A recent article in the Telegraph seemed to be promoting the Spanish dream once more. The author of the piece suggested that some 90,000 Brits left Spain and the Mediterranean region during the recession, but that now some hardy Britons are returning to the Costas to snap up bargain basement property in Spain.
In part the article was well researched, advising that anyone buying now would do well to capitalise on any equity in their British property rather than attempt to raise a mortgage in Spain. This is because mortgage lenders in Spain are likely to charge foreign buyers in excess of double what they will charge local buyers as an interest rate!
But in part I would also suggest the article is a little off the mark because Spain is still trapped in an economic nightmare, the property market is still a mess, and anyone committing a substantial sum of money to the nation – let alone it’s dodgy real estate market – is taking a massive risk. So, should you buy a property in Spain as the article suggests some British expats are doing? No…but you can capitalise on Spain’s economic issues and enjoy living in the sunshine! Here’s how…
Instead of buying a property in Spain, rent one!
Spain is still an incredibly appealing nation – it has great weather, the culture is fascinating, the food is delicious and the lifestyle virtually inimitable. As a tourism destination Spain has not decreased in appeal at all. As a place to retire Spain’s appeal has not diminished either…
However, Spain is not somewhere to work and it is not somewhere to buy property – not at the moment anyway.
There are vast swathes of unfinished housing stock in the most popular parts. There are reports of demolitions planned to deal with this problem: but whichever way you look at it, Spain’s property market has been sullied by over-development, greed and now bankruptcy.
There is absolutely no point buying a property in Spain when prices are still falling, where there is nothing on the horizon to suggest a reversal in Spain’s economic fortunes, and when you’re potentially unsure about how much of the rest of your life you want to commit to living in Spain.
Why, why, why would anyone buy a property in Spain now? You just don’t need to! There’s no end of rental real estate available in every corner of Spain…and prices are far lower per square meter than they are in the UK.
So, instead of remortgaging your British home, saddling yourself with mortgage payments and buying something you may never be able to sell should the need arise, rent out your British home, enjoy profit rent, and use the profit to fund your lifestyle in Spain!
Just don’t expect to be able to earn an income from the Spanish economy. You will need to be retired or have some form of alternative income to afford the dream – but at least you won’t have to worry about someone coming along and demolishing your property or devaluing it below what you paid for it – because you don’t own it. You just live in it. And if it gets demolished you can just find another one to rent! Simple.