Black Spots for Foreigners Seeking to Build Their Dream Home in Spain

“British couple’s Costa dream is demolished”.  That was the headline of an article run by The Daily Telegraph in early 2008.  It describes how a ₤570,000 retirement home in Southern Andalusia was torn down by Spanish authorities just over a year after it had been built. There are plenty of other stories about corrupt officials, incompetent lawyers and dishonest estate agents. If it weren’t for the fabulous benefits of living in Spain, and after all this is the California of Europe, it would be easy to get put off.

However, don’t worry!  With the right planning, research, knowledge and advice from trustworthy professionals you can easily avoid the bulldozers.  So what are the potential pitfalls, and how can you avoid them?  Read on and find out…

Before You Buy Your Land

Even before you buy your land or plot on which you intend to build, several checks need to be made to ensure everything’s in order before going ahead with the purchase.

• Make sure your site is physically suitable for the intended building work – will it be accessible in bad weather?  Will the track or road withstand torrential rain and large construction traffic?
• Have a ‘topographical survey’ to document the existing site.
• Plot size – make sure you’re clear on where the boundaries of your site lie, and whether this gives you sufficient space to get planning permission for the square meterage you’re intending to build.
• Check whether the land will get approval for what you intend to build, including any new access roads.  This one may sound obvious but bear in mind that the rules which apply to construction on your site might not be the same as those for neighbouring properties.  It is often best to get a building license (or a ‘Licencia de Obras’) from your local town hall before buying.
• Look out for any services (water, electricity etc.) that cross the site, and check on any relevant rights of way.
• Check where the responsibility lies for maintenance and improvement of roads, pavements, electrics, sewerage and so on.
• Finally, but importantly, find out what, if any, the medium term infrastructure plans are.  Roads and railways in many areas of Spain need improvement and there are various large-scale projects in the pipeline.  Similarly, there are plans to build several new airports over the next few years, so this should be looked into too.

A Check on All the Costs

So, you’ve researched your favourite plot with a fine-toothed comb, and have decided to buy – this is an exciting time!  However, it’s still worth being thorough at this stage and making sure you’ve budgeted sensibly and realistically, taking into account everything from changes in the building plans (post-contract signing) to connection charges for water, electricity and telephones.

When assessing quotes from contractors, clarify the inclusion or otherwise of transport costs for workers and materials. This is especially significant if you have a remote site.  It is also a good idea to organise a ‘termination guarantee’ with the backing of a bank.  This will cover you if the builder contracted to your site goes out of business before completing the work.

VAT in Spain is around 16% on land purchases and 7% on building costs, and you should ensure that contracts for the land and for the building are kept separate.  Also, a handy tip is to have your swimming pool included in the building contract (taxed at 7%) rather than it being in a separate contract and you having to pay up 16% in VAT – this might free up some money to buy a new swimsuit!

Licenses and Guarantees

As well as the ‘Licencia de Obra’ (or building license) mentioned before, there are a few crucial documents that you should have in order as you move into your new Spanish home…

• Certificado Final de Obra – A certificate from an architect confirming that construction is complete, and that the house has been built according to the agreed plans.
• Licencia de Primera Ocupacion (also known as Cedula de Habitabilidad) – A document issued by your local town hall essentially stating that you’re allowed to live in the property.  Although this isn’t technically a legal requirement, you can’t get access to water or electricity supplies without it.

It’s also worth insisting on references for any professional advisors you use at any stage during the design and build process, and following them up to ensure the credibility of the person you’re employing.

And Finally

I have to admit, all this information does seem a little tedious, but the message is with that thorough in-depth research, planning and sound advice you can easily avoid all the stress and hassle of endless hidden costs or problems.  The design and build of your dream home in Spain should be exciting and memorable, not tedious and stressful!

This article was written jointly by John Wolfendale and Simon Thorpe.

John Wolfendale is a director of Eco Vida. Simon Thorpe is a third year architecture undergraduate at Magdalene Cambridge. At the time of writing he is on an internship with Eco Vida. simoncthorpe@hotmail.co.uk