Property from abroad

Real estate investing
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Several people in my close circle/friends have invested in properties in Southern Europe for warmth, and it would be good to open a discussion channel about investing in a seasonal home or a second home abroad, where everyone can share their experiences, cultural differences, and country-specific considerations to enlighten others, such as:

  • taxes and practices
  • renovations and use of labor
  • restrictions and opportunities
  • renting
  • expertise and selling
  • co-ownership
  • real estate agents
  • neighbors and local communities
  • rural areas and peaceful regions (where affordable housing is available)
  • other points to bring up from different stages of ownership
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2

I would be very interested in buying a plot of land and the intricacies involved. Something like a piece of countryside located a suitable distance from services, which could serve as my own base, for example, with a motorhome. One would then build the necessary minimal infrastructure there, such as a shelter, solar panels, and an outhouse, hopefully without complex permits. Preferably with minimal and lowest maintenance costs.

I would gladly hear if anyone has experiences/views related to these in Portugal, Spain, and perhaps even France, Italy, and Greece. Does one expose oneself to significant political risk and/or surveillance by local security services with such a thing? In practice, we are probably talking about the same things as in the opening post, but the object of purchase would be purely property instead of a dwelling.

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Great opening! The undersigned also dreams of buying a home somewhere in the warm south and then renting it out, especially during the summer season. Until now, I’ve always rented an Airbnb myself for a couple of months in winter from the Spanish coast. They strongly push the idea, regarding Spain, that transaction costs are about 10% of the property’s sale price. Does the panel have experience on how accurate that is in practice?

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The truth is that the costs on the sun coast favored by Finns are closer to 15% than 10%.

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This is true. Depending on the region, the local property transfer tax can be a dreadful 10% of the purchase price of a house or apartment. On top of that, there are also notary fees, which are needed almost every step of the way. Broker or trusted party fees on top, and in new developments, some additional charges.

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I have understood that almost always, or rather always, when buying in Spain, one needs the help of a lawyer who charges an additional 1-2%. Even real estate agents tell you they have an “acquainted judge” whose services are worth using. Spanish bureaucracy is probably full of all sorts of pitfalls. A lawyer is recommended even for new builds. In Finland, one can trust a real estate agent quite a bit. In Spain, it seems the situation is not quite the same. The agent’s due diligence and responsibility are probably different.
Spain is experiencing a squatting epidemic!
Today I looked at idealista.es, Spain’s largest real estate website. For example, in Fuengirola, a favorite city for Finns, there are 2456 apartments for sale, and 13 of them are occupied. In Torremolinos, 1118 are for sale and 12 are occupied; in Benalmadena, 2092 are for sale and only 6 are occupied. In Mijas, 3768 are for sale and 33 are occupied. In Marbella, 8341 are for sale and only 26 are occupied.
Evicting the occupiers is probably an arduous process and will also be expensive? Good alarm systems and a contract with a security company are a must. The police can probably arrest intruders if they are caught red-handed. If they manage to change the locks and settle in, one has to start a legal process. Spanish standard locks are quite flimsy. This was told in a newspaper by a Finnish millionaire living on the coast who engaged in mischief in his youth. He showed how a lock can be picked open in a few moments.

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I can share my own experiences from France. Buying an apartment is certainly possible, and there is experience with foreign buyers, partly because in France, a child can inherit 100k of real estate tax-free from their parent. In France, all apartments are considered real estate. Finland and France have a tax treaty, based on which a Finn who owns an apartment in France can transfer a 100k inheritance to their child tax-free (in theory; I have no experience with how the tax authorities actually view this, but at least this is stated on the tax authority’s website). If there are several children, the value of the apartment can be divided among them, meaning, for example, a 300k apartment goes to three children tax-free. Of course, this involves a fair bit of paperwork, a European Certificate of Succession, etc., so it requires patience from the heirs, and if someone in the family speaks French, the process becomes significantly easier.

In France, real estate agent fees are higher than in Finland, and many apartments are sold without an agent (de particulier Ă  particulier). This high cost of agents is partly due to the fact that buying/selling an apartment is very bureaucratic, and notaries play a significant role. In France, a notary is like a junior lawyer who drafts the sales agreement and reviews it. In Finland, the seller/buyer themselves takes on a similar role.

When buying an apartment in France, it seems to be a fairly common practice to first make a purchase offer and a promise to buy, and only then process the paperwork through the bank; this takes 2-3 months.

Then, about living there itself. In French style, everything is done either efficiently or bureaucratically slowly. In my experience, at least in Southern France, housing association matters are often handled a bit carelessly, and renovations are only done when the condition of the building absolutely requires it. In Northern France, these matters are apparently handled more meticulously. In winter, apartments can be surprisingly cold; I recommend getting double-glazed windows.

But it is certainly pleasant to live there. These quirks can just surprise a Nordic person.

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