Relocation to Spain Experience

[jpaul]

The positive being that if we don't complete until November 24, then it's around 12 months of potential additional savings, the biggest benefit being that for every £1 we save, we can then borrow an extra £2.

you mean you won't owe taxes until it is liveable - won't he require a drip feed of funds, for labour&materials during build though.
How do you protect against builder going bust, or cost/time over-run (eg inflation) .

Connecting in utilities sounds as though that will be significant cost - sceptic tank, is normal ?
Do they do a geological survey/radar of the site to check there are no problem/tough strata.

 

[Martynt74]

you mean you won't owe taxes until it is liveable - won't he require a drip feed of funds, for labour&materials during build though.
How do you protect against builder going bust, or cost/time over-run (eg inflation) .

Connecting in utilities sounds as though that will be significant cost - sceptic tank, is normal ?
Do they do a geological survey/radar of the site to check there are no problem/tough strata.

Yeah, taxes are only payable on completion, and whilst we'll need to drip feed money. It'd all be factored into the Mortgage calculation, so as long as we pay "30%" we don't need to have the full 30% sat as capital, it can be through the stepped payments.

That's where his insurance comes into it, although as mentioned as we'd be buying the land outright. We'd own the building up to each stage, so as long as the step plan for funds is agreed based on certain milestones is adhered to and we don't give in to any requests to deviate from that then we should be fine. However this is builder affiliated with an estate agency and slightly higher end than the typical one man band builder so it should mitigate the risk slightly. Not risk free, but then nothing really is when it comes to things like this. You just have to mitigate where you can.

Utilities is generally priced into the land plot. If it's pre-connected for water/electric then the land is more expensive than buying it without. Septic tanks are fairly standard though unfortunately, but that's just accepted due to us looking in remote areas.

Yeah, the builder does the survey on the land with architects to determine foundations needed etc.

 

[Orangeade]

I haven't read everything here so if you're originally a native or very specifically focused ignore me. (Or if I have read it all wrong and you're doing it already )

But if this is relatively "new" to both you and your wife, would you not consider it wiser to rent for a year? 1) build more equity up, but secondly and more importantly to make sure you actually want to be in that specific house in that specific area in that specific region? When the honeymoon time ends there might be things that pivot in importance as to what would suit your new lifestyle better?

And to echo what everyone said here, trust no one when it comes to this process, there is absolutely no shame there in ripping of a "Guiri".


But overall looks great, good to see people actually following their dreams and doing rather than talking!

Edit: my first point was based on having done the same before and jumping in to buying a place which wasn't bad but became apparent after a year or so that it wasn't going to be long long term. Luckily for me I just rented it out long term (never been back!) and bought another!

 

[potatolord]

I'm a pretty cautious type, so take the following with that in mind.

You're in a different legal jurisdiction, and your expectations need checking very carefully.

A lot seems to be riding on the builder here, and your opinion of them based on what you understand of their reputation. Have you spoken with other builders to get a comparison price? What happens if they prioritise another job and that delays completion? What happens if your builder is injured/ some other terrible thing happens- does he have back-up?

They suggested you overvalue the build cost to increase mortgage value. Does that mean you've given them further contingency, and they now know that? How solid is a quoted price, and us there any legal force.

If you're paid in gbp, did you allow for some exchange rate fluctuation?

How well do you know the area you're buying in? What's it like on a wet Tuesday in January?

I'm a right misery guts, so feel free to ignore all of that!

 

[Martynt74]

I haven't read everything here so if you're originally a native or very specifically focused ignore me. (Or if I have read it all wrong and you're doing it already )

But if this is relatively "new" to both you and your wife, would you not consider it wiser to rent for a year? 1) build more equity up, but secondly and more importantly to make sure you actually want to be in that specific house in that specific area in that specific region? When the honeymoon time ends there might be things that pivot in importance as to what would suit your new lifestyle better?

And to echo what everyone said here, trust no one when it comes to this process, there is absolutely no shame there in ripping of a "Guiri".


But overall looks great, good to see people actually following their dreams and doing rather than talking!

Edit: my first point was based on having done the same before and jumping in to buying a place which wasn't bad but became apparent after a year or so that it wasn't going to be long long term. Luckily for me I just rented it out long term (never been back!) and bought another!

I guess in theory, however we know the general area well, and are pretty good at knowing what we do/don't like pretty quickly. Probably helps that we've never been fussed on areas or having high demands even when living in the UK. We happily bought houses in places we'd never really been to as long as the house itself was right for us.

