You perhaps have in mind exactly what you would like your ideal property in Spain to look like, where it should be situated and the dimensions and specifications it should include. Trouble is, one doesn’t seem to have been built yet. The solution? Build one of your own.
Property programmes showing entrepreneurial individuals creating their new home from foundation to fixtures have perhaps contributed in the interest that there is in starting from scratch and building your own home in Spain.
There are attractions to taking control including removing the profit of the promoter and avoiding some of the risk associated with buying from one. However, building your own property in Spain comes with risks of its own and you need to have calculated your budget carefully before setting out.
According to El Confidencial, the cost of buying land has dropped and an increasing number of people are taking advantage of this. However, they warn, it is important to calculate all the potential costs before embarking on a build-it-yourself venture.
Calculating the cost
Although the majority of costs lie with purchasing the site and the building work itself, there are other on-costs that you can easily neglect to build into your calculations.
Of the total cost, you can expect to pay:
- 45% for purchasing the plot
- 40% for the building work
- 8% for the professional fees
- 7% for taxes and licences
It is important that you select your site carefully. It might sound obvious but you must check with the local municipality in Spain that you can build there and what restrictions there might be in terms of dimensions of the building. You should check the current ownership of the land and that the specifications match the registration recorded in the Land Registry.
You need to consider your utilities too. Is your plot accessible from a public road? Are services available including water supply, sewage and electricity?
On top of the building costs and the price of the plot you must add the costs of the Deed of sale, notary fees and registration in the Land Registry in Spain. This usually comes to around 0.5% of the purchase price.
There will be Transfer tax to pay of between 7% and 9% and if you are a company you will have to pay 21% in VAT. There will also be VAT to pay on the building work itself that will come to around 10% of the contract budget. VAT (IVA) also applies to architects’, technicians’ and builders’ fees all at a rate of 21%.
Overall it is estimated that the cost of building the house will come in at 750-900 euros per square metre of house built. The final cost can come in higher as there is a tendency for you to pick higher quality building materials when building for your own use. The individual builder will not necessarily benefit from economy of size either.
Make sure it’s legal
However expert you feel you may be, engaging an architect in Spain is essential. You must have the correct licences to go ahead and apply for provisional water and electricity supply whilst the property is being built.
Reading through this, it is perhaps not surprising that we recommend that you engage a good solicitor with experience in conveyancing and property law and taxes in Spain to ensure that you take the correct steps in legalising your new home. Having put in so much blood, sweat and tears into its construction the last thing you want is to be told it’s got to come down.
It might sound like an obstacle race to construct your own home and it’s certainly not for the faint hearted, however, it could still be a cheaper way to ensure that you get exactly what you envisaged from your Spanish dream home over the years.
El Confidencial: ‘Cuánto cuesta construirte tu propia casa?