|April 29, 2016||No Comments|
The U.S. dollar has been buying more in Europe than it has in over a decade. This is a smart time to invest in Spain’s real estate market and to buy property in certain areas, including Barcelona.
Barcelona’s real estate market is currently driven by foreigners, with almost 25% of all buyers being foreign investors. Between the strong dollar and still-competitive real estate prices, it’s an excellent opportunity for Americans and dollar-based buyers to buy in Barcelona. The consensus expectation is that the dollar will remain broadly steady at least until the end of 2016 with Barcelona’s real estate prices expected to climb faster here than pretty much anywhere else in Spain.
On top of all this, Spain is offering major incentives for private investors from outside of the European Union. Investors of half a million euros are eligible for Spain’s Golden Visa program, which was introduced by the Entrepreneurs Law 14/2013 and then amended in July 2015 by the Second Chance Mechanism Law 25/2015 to make it even more attractive for foreign investors.
Applicants for the Golden Visa residency permit can now receive work permits in Spain. They can also request reunification not only with married partners but with common law partners as well. Additionally, the program now covers the investor’s economically dependent children – including grown up children – and parents.
Foreign investors are no longer required to visit Spain to renew their visas. After the initial duration of one year, the visa becomes a two-year residence permit that can then be renewed for periods of five years. Once the investor travels to Spain with a tourist visa, he or she can request a residency permit from Spain without having to obtain an investor visa from abroad first. As a result, investors who are already in Spain can remain in the country during the entire process of requesting or renewing their visas. Lastly, an investor can secure a six-month visa as early as he signs a deposit contract and pays the earnest money, while paying sufficient funds into a Spanish bank account.
What this all means is that a real estate buyer can gain a Spanish residency visa for his or her whole family by spending €500,000 or more on a real property purchase in Spain. Once the visa is granted, the investor can buy and sell properties as long as he or she maintains the investment threshold of €500,000 so that the visa can be renewed later on.
This visa also has no minimum stay requirement for renewal. Investors can therefore choose to remain tax residents outside of Spain, while benefiting from Spanish residency and the freedom of unlimited travel and unlimited stays in the EU. Spanish residency — and with it the ability to travel freely in Europe — is a major attraction for many non-EU investors.
In recent years, many private American investors have come to Spain to buy “summer” homes by the beach, renting them out to other American expats for the rest of the year. The number of such buyers has been accelerating thanks to Spain’s favorable tax treaties with most countries, which in many cases provide non-EU resident’s that own real property in Spain with tax incentives similar to domestic property ownership. Most tax treaties provide relief from double taxation, meaning that each country allow deductions or provides credits for taxes incurred in the other country.
The demand for Barcelona apartments and buildings with pre-existing tourist rental licenses has been skyrocketing. Last summer Barcelona’s new major announced that the city would stop issuing new tourism licenses for hotels and holiday rentals for at least one year. Then, in March of this year, City Hall quietly decided to extend that moratorium to all new licenses, including hotels and tourist rentals. With only 9,600 tourist rental licenses currently valid in the city, the new rules mean that a tourist rental license can only be granted if an old one expires.
According to a March 2016 report by international property consultants Jones Lang LaSalle nine out of ten large investors also have Spanish real estate in their sights this year. In a recent poll of more than 100 leading property investors in Spain and abroad, 89% see investing in Spain this year as a high or very high priority, with Spanish residential property a priority for 38% of the investment managers. Spain is the third most favored market in Europe amongst professional investors, behind only Germany and the UK.
For all of these reasons, we expect both professional and private investors will have quite an appetite for Spanish real estate for at least the next few years.
Written by: Nadja Vietz – Abogado-Rechtsanwältin-Attorney (WA)