As soon as we arrived in this area back at the start of October it's felt like home to us, and that's enough. I don't think there's anything that could be changed to suit us better. We're surrounded by mountains, the views are great, the plot is flat and the house is all on a single level (important for my wife as she's disabled). I guess because we've been coming to the area a long time and generally know what is/isn't important to us it's easier to be certain. Having this rental just cemented it to us.
I would say the only compromise is the distance from the beach, but you just don't get the kind of house we want, on the size of plot we want with close access to mountains and still get closeness to the sea without being in very specific areas or having a very big budget. Well beyond what we'd want to spend.

 

[Martynt74]

I'm a pretty cautious type, so take the following with that in mind.

You're in a different legal jurisdiction, and your expectations need checking very carefully.

A lot seems to be riding on the builder here, and your opinion of them based on what you understand of their reputation. Have you spoken with other builders to get a comparison price? What happens if they prioritise another job and that delays completion? What happens if your builder is injured/ some other terrible thing happens- does he have back-up?

They suggested you overvalue the build cost to increase mortgage value. Does that mean you've given them further contingency, and they now know that? How solid is a quoted price, and us there any legal force.

If you're paid in gbp, did you allow for some exchange rate fluctuation?

How well do you know the area you're buying in? What's it like on a wet Tuesday in January?

I'm a right misery guts, so feel free to ignore all of that!

Yeah, we're taking the reputation of the builder, but not sure what else we can do. The prices are around in line with others, perhaps a touch more expensive, but from what i've heard from speaking to people that's more down to the higher quality of the build. Using better insulation materials etc.

To add, the "builder" we're using is more of a developer who manages the whole thing. He's not a builder as such in that i don't forsee him actually lifting a finger when it comes to the build process. He's more about co-ordinating the build, working with the builders/architects/banks etc.

No, it would be over-valued on architect valuation only. My contract with him would be for the pre-agreed "build price". One of the main benefits of this guy is that from prior customers his main selling point is that the price is the price. Even when covid was going mental he still stuck to prices and swallowed the cost increases. Yes it probably means that the cost of our build is more expensive as he'll factor in more contingency, but that certainty is a big factor in decreasing risk.

I'll be paid in EUR as i'm employed by the spanish entity. The only risk of FX fluctuation is our savings. However i'm accepting the risk to keep it in GBP because the saving rates are much better.

Yeah, we know the area well enough. My parents have had a place here (or nearby at least) for 25years, and lived here for around the last 10. As such we've visited at various times of the year. We know how cold it can get in January/February. It's a big factor in favouring a new build as it would be built much more efficiently than traditional builds and therefore retain heat in colder months much, much better.

 

[potatolord]

Ah, that all sounds like you have your eyes open.

 

[Martynt74]

I would certainly say that between my wife and i we're fairly good at being grounded and factoring everything in. Althoug I'll happily admit i can get giddy and carried away such as speccing up £10k home automation installations and £5k dream speakers for my music room

Luckily my wife reigns me in by reminding me that we also need more important things such as sofas and beds

 

[dlockers]

IMO line up Nick Knowles

 

[Martynt74]

IMO line up Nick Knowles

Did suggest a sob story due to my wifes disability and seeing if someone would just build us a house....."Yep, she definitely needs that massive home cinema"

 

[potatolord]

IMO line up Nick Knowles

If it is a remote location, no-one would find the body, I guess.

 

[Mercenary Keyboard Warrior]

Only quickly skimmed the numbers but look right on a first glance.

My only other comment to add in regards the build, having been a little burned in the UK property market development side personally (crowd funded type loans I was part of)
My experience is that if a developer goes bust then finding a new one to take over a part completed project is difficult. They tend to really want to secure a decent profit as well, and they know that taking on a part completed project can be a real pain. (they may quibble over if stuff is to spec etc)
What is the sign off like in regards local council etc. Do they need to sign off at plenty of stages?
If not can you find a way to, and agree a methodology to, check all is up to spec etc.

My experience of Spanish building is now old and out of date probably. But it used to be very foreign (pun intended) with quite different methods, materials etc and as such would be difficult for a Brit to be sure what was happening looked correct.

 

[Martynt74]

Only quickly skimmed the numbers but look right on a first glance.

My only other comment to add in regards the build, having been a little burned in the UK property market development side personally (crowd funded type loans I was part of)
My experience is that if a developer goes bust then finding a new one to take over a part completed project is difficult. They tend to really want to secure a decent profit as well, and they know that taking on a part completed project can be a real pain. (they may quibble over if stuff is to spec etc)
What is the sign off like in regards local council etc. Do they need to sign off at plenty of stages?
If not can you find a way to, and agree a methodology to, check all is up to spec etc.

My experience of Spanish building is now old and out of date probably. But it used to be very foreign (pun intended) with quite different methods, materials etc and as such would be difficult for a Brit to be sure what was happening looked correct.

Cheers, i did spend quite a while on it, although it was gone midnight at that stage!

