Buying Off Plan Property in Spain

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Buying Off Plan Property in Spain

Buying off plan is a popular option in Spain as the earlier you buy in, the less expensive your total purchase price will be. However, while many off plan and investment real estate buyers are satisfied with the final outcome, you should always be aware that there is a risk thatbthe developer will run into financial difulcaties and the building project will not be completed.

To cover this risk, property developers and builders in Spain are by law required to take out a special bank guarantee that will compensate investors should things go wrong.

Before investing in any not-yet-completed (offplan) project, check that the guarantee is in place and consult with the manager of the bank that is standing behind it. Once you are sure the off plan development is properly guaranteed, your main concern will be the payment schedule. Usually you are required to make a down payment with subsequent payments due as the project progresses.

In addition to the initial down payment, investors may be required to pay 25 per cent of the remainder when the basic structure is completed, 25 per cent more when the floors and some interior work has been finished and so on.

When considering the cost of an off plan property in Spain, take into account whether or not the kitchen is included, or furnished, and outfitted with basic appliances. It is not unheard of for either or both of these aspects to be left in the hands of the future owner.

Finally, your lawyer will help you to ensure the contract you sign is in your best interest, containing, for example, a clause that ensures you receive compensation if work is delayed. This is an excellent way to encourage your builder to keep the project on schedule and hand over the keys on - or at least near - the date promised.