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Property investors urged to look to Spain

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Property seekers planning to invest in a home in Spain have been advised that now is the best time to make the move.

According to Marc Prichard, sales and marketing director at Taylor Wimpey Espana, there has never been a better time to invest because the government of Spain has cut its VAT rate in a bid to stimulate its lagging economy.

Previously, those looking to buy property in Spain would be liable to pay an eight per cent rate of VAT (known locally as IVA), but now will only have to pay four per cent if they conduct a money transfer and make a purchase before the end of the year.

Furthermore, some companies have reduced the level of VAT they charge to zero per cent when clients make purchases at certain housing developments.

Speaking to the Telegraph, Mr Prichard explained that Taylor Wimpey charges a zero per cent VAT rate for clients that purchase properties at its El Puerto development in Majorca.

"If you're buying a two-bedroom apartment in Majorca for €177,000 (£151,721), you'll pay zero euros in VAT rather than €14,160 (£12,137)," he commented.

However, people buying resale properties in Spain will still be liable to pay transfer tax, which currently stands at seven per cent of the purchase property.

In addition to this, customers will have to pay another three to four per cent to cover independent legal advice, including a lender's arrangement fee if they are planning on obtaining a mortgage, and notary and land registry fees.

Obtaining a financial administrator or a gestor is not mandatory but is usually advised in order to ensure that the purchase goes ahead as smoothly as possible.

In terms of ongoing costs, people thinking of buying in Spain should also be aware of the country's council tax, which currently stands at just under £40 per month.

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