a nice increase of €5,000 to spend! However, it’s just as likely that this can shift in the other direction, for example, to a rate of £1.00 to €1.10. In this scenario, you’ll be €5,000 down!
Naturally, the higher the purchase price, the more significant the impact of these seemingly small exchange rate shifts, which is why it’s essential to check exchange rates and currency transfer options – to make sure you’re getting the most out of your money.
Fortunately, using a specialist currency company can minimise the impact of these shifts in the exchange rate, alongside other protective measures, such as avoiding currency transfer fees and providing enhanced security for fund transfers.
6. Calculate your return
If you plan to invest in a holiday home or a long-term rental in Costa Blanca South, calculating your investment’s potential financial return is vital.
Pay close attention to predicted rental prices for the area, and note that the advertised rate is often higher than the final agreed rental price. Again, the advice of a local market expert, like Micasamo Realty, will provide valuable guidance.
In addition, all investors should have a realistic estimate of how much the property might gain in value over the coming years. Predicting this long-term value is trickier but remains a valuable part of the decision-making process.
7. Consider ongoing costs
Whether relocating to the Costa Blanca South permanently or investing in a rental property, knowing the ongoing fixed costs associated with a property is essential before signing on the dotted line.
Ongoing fixed costs typically include:
- Community fees (for example, for a shared pool, parking, and cleaning of communal areas)
- Building expenses or renovation costs
- Maintenance and repairs
- Mortgage repayments (if applicable)
- Home insurance
- IBI – the Spanish equivalent of council tax/property tax
- Utility bills – including electricity, gas, water, and phone/internet/TV
- Property management fees
These costs will vary depending on the property type, region, and location – and will typically need to be paid whether the property is occupied or empty.
In addition, investors with rental properties (including those who live overseas) must also declare their profits annually and pay the necessary taxes.
8. Think about hiring a translator
When you find the perfect Costa Blanca South property, attention to detail is the name of the game. If you don’t speak Spanish, and need access to a trusted translator, then now is the time to hire someone who can accurately translate all the small print relating to the property purchase.
If you’re buying your property with Micasamo, you can rest assured that – as part of our end-to-end service – we will connect you with all the right people for financial, legal, and relocation advice and support that either speak perfect English or can offer a translator if required.
9. Take extra care with the legal process
Finding an experienced, trusted lawyer (abogada/o) is highly advisable when buying a property in Spain. Having a legal representative throughout the investment process, who knows precisely how the Spanish system works, will ensure peace of mind and avoid any potential pitfalls.
Again, finding a lawyer that speaks your language is essential – so that you can communicate clearly on legal, financial and technical matters.
Your lawyer should also alert you to specific requirements; for example, if you plan to rent your property, you must have a License of First Occupation. Without this, you can’t obtain a holiday rental license.
10. Leave your property in safe hands
So, you’ve found and purchased the perfect property, successfully navigated the legal landscape, budgeted for the ongoing costs… and now you’re ready to rent it out – either as a holiday let or a long-term rental. But you’ll want to make sure your property investment is protected.
Finding a good Spanish property management company will allow you to start reaping the financial rewards of your investment without the headache of managing the property yourself from overseas.
Having a Spanish team ‘on the ground’ will give you peace of mind that your property is being properly cared for by tenants and well maintained in terms of repairs and regular inspections. It also ensures that any unexpected issues can be dealt with quickly, efficiently and professionally on your behalf.
Even if you’re not planning to rent your property, you can still benefit from the services a property management company, like Micasamo, can provide. Knowing that your property is in safe hands while you’re away – and in tip-top condition, clean and ready to welcome you whenever you decide to visit – really is invaluable.
Further support and guidance
We hope our 10 top tips have provided some food for thought. From experience, we know each client’s situation is unique, so if you require any further information on the current hot investment opportunities on the Costa Blanca or the Costa Cálida, the Micasamo team is here and ready to help.
Get in touch today, and we can explore your property requirements, moving you a step closer to achieving your dream investment in the sun!