8 mistakes people make while buying real estate in Costa del Sol and how to avoid them

Intro

Before I launched my own real estate agency in Costa del Sol, I was a first-time home buyer myself. I know that searching for a property here can be equally exciting and scary, so I decided to put together a list of common mistakes to be aware of.

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Buying real estate in Costa del Sol – mistakes people make and how to avoid them

1. Underestimating the true cost of buying property

This might sound obvious, but believe me, a lot of people forget about it – property price is just one cost you need to account for. So, even if you find a house that’s within your reach financially, you must also be aware of other charges and taxes and budget them in. These might include:

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• Transfer tax
• Notary fees
• Registration costs, etc. 

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Also, if you’re not paying by cash, you have to find the best mortgage deal and decide on the currency to borrow in. And this means accounting for currency fluctuations. While a slight increase won’t affect your ability to buy, a 10% drop of PLN against EUR could put the property out of your range. 

How to avoid it: Create a budget

If you know how much you want to spend on real estate in Costa del Sol then make sure that this sum also includes costs related to taxes, legal fees, currency rate fluctuations, registration costs, etc. It’s best to create a budget, to check how slight changes in costs will affect your ability to buy. Also, don’t forget to include ongoing expenses like community fees, property management, and maintenance – this is especially important for coastal properties. I recommend having a contingency fund for unforeseen expenses. 

2. Skipping professional legal advice

Buying property overseas is more complicated than in your home country as there are rules and laws you might not be familiar with. Before you make a reservation or deposit on the property, consult with a lawyer. Early in the process, potential problems might arise, so it’s key to have a lawyer who could help you make decisions. 

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Here is a little tip, pick a law firm where tax advisors, lawyers, and architects work closely together so they can review the property from every angle. Also, focus on finding a counsel who is dedicated to protecting your interest and securing the best deal for you.  

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How to avoid it: Choose the right legal representation

Work with a lawyer who is bilingual and has a deep expertise in Spanish real estate law as well as experience working with international clients. To avoid conflict of interest, it’s best to choose one who is not affiliated with the seller, agent, or developer. I recommend checking their credentials in Colegio de Abogados. The right partner will not only conduct due diligence and make sure that you have all the necessary documents, but also explain the process clearly. 

3. Ignoring the due diligence process

One of the biggest real estate investment risks I see people make is skipping a complete due diligence. It should go beyond technicalities, and also include legal and fiscal perspectives. Here are some of the issues you might discover during the process and things you should do: 

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• Putting off your NIE application, i.e., a foreign ID in Spain. You need to have one if you’re thinking about buying real estate in Costa del Sol and elsewhere in Spain. It’s not assigned automatically, you must apply for it
• Not registering the property in the property registry to ensure a single title of ownership and guarantee it against any 3rd parties 
• Finding out that the property doesn’t have a Spanish Nota Simple, which reflects the state of the property 

• Confirming that the seller is the legally registered owner of the home
• Assessing whether the property is subject to public domain restrictions or protected assets
• Investigating if the property is impacted by legal protection easements
• Checking if there are any liens or embargoes on the real estate due to outstanding debts with the tax agency or third parties, including Property Tax (IBI), Personal Income Tax, Wealth Tax, etc.
• Spotting any outstanding debts with the Homeowners Association, as well as with electricity or water companies (utilities in Spain)
• Verifying the presence of a valid Building Licence or First Occupation permit
• Checking for unpaid Property Tax (IBI) or other municipal taxes
• Ensuring the property is not located in a flood-prone area
• Confirming that the property has the necessary Energy Performance Certificate.

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I know it’s a lot to take in, but there’s no reason to worry – a good lawyer will check all of the above for you. I just wanted to make you aware of the issues that you might come across. 

How to avoid it: Conducting thorough research

Collaborate with a lawyer who specialises in Costa del Sol and remember to request a Nota Simple. It will help you guarantee the legal safety of the property. This document is specific to Spain, and includes critical information on the real estate such as the legal owner, any debts or liens against the property, its boundaries, and if there are any legal proceedings against it. It’s issued by the Registro de la Propiedad (Property Registry). 

4. Overlooking location considerations

Each area and town in the Costa del Sol has its unique charm. There are both vibrant cities and tranquil villages here, so shortlisting a few locations that have everything you need shouldn’t take you too long.

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You need to make sure that you’re not taking a leap of faith when deciding on the exact town and property, though.

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Consider access to the most important services and amenities. How far is the nearest grocery store? How long will it take you to get to the highway, or how good is the road that leads to and from your potential future home? 

These considerations are about more than your convenience; if you decide to rent the property or resell it in the future, it’ll also affect the resale value you get. Unfortunately, some buyers don’t think about these long-term perspectives.

How to avoid it: Research the area

There are a few tactics I recommend. In the early stages, you can look into forums like the Moving to Costa del Sol or Ask-Me-Anything threads on Reddit, where expats share their experiences. It’s a great place to ask those who live in your dream destination about access to essential amenities. 

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You could also test the waters yourself. If you’re considering a couple locations, you could travel to the area and stay there for a few nights. When you do, try to go about your day the same way you would if you lived there.

