Publication date: October 21, 2024

Faced with the difficult situation on the real estate market in Poland, Poles are increasingly looking to foreign markets. This trend is particularly noticeable in Spain. Compared to purchases in other countries neighbouring Poland the increase of property purchases in Spain is one of the highest for Poles.

The main destinations are the Mediterranean coast and the Spanish archipelagos due to their good Mediterranean climate.

Poles have bought a record number of flats in Spain. In 2022, there were almost 3,000 units. In annual terms, interest increased by 160% and the share of Polish purchases among foreigners rose to 3.2% from 1.9% a year ago.

It is estimated that Poles bought more than 670 flats in the fourth quarter alone, up from more than 1,000 in the record third quarter. Experts point out that the increase in purchases of Spanish flats by Poles is part of a wider trend of a 55% increase in foreign purchases.

Analysing economic data, the average cost per square metre in Spain is around 9,000 PLN, which is not too far away and sometimes even lower than the average in cities such as Warsaw, Krakow, Gdansk or Wroclaw, which is between 13,000 and 10,000 PLN. Spain has a large territory and this means that the average is quite different from the average of the country’s large urban centres. Using some cities as examples: Seville – 9,360 PLN; Malaga – 10,839 PLN; Palma – 14,944 PLN; Madrid – 18,253 PLN; Barcelona – 20,528 PLN.

Given the lack of supply in the Polish environment and the increase in real estate prices, Spain would be a good option for those investors who do not find a good option in Poland and have the necessary capital, not much more than that required in Poland, for its acquisition. In addition, Spain has a long experience of selling real estate to foreign clients, especially from the EU, so there are a multitude of services available to assist in the transaction, in the provinces mentioned above, the proportion of foreigners already exceeds 30%.

Legal aspects of buying real estate in Spain

The first and only legal requirement for a Pole to buy real estate is to have a NIE number (Número de Identificación de Extranjeros/Identification Number of Foreigner). It has similarities with the functioning of PESEL number in Poland. It is a personal and unique number needed to make any transaction in Spain. You can obtain the NIE by going to the Police station in Spain or, without leaving Poland, going to the Embassy or Consulate of Spain. On the other hand, it is not needed to have a Spanish bank account. It is not compulsory but it is advisable when it comes to paying expenses and taxes.

The purchase and sale of property in Spain is done before a notary public. There, the capacity of the parties to enter into the contract will be checked. The contract must contain the object and the price. In Spanish law it is possible to make a purchase deposit (contrato de arras) before the contract of sale. Once the purchase is done, you should register your right on the Property Registry, it is not compulsory but it is a safeguard of your right.

The Registro de la Propiedad (Property Registry) is very important during all the process. Before buying the real estate the buyer should ask there about the building. The Property Registry is public for those who have a known interest in ascertaining the status of registered immovable property or rights in rem.

First of all, registration legitimization. For all legal purposes, registered rights in rem shall be presumed to exist and to belong to their holder in the manner determined by the respective entry. Likewise, it shall be presumed that whoever has registered ownership or rights in rem has possession of them.

• Second, unopposability. Titles of ownership or other rights in rem in immovable property which are not duly registered or recorded in the land register are not prejudicial to third parties. In other words, the right that is registered prevails over the right that is not.
• Third, public registry faith. A person who in good faith acquires for valuable consideration any right from someone who is shown in the Register as having the power to transfer it, shall be maintained in his acquisition, once he has registered his right, even if the right of the transferor later proves to be invalid for reasons not recorded in the Register.
• Fourth, presumption of truthfulness. The thing registered are true until proven otherwise.
• Fifth, legal safeguard. The entries in the Register are under the safeguard of the Courts and produce all their effects.
• Sixth, judicial protection of registered rights. Registered rights can be enforced through judicial process.

The only legal issue that is of compulsory registration in the Property Registry is the mortgage. Nevertheless, all events, acts or rights affecting immovable property, such as rights of usufruct, use, habitation, censuses, easements, surface, etc., as well as judicial decisions, can be registered. One principle of operation of the Property Registry is particularly important, the principle of priority. If two incompatible rights are to be registered, the one that arrives first is registered.

The purchase of a house is subject to several taxes:

• Impuesto sobre el Valor Añadido (IVA) (VAT in English), in case of new real estate, the tax rate is 10%
• Impuesto de Transmisiones Patrimoniales (ITP) (property transfer tax), in case of second hand houses, between 6 and 10% depending on the Comunidad Autónoma (region).
• Impuesto de los Actos Jurídicos Documentados (AJD) (Stamp Duty), it is payable if the property is purchased and VAT is charged and if it is purchased with a mortgage.

Other expenditures of the process:

• Public deed at the notary’s office.
• Registration of the deed in the Property Registry.
• In case it is necessary to take out a mortgage, the appraisal and the notary, the mortgage taxes and the registration of the deed in the Property Registry must be included.

When it comes to buy real estate it’s important to have in mind that there is a variety of types of ownership.

• Pleno propietario (full ownership): it is the possession of the real right of ownership in its full use and enjoyment, the classic property right. When you are an owner you have a series of powers such as the power of free disposal (the power to dispose of, encumber, transform), the power of free use, the power of reinvestment.
• Nudo propietario (naked owner): this is when you have the real right of ownership of the property but not possession or the right to use and enjoy it.
• Usufructuario (beneficial owner): is when you do not have the right of ownership but a right to the use and enjoyment of the thing for life, it is the counterpart of naked owner.
• Copropietario (co-owner): there are different types of co-ownership in Spain, the joint ownership and the horizontal ownership are the most important ones. The first would be for example in the case of an inheritance, the children inherit the house of their parents and all are equal owners. The second is the case of flat blocks, for example, where everyone is the owner of their own home and co-owner of the common areas.

Regarding the ownership rights of the subsoil and the sky above and below the property, this will vary depending on where the property is located, i.e. in which city and in which region. Furthermore, it must be taken into account that if, for example, mining or water resources are found in that subsoil, Spanish law declares them to be public property. Beyond that, the subsoil belongs to the owner of the land for its use and enjoyment, with the limit of the subsoil necessary for the owner to obtain the benefits and utilities of the property.