Retire in Spain, buy now, move when you are ready!

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Posted and filed under Bare Ownership.

An investment idea for people looking to retire in Spain in the future but who can invest in Spain now.

Here in Spanish Solutions, we receive hundreds of requests and questions from our clients present and future. One theme that is really hot right now is about the possibility of buying a property in Spain now, but moving over to retire in Spain in say ten years. (when they retire). Clients can take advantage of the lower prices which are sure to rise after the Brexit and coronavirus issues are resolved.

Our British clients can avoid Brexit chaos by buying their dream property while both countries have agreements in place. The current laws and deals allow British people to purchase a second home in the sunny regions of Alicante or Marbella (two of the most popular regions for British people to buy property in Spain), legally without the need for the visas and checks of a non-European citizen. 

What is the best way to invest in Spain now while taking advantage of COVID 19? Why wait until it’s over and then worry about it? Sale and leaseback property purchases in Spain might be the key. 

Be honest. We all like to save money.

What if our buyers could save an estimated 50% off the purchase price of their property in the sun today? We are doing deals just like this, right now and our sellers are loving it too. (Yes, everyone loves these deals).

We spent 12 months researching how we can legally match sellers who need cash to investors longin for a terrific deal. We worked with the bank of spain, notaries, lawyers/tax experts including KPMG and Garrigues. Now we have the plan.

Let’s say you want to retire in ten years. By then, we assume the Brexit chaos will have relaxed, the Coronavirus will be a thing of the past and you’ll be ready to pack your bags and head off to the Mediterranean. 

Probably according to the experts, the economy in the UK will take a post Brexit bashing. this means more and more British people will be working remotely from sunny Spain. Many believe that Sterling will have taken another another hit and then, it may be quite a lot more expensive to buy a Spanish property in ten years. House prices in many parts of Spain, like the golf paradise of Murcia province, are currently 40% below the peak prices of 2008. With increased demand, these prices will rise again in the direction of the Spanish property boom days. 

Take a property that sold for 200,000 euro in 2008. That same property could be bought today for 120,000 euro. (Plus costs of course).

What if a savvy investor could purchase the property today for 60,000 euro to retire in Spain? 

Retire in Spain younger and with more cash in the bank.

Most of the delayed gratification by buyers in Spain (those who are buying now with a view to retiring down the road) purchase the property and rent it either long term or short term. Yields on a property in Spain average 5%, which is decent. This amount is taxable of course.

Instead, with sale and leaseback, we are offering our buyers a chance to buy a property with up to 50% discount from the Tinsa valuation. Next, they offer the existing owner a long term option to remain in the property. This option will either be in the form of a rental contract or bare ownership.  

Win/win deals.

The seller wins. They get a lump sum right now; they get to live in their property possibly for the rest of their days; there is no disruption to their current lives; no annoying estate agents; no searching for another property; no moving or stress. In fact, their life, the day after the transaction, is more or less the same as the day before the deal is completed in the notary. 

The buyer wins. They get property in Spain with a huge discount. It is a fully legal transaction and the deeds are drawn up in their name immediately in the notary office before being registered with the Spanish land registry. They don’t have to worry about finding a tenant, paying rental tax, dealing with renal agents vacant property worries, or any of those hassles. They know the person living in their house, the ex-owner/tenant, will treat it as if it was their own- because they will feel it still is! 

What if´s.

If it sounds too good to be true…. well, you know the rest, except in this case, we’ve probably already thought of the answer. A 52-year-old buyer from Bristol in the UK asked us the following questions last week. 

What if something somehow goes wrong legally? Remember we are not estate agents here in Spanish Solutions. Here, you’ll find a team of legal and tax experts. We have done 4,000 conveyancing deals in Spain. This arrangement is not that different, once we ensure buyers and sellers follow the guidelines as presented to us by the Bank of Spain. We do our checks with the land registry in Spain, we ensure the home is legally built, has no planning issue, mortgage or debt. Of course, we make sure the owners are who they say they are, just like every conveyancing deal we do.