It's a fair point on the developer going bust, but i think that's always going to be a risk regardless of builder, you just have to do as much due diligence as possible and take as many steps as you can to minimise risk. This guy has a great local reputation which seems important to me and this comes from a few different nationalities, and also a few keyholder/home maintenance guys i've spoken to along with multiple estate agents. They all think highly of him and him having his own office where you can visit him in person helps, especially since his English is fairly good. Although he struggles with my wife and I being northerners!
I know the office adds more overheads which we're ultimately paying for, but again it's a small cost for minimised risk. He also said he had an insurance policy which covers his side of the build in the event of going bust. I need to see more details of that, but again seems safe.

Yes, there are regular site visits for sign offs. Especially as it's a self build mortgage so the bank get involved too.


I think whilst there are lots of historic negative stories of builders in Spain, from what i can gather, these are usually big developers who want to throw up loads of shoddy houses/flats and then move onto the next project. It doesn't feel like this guy is on that level.
Yeah, materials are different, although this is another pro of going with a new build. The house we're currently in has me sat in a hoody at my desk even when it's 24C and sunny outside. It just doesn't retain any heat and gets freakishly cold. Having a new build with insulated concrete blocks and higher quality glass to keep out sunlight yet still retain heat in cooler months is a big plus.
The pool on the house we visited had a solar heated pool. The water was like a jacuzzi!

 

[drakioned]

Thank you for writing up your experience... I don't expect I'll ever do anything similar but it's cool that people are writing up their experiences.

 

[Martynt74]

Thank you for writing up your experience... I don't expect I'll ever do anything similar but it's cool that people are writing up their experiences.

No worries, if anything it's as much for me to be able to read back on in the future!

Had a few meetings with local builders to get an idea of other options which are potentially finished builds.

Yesterday met with an agent selling some, they seem to be one of the bigger agents in the area and sell on behalf of multiple builders. The first house we saw was a little underwhelming. The second was a little bigger on a fantastic plot. It was elevated on the corner of a "shelf" so nothing would block the views in front. Unfortunately there were a few houses quite closeby which ruined the feel a bit. The builder also throws up a lot of quite american looking houses quite cheap (see link https://www.alicantedreamhomes.com/...o/new-build-villa-s-with-wow-factor-7282.html). As such it feels really bizarre and not "Spanish" if that makes sense.

Today was another builder. The agent advised that this guy was cheaper than the one we'd previously met with, but has he owns a lot of the plots you would buy the whole package rather than buy a plot and build on it. It's also over the border in Murcia and as such you only need 5000m2 to build on. As such mortgage terms would be slightly more favourable. Whilst the house isn't built as well, it's reflected in the price and we saw a very nice house (perhaps a touch small) which was €280k including a double garage and on a superb plot that had incredible unspoilt mountain views. This builder also fits network points (sometimes multiple) in every room which was a nice thing to see. The slight downside was that the build was slightly advanced and they'd tiled the pool in the standard blue mosaic that we had aimed to avoid. Not a deal breaker but something to bear in mind.
Buying something cheaper is something we discussed a long time ago. Having a smaller mortgage and not having pressure on my wife to work would relieve some stress, although we could probably cope without her salary either way. However i think that pushing ourselves a bit now to get "everything" is the right choice. In theory it should be our last house and i don't see any reasons to move as long as we get it right.

He then took us to another house. This one was fairly remote and up at €330k (Link - Note the link seems to include pictures of 2 similar builds. We saw the one with the infinity style pool) However it was a step up in size. The negatives were the steps up to the front door and the fact it was crazy windy today which ruined the tranquility. I also decided it was probably a little too distant from anywhere.

We then got taken to one he was obviously quite excited about.

Villa in Macisvenda - New build - Alicante Dream Homes

Amazing new villa with pool in Macisvenda. This amazing villa with pool and garage is located in Macisvenda, 15 km from Fortuna where you find the thermal baths. Surrounded by a natural environment, almond trees and mountain views. The villa comprises a very large dining room with pool and...

www.alicantedreamhomes.com

Pulling up, it was a little odd. He had tiled the outside of the house and it was maybe a little "too" modern for our tastes. Although well finished. We then got lead to a ramp to the underground basement. This thing was HUGE. Effectively it has this room twice. Probably around 140m2

We then went up through the front door and this thing was incredible inside. Each bedroom was a great side. The kitchen was well specced including one of those hobs with built in extractor. Sensors already in the walls for motion sensing lights. Network ports galore and electric shutters on all windows that could be integrated into google. The windows also felt incredibly well built.
The bathrooms had been clad in aluminium sheets in silver and copper. I thought they looked great but my wife was less convinced.

