Many are interested in the question not only about the property cost in Spain, but also in the cost of its maintenance. Let us sort it out in order.
CONTENT:
- Property maintenance cost in Spain
- Fixed monthly payments in Spain
- Annual costs associated with maintaining a Spanish house
- Incidental expenses
- Rental income
- Property maintenance in Spain in 2022
- We will help you buy apartment in Spain
PROPERTY MAINTENANCE COST IN SPAIN
After purchasing a house, you must pay a monthly rent and other expenses. Today we will explain what is included in the cost of maintaining a house in Spain and will clearly state the presence of monthly and annual costs.
FIXED MONTHLY PAYMENTS IN SPAIN
The most important thing to keep in mind is the monthly costs, which are the most expensive. Compared to annual costs, they will require good economic forecasting. Annual expenses are usually less in quantity, and besides, there is a whole year to “accumulate” required amount.
Monthly expenses include the following types of expenses:
Mortgage costs
These are by far the most important and biggest costs to own a house. The amount of expenses depends on mortgage loan terms: interest, maturity, etc. Experts recommend that it is better that this expense item is no more than 30% of the family's monthly income. If the percentage is higher, there is a greater risk in the event of economic problems.
The reality is that many mortgages that are being paid right now in Spain exceed this recommendation. This is the main reason for the high level of the property embargo in Spain. The day of the month the mortgage is repaid throughout its existence will depend on the date of the mortgage loan.
Housing maintenance costs
This is a different kind of fixed cost that you have to pay every month. This money is intended to cover the costs of common areas in a residential building: cleaning and concierge fees, garages, swimming pools, insurance, etc. In Spain, they usually average about 50 euros per month, although this fee can be more expensive in the case of large housing offices with security and gates, several elevators or a pool and a sports area.
In addition, utility bills are charged by mutual agreement at homeowners' meetings. They can be increased due to the presence of breakdowns, as well as due to prediction of future repairs. These increases are usually temporary. In many housing offices, especially in older buildings, water costs are usually included in the general bill.
Utility bills
Utility bills are also included in monthly expenses. Some of them may be considered mandatory, such as electricity, gas or water (which are sometimes included as general costs), while others are a decision of the owner: internet and mobile communications, burglar alarms, etc.
On average, in Spain they usually pay around 200 euros per month for all these services. Although the price may vary depending on the season, as some items, such as gas or electricity, are consumed more at one time of the year than at another.
Annual expenses related to housing maintenance
Annual expenses are just as important, but they tend to be less and are of two types:
- Taxes and fees.
- House insurance.
Taxes and levies are usually of a municipal nature. This means that the amount and payment methods usually depend on the municipality where the property is located. The most common are IBI (property tax) and garbage collection.
IBI is a tax that is paid for any type of real estate (house, premise, garage). It is paid depending on the municipality and on the cadastral value of the apartment in Spain. The higher the cadastral value, the more you have to pay.
As far as garbage collection is concerned, it is a tax that serves to collect waste on the streets. Some municipalities include this tax in the IBI.
To get an idea, in Spain IBI ranges from 300 to 500 euros per year, approximately. And the duty is from 80 to 100 euros.
Most municipalities set long pay periods (two months) and even the possibility of residence or division into two terms.
As for real estate insurance, in many cases it is compulsory (with a mortgage loan). In any case, the insurance covers the cost of property damage that may be caused.
These costs range from 250-300 euros per year. A small amount that will help you save in case of any problems.
INCIDENTAL EXPENSES
These are indirect costs due to specific and unexpected situations:
- Expenses for house renovations or upgrades. Obviously, these costs are voluntary, although in many cases they may be necessary depending on property condition. They can also lead to savings, for example, if renovations are carried out that will save energy in the future.
- Unexpected expenses. These are usually additional costs to pay for some work: installing an elevator, repairing roofs, facades, stairs or simple repairs to breakdowns in a building.
- Breakage costs. They are the most difficult to forecast, so it is recommended to have “spare funds” in the annual budget. Many of these minor breakdowns can be avoided with insurance.
RENTAL INCOME
Renting out real estate in Spain requires a lot of expense, as there is a high probability of wear and tear due to constant use.
Rental prices would have risen 50% in the last five years to 2019. However, this year, real estate analyst and economics professor at UB Gonzalo Bernardos predicts that the rental price will fall by 6%. The price will depend on many other factors such as housing conditions, infrastructure, etc.
Rental income in Spain includes the medium / long term rental of premises or housing with the receipt of the rent. In this case, it is important to calculate the total investment amount, that is, the funds that will go to the purchase, including expenses and taxes, as well as the planned profitability.
Rental business in Spain largely depends on the region of its location.
The purchase price and the average rental price are data that vary depending on the region of Spain. Among the most profitable places for investment in housing, we can confidently name the following cities:
- Navarra (ROI is 7.1%);
- Murcia (ROI is 7%);
- Valencia (ROI is 6.9%);
- Catalonia (ROI is 6.8%)
In 2020, property profitability in Catalonia reached the highest level in the last 10 years.
The lowest profitability is in the following autonomous communities:
- Madrid (yield 5.5%);
- Extremadura (ROI is 5.5%)
- Basque Country (ROI is 5.5%)
- Balearic Islands (ROI is 4.8%)
Currently, in cities like Madrid and Barcelona, rental prices are dropping due to more housing, leading to lower profitability.
A full recovery of Spanish real estate market is projected by 2022.
Accordingly, the cost of housing maintenance next year will remain at the 2021 level. However, a slight rise in the cost of utilities by 1-2% is possible.
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