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If you don't have the time to travel there yourself, you could get help from a local realtor. They can do so-called “location work” for you. Among others, they can give you an estimate of the time it takes to get to different places by car and foot. They might even be able to film a video as they explore the area for you.

5. Falling for unrealistic sales promises

Saw a too-good-to-be-true deal for a property? High chances are, there’s a ‘catch’ like high, hidden long-term costs or loud construction planned for the upcoming years.

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The latter issue is something that Ivo Rusev and his wife, who bought a house very close to Estepona, experienced when they purchased their property. “I made the mistake of not fully researching the area, or maybe not predicting that the lot nearby would be eventually used for a new building”, he told me. “The fantastic view and close proximity to the beach just drew us immediately, but I didn’t realise there would be constant construction noise nearby”. Ivo told me that that’s now resolved, but this made their stays for the first 2 years much less enjoyable. 

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As a real estate agent, I must also warn you about another common tactic. To get your attention (and your contact details), some realtors keep a listing of a beautiful villa or apartment for a good price or at a great location. In reality, the property might not exist or was sold long ago. Once they have your details, they’ll keep sending offers or calling you. You might be ok with this, but for some this might be too obtrusive and put you at an uncomfortable spot. 

How to avoid it: Look into planned developments and the property’s registry 

Each municipality in Spain needs to publish their own urban planning documentation, known as the "Plan General de Ordenación Urbana" (PGOU). With a little digging, you can find future construction plans and land usage (Afectaciones Urbanísticas) for your potential future neighbourhood. You could find out, for instance, that your remotely located villa will have a shopping centre built 1km away in the next 5 years. Of course, you could also see some good news, too, like having new roads set up to ease connection to the airport or other major towns.

If you want to buy a plot of land, not an existing property, then the stakes are even higher – check the city plans to verify if you can build over the land, as there might be restrictions due to wildlife/environment preservation.

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The best way to avoid any of the traps I’ve mentioned here though is to partner with a real estate agency. They know the market and can spot too-good-to-be true offers straight away, and will know about any new developments in their area. Plus, if you’re buying from a new development, they will either already know the property development company behind it, or have the means to verify their legal status.

6. Not inspecting the property properly 

Another mistake that people make while buying property overseas is not viewing it in person. You should take a detailed look inside and outside the real estate – take your time, and view it at different times of the day. By doing so you’ll be able to spot issues like:  

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• Damaged windows, doors, frames etc.
• Moisture problems
• The energy efficiency of electrical systems
• Noise concerns or issues with the neighbours
• House furnishing, etc.  

How to avoid it: Hiring a professional inspector

It’s best to hire a professional inspector who’ll point out any issues. While it might cost you a bit extra, it will pay off long term. There are plenty of inspectors to choose from – with many located in Costa del Sol. 

7. Not working with a trusted real estate agency quickly enough

In my experience, the majority of expats looking for properties in Costa del Sol already own a property (or a few) in their local market. Some think that finding and buying a property abroad follows the same rules, but it’s not true.

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Take Poland, for one. When you visit the top Polish real estate listing sites, you’ll find posts from both agencies and private sellers. Generally speaking, realtors won’t have a lot of ‘hidden’ properties – most of the homes they represent will be published online in these listings.

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This differs from how the real estate system works like in Spain.

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Realtors in Spain work in an agency network – they have access not only to the properties they represent, but also those of their partners. They can see every property on sale, new developments, properties from banks. An individual buyer will never get access to them alone.

How to avoid it: Pair up with an agency that specialises in the Costa del Sol region 

They know the area inside out and will quickly short-list potential properties for you if you tell them your priorities (for example, whether you're seeking a three-bedroom villa but are flexible on square footage size and prioritise location). Better yet, agents might be in a much better position to negotiate the prices for you.

8. Not considering long-term costs

Sometimes, you might like a property so much that you want to act quickly and finalise the purchase before someone else does. But even if the price looks great and the location meets your needs, make sure you understand all the recurring costs you can expect once you buy the property.

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How much they’ll amount to depends on your neighbourhood’s community fees, utility rates, and maintenance costs. Others, like professional property management, will only apply if you don’t relocate to the property full-time – you might want someone to look over your property while you’re gone, or handle tourist rentals for you.

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Speaking of tourists – some communities don’t forbid rentals, but set a massive fee if you want to lease your property. I’ve heard of situations where, once you get a tourist licence, your community fees will be raised by more than 30%. 

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It’s hard to forecast some of these costs, especially if it’s your first property in the region.

How to avoid it: Research the community you fall under

Check if you can find information on how high community or maintenance fees are. Before you buy, make sure they won’t drain your funds in the long-term. Consult your realtor or lawyer if they can get any information. The latter could also draft a long-term cost simulation and search the T&Cs of your neighbourhood for any ‘hidden’ costs or other risks.

Avoid real estate investment risks and make the most of your property

I wrote this piece not to discourage you, but to spare you from a lot of unpleasant surprises – some of which can be really costly.  

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Learn more about what you should pay attention to while buying your first property in Spain.

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