Should you buy or rent your (holiday) home in Spain?

After Spain’s financial instability over the past few years and the effects of the pandemic, the spanish housing market (purchases) is finally settling. By the end of October 2024, property prices had risen by 8.7% year-on-year, with further increases expected at around 2.8% in 2025.

Rental prices have risen substantially over the last 5 years due to a supply shortage. The average price for a city-centre apartment in Spain is approximately €1,500 per month, while a similar property on the outskirts will cost you like €1,000.

If you’re planning to move to Spain, you should consider your long-term goals. Do you know the best places to live in Spain? Do you plan to settle permanently or would you like to see the lifestyle before you commit? Alternatively, do you intend to retire to Spain and want to invest now for the future?

Your financial situation will also influence whether you buy or rent in Spain. If you’ve sold your UK property, you might have a deposit for a new home, or you may need to take out a mortgage.

The best advice we can offer when considering whether to long-term rent or buy in Spain long-term is to take your time, and do your research to ensure your dream becomes an affordable reality.

Before you make a final decision, you should compare the costs to rent or buy in Spain.

The price of a property in Spain depends on where you plan to live. Properties in cities such as Madrid or Barcelona or properties on the spanish coast are more expensive than those inland or in rural areas. For example, Castilla-La Mancha is currently one of the cheapest places to buy property in Spain.

Once the property has been found and the price negotiated, you can expect to pay a deposit of between 10-30% of the property price, which are taxes and notary fees.

You should also consider the ongoing costs of buying a spanish property, which will include:

• mortgage payments, (if you need one)
• property taxes,
• community fees (if you buy an apartment or a property in a shared complex),
• maintenance.

The long-term financial benefits will affect your decision whether to buy or rent in Spain. If you’ve found your « forever home » and plan to stay, you’re likely to see equity in the property over the coming years.

If you’re open on where to settle in Spain, renting can give you more flexibility. Rental prices vary by region, and if you’re open to different locations, you’ll have a lot of rental options. When you rent a property, you’ll typically need to pay a security deposit, which is often the equivalent of two months’ rent.

If you plan to rent long-term, it’s good to know that landlords can only legally increase the rent by 3% per year. Most contracts are for 11 months, and after this, unless the landlord gives notice, the tenant has the right to stay for 5 years.

The table below shows the average price to buy and rent per m2 by region in spanish (in euros per square meter), helping you decide whether to buy or rent in Spain.

Whether you’re deciding to buy or rent in Spain for retirement, as a family or couple, choosing the right environment is key to your happiness. Yes, the location can significantly impact your lifestyle, as well as the general atmosphere of the area. Spain is known for its lifestyle and its lively street: festive gatherings, street conversations at high volume, and bustling scooters, especially in towns and cities. If you prefer a more peaceful life, the countryside may be more suitable for you, though it may also come with its own challenges like barking dogs, noisy neighbors and farm machinery.

Renting before making a final purchase can give you the flexibility to test out an area before committing to buying, ensuring that you find the right home in the perfect location.

Below are the main advantages and disadvantages of buying a property in Spain:

• Potential for property value appreciation: buying a property in Spain allows you to build equity over time. Your investment could appreciate, offering long-term financial benefits, as property values continue to rise.
• Long-term financial stability and security: homeownership provides a sense of stability and security, especially if you’re planning to retire in Spain.
• Freedom to alter/decorate the property: you have the freedom to modify your home according to your preferences, whether it’s renovating, redecorating, or adding amenities.

• High initial investment: buying property in Spain involves a large initial investment, including the deposit, taxes, notary fees, and maintenance costs, which may not be affordable for everyone.
• Ongoing costs and responsibilities: homeownership involves ongoing costs like mortgage payments, taxes, community fees, and maintenance, which can add up over time.
• Reduced flexibility to move: if you decide to move to another area or return home, selling the property can take time, and you may not make a profit in the short term.

Below are the key benefits and drawbacks of renting a property in Spain.

• Flexibility to relocate: if you’re unsure about living in Spain long-term or if you want to explore different regions before making a permanent commitment, this is ideal for you.
• Lower upfront costs: you’ll only need to cover a security deposit(usually two months’ rent) and monthly rent. There are no additional costs such as taxes, notary fees, or maintenance responsibilities.
• No maintenance responsibilities: you’re not responsible for property upkeep when renting. Any repairs or maintenance issues are typically the responsibility of the landlord, which can save you both time and money.

• No long-term investment: renting doesn’t build equity or increase in value like buying does. It’s paying for a place to live without gaining long-term financial benefit.
• Limited ability to personalise: renters can’t usually make changes to the property, like painting walls or adding fixtures, as landlords prefer to keep control over its condition.
• Pets sometimes not allowed: in some rental properties, pets are not allowed, which can be a limitation for those with animals looking for a place to live.

Whether you decide to buy or rent in Spain, iad Overseas can help you find the ideal place to settle and enjoy the relaxed lifestyle of this wonderful country. Get in touch and find out how we can help.