The pool area was also great with an outside toilet which was a nice touch. The only negatives are that there was an electric pole on the corner of the plot and one of the cables drooped down over the corner of the plot. This is the Spanish countryside so it's always a risk, but it would be better to avoid. The plot was also lowish down on the hill and so felt overlooked from the house up the hill. Would be fine in time when trees grew, but that could be years.

Price was €330k which felt a great price considering what was included. It sounds like it was the builder being "experimental" with a few ideas such as the home automation and underbuild which is very rare here unless you are doing it because the plot requires it. It was also a step up in quality from what he usually builds so was in effect his "showpiece". As such i imagine he's on a slightly lower margin with it.
If it was on a better plot but for sale at €350k i'd have snapped his hand off. Sadly it just gives us something to think about.

 

[tom_nieto]

@Martynt74 - glad you’re seeing some exciting options. Good to get it right though. It seems like there are a good few to choose from.

The last house is perfect - you can build an underground bowling alley and have OcUK over!

 

[Martynt74]

Oh man. I never even thought about a bowling alley!

Also had an email from the initial builder to say his contact at the bank would provide a mortgage for 50% of the plot. This is a huge bonus for us. I've asked him how much an underbuild like the above would be vs an external garage

 

[Martynt74]

Interesting thought as i pore over my spreadsheet for a further night adjusting minor things. Spot the cool accountant over here guys! At least i have an evening cocktail in hand.

I’m currently earning around £600/mth on the cash i have in savings.
Rent. In this very very nice villa is only €1250 or £1100. Which means it’s only costing me £500/month.
I have zero maintenance costs or things to do around the house and so free time is exactly that. If anything goes wrong, i just ring a guy who comes and fixes it.

Does this mean that renting is actually the way forward! Especially given my savings capabilities with such low outgoings and no unexpected expenses wiping things out, mean i can continue to build these savings by ~£2500/mth

Assuming my mortgage ends up around €1600/mth, i would expect around €1000 of that to be interest (the true cost). Meaning that owning a home would cost around double that of renting. Along with the additional maintenance bills. The benefits obviously being that we'll never feel completely "at home" here and there are compromises that we're making by being in rented accommodation.

I know that at some point that swing shifts further into the life of the mortgage, and there's no guarantee of 5% interest rates forever. It's tempting to just stay here a while though!

 

[D.P.]

Only in the UK is buying such an important idea that people obsess over. In many countries renting is norm and economically the best action. Beware of totally different tax systems, for example it is usual to pay property taxes instead of council taxes, so you can easily find yourself paying 2% of that 330k house per year in tax. And on top of property taxes there can be rental equivalence taxes based on expected rental income if you were to rent it out - designed to avoid leaving empty 2nd homes. You then have investment opportunities with your capital. As long as you don't intend to retire before 15+ years then you can use something like a vanguard tracker fund to get 7% PA returns , which is taxed at a lower rate than income. t

And don't underestimate maintenance costs. Mortgage companies assume around a 2-4% of the house value per year, but the costs are not linear. Many years they will be low, then you have to factor in a new boiler or bathroom upgrade

 

[Concrete]

I might be overly cautious, but from my parents experiences having been out there 20+ years, do not trust the estate agents, and especially do not trust a developer.. Make sure you have totally independent legal advice and I believe going for a mortgage naturally gets a lot more checks/conditions applied that also helps, but that should all be dealt with by someone neutral. Just look at the number of abandoned illegal developments and they all had dodgy developers and estate agents selling those to the unsuspecting..

Just FYI, a lot of the problems start with developers that have 'contact's in the town halls.. This has been abused time and time again where they've paid back handers to those contacts, who get them dodgy licences to build tool sheds/animal sheds or outright build where in reality you can't.. it's quite common that this gets so rife, suddenly the mayor (or equivalent) suddenly disappears to South America with a bundle of cash leaving a massive wake of woe behind them..

Its the same for estate agents.. there was very little legal comeback on them for working with dodgy developers and creaming off a lot of money, only to claim all manner of excuses when it all went south..

There is very little proper legal recourse for dodgy behaviour, and its systemic in that it often goes back to the 'town hall'.. back in the early 2000's my parents had sold one house in Spain and were looking for a new place in Torrevieja, out of the 3 new houses they pursued, two fell through on legal issues.. one downright illegal with incorrect planning permission, the other was not built correctly and had no services, it was illegally hooked up to the water supply and there was no guarantee it would ever get a proper water supply! it took nearly a year to find somewhere and they had to come back to the UK for 6 months staying with me whilst they got their 3rd place sorted..

[edit] I see some changes have occured recently, that may help, but still.. eyes open.. trust no-one!

Pretty much this, ex-mayor of where I live is in prison for 3 years for rampant fraud.