The most likely reason for something to go wrong is that the investor tried to do a private property purchase rather than using a law firm like Spanish solutions who are competent in these matters. 

What if the tenant dies?

The deal states that the ex-owner stays there until such time as they no longer want to or can. If they move to New Zealand, fall in love with a prince or pass away, it goes without saying that the new owner takes full ownership of their property. They can rent it as any normal Spanish property investment until such time as they want to move in and retire to Spain. 

What if the deal has not matured by the time we wish to retire?

Our investors ask us to only pick owners who are 70 or older. You will know the situation of the owner before you buy the property naturally. The average age at which people die in Spain is 83, a little younger for ex-pats. We have an owner just today looking for this deal and she is 79 already. Life happens.

Even if she is still around in ten years when you are ready to move, you’ll then hopefully own a property worth 200,000. That is assuming the property only goes back to 2008 levels. You only paid 60,000 euro for your Spanish home which now has an 89-year-old tenant. It would be simple to sell the property and make a substantial profit. You can move or upgrade simply as you got your foot on the ladder at such a lowe price.  

The location and even the type of property is not so important now. What is important is the valuation, and how easily you can turn it into money when you are ready to retire. This is not a normal house purchase, it’s much better than that, so think with an open mind.

What if I change my mind after 5 years and want to move back to the UK?

This is your freehold Spanish property. You can sell the property at any time. We’ll help you to do so and introduce you to some estate agents you can trust. Please remember that the new buyer must be aware that the property is being sold with a sitting tenant. Again, we deal with that and we protect everyone.

What if the tenant doesn’t maintain the property?

We provide a property management service. We check in on the tenant/ex-owner regularly to make sure they are doing ok, we ensure the property is being kept as you would like and have agreed in advance. Naturally, you’ll have insurance on your property (we can help!) so if there is an issue, we make it go away. You can visit the property yourself too, but only with the property manager present. 

What if we decide to move in next year before the deal matures?

Here is the “catch”. It is not a hidden one, it is the very focal pointy of the arrangement. You’re getting a huge discount on this property and this is why. The ex-owner, now your tenant, has a legally binding agreement that states that if they are not in breach of the agreement, you will not have the right to evict them. Of course, we can speak to them on your behalf if you are ready to move. Maybe they are ready to move too and they want to go back to the UK, who knows? We will help.

What if I need to get a mortgage?

No problem. The Spanish banks are happy to provide our buyers with the finance of up to 70% LTV.

What if the seller values the property too high?

We get our valuations from Tinsa, Spain’s most respected valuation company. (www.tinsa.com). They are the one who provides valuations to all of the banks. We’ll also have a good idea of what all the other properties around are selling for so deciding on the valuation is easy. If you don’t like it, you can walk away but we don’t think you will.  

What if after we get into the house we decide we don’t like it?

That is fine. It happens to property buyers in Spain all the time- they don’t like the neighbours barking dog, the garden is too small and the sound of the waves are too loud. The good news, you’ve bought for a fraction of the current price so selling and upgrading is not an issue for you. 

What if I pass away before I ever move to Spain?

Like with any property buyer in Spain, we advise you to get a will and make the normal provisions for your heirs. Spanish Solutions deal with wills, probate, non-resident tax and any other concerns you may have.

What if I delay and don’t act quickly?

The rules may change after the Brexit deal. We simply don’t know how this deal will look in 2021 but right now it is simple for the buyer and importantly for the seller too. Unless it’s attractive for both parties, we can’t help you to reach an agreement.

All the good deals will be snapped up by a major Irish fund currently looking for up to 100,000,000 worth of Spanish property. That is one hundred million, you read it correctly. This fund is soon launching in Spain with a view to dominating this market. Once they get involved and the availability will drop and the prices will increase. 

We don’t know of any other law office in Spain offering these sorts of deals. They are not going to last for all that long. 

Interested in learning more to retire in Spain using bare ownership? Why not get in touch now

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