Real estate for 1 euro in Spain – sink or soar?
Is the property offer for 1 euro in Spain interesting? In which locations are such real estate offers most frequently offered? How much does a property for 1 euro in Spain really cost? I will try to answer these and other questions that arise on the occasion of the topic of real estate for 1 euro in Spain.
Co znajdziesz w artykule:
- Where did the idea of "real estate for 1 euro" come from?
- Is the real estate for 1 euro offer in Spain interesting?
- It is important to be aware that to buy a property for euro in Spain it is not enough to spend 1 euro
- In which locations do such offers appear most often?
- How much do real estate for 1 euro in Spain actually cost?
- Who is most often looking for such real estate?
- What should you pay special attention to when looking for such offers?
- The biggest challenges when buying real estate for 1 euro in Spain
Where did the idea of "real estate for 1 euro" come from?
The idea was born in Italy, where the outflow of inhabitants from small towns began many years ago and at some point began to worry the local authorities. Someone got the idea then to try to get people back by offering them the opportunity to buy a house for 1 euro. Then the idea went out into the world. France, Great Britain and Spain, among others, have taken over the idea.
Is the real estate for 1 euro offer in Spain interesting?
The offer is wide, although it must be remembered that it is a very specific offer. Most of this type of offer is published by municipalities, because they are the owners of real estate that has been abandoned or transferred to the public fund.
You can buy a house in a village or even an entire village. You can also buy a castle or a monastery – we are not talking about "1 euro" here, but the prices of these properties are still much lower than the market prices.
It is important to be aware that to buy a property for euro in Spain it is not enough to spend 1 euro
The requirements imposed by the municipalities still must be met. Municipalities receive thousands of applications from both domestic and international investors, so the selection process is strict. The most common requirements for investors are:
- Involvement in the development of the locality: transforming the house into one's first residence, declaration of moving and settling in a given locality for a longer time, and submitting ideas for improving the locality's situation. Additionally, the municipality may require you to pay a certain amount, for example € 1000 as a guarantee.
- Submit a renovation plan for your property: homes that are 'sold' this way tend to be badly damaged, so some municipalities are asking for a comprehensive renovation plan and this is a condition for their approval to sell. Some municipalities require investors to provide a certificate from the bank confirming that the account has the amount specified by the municipality as the minimum for renovation of a given house.
- Since the goal of municipalities offering “real estate for 1 euro" is to attract as many young people as possible who intend to start a business or start a family (or both), municipalities most often choose the profiles that they consider beneficial for the functioning of the city: young couples, families with children, people with attractive jobs, etc.
As you can see, buying a house “for 1 euro" is not only an investor's decision, it is influenced by at least a few people.
In which locations do such offers appear most often?
Most often these are villages that suffer from depopulation. Young people go to larger cities to study, which they rarely return to, or to look for a job. The villages they come from don't have much to offer them. There is a shortage of jobs, the cultural offer is very limited, there are no prospects for a better tomorrow.
According to the data of the National Institute of Statistics, provinces such as Soria and Zamora have lost more than 10% of their population in the last decade. In contrast, El País in an article published in 2019 reported that in Spain there were "over 3,000 abandoned towns, located mainly in Galicia, Castile and León, Aragon and Asturias."
How much do real estate for 1 euro in Spain actually cost?
The term "real estate for 1 euro" is not precise, it rather describes a system where municipalities sell or cede real estate to investors. An interesting example is the Corteaga commune in Galicia, which at the end of 2013 gave investors the village of Barca for free. An area of approximately 15,000 square meters and 12 stone houses standing on it was donated for zero euro to a company that remained in the village to turn it into a "tourist and cultural center of the commune" (source: "La voz de Galicia"). I was looking for information about the future of this project. Unfortunately, it eventually collapsed.
What are the additional costs of buying such real estate?
Each transaction should be considered separately. Even with a standard purchase and sale of real estate, the transaction-related costs vary depending on the autonomous community, and here we are dealing with a donation rather than a purchase and sale transaction. If a commune cedes or sells a house or a few houses to an investor for the proverbial “1 euro", it is difficult to talk about transaction costs. In such cases, costs only start after the transaction.
What is the condition of these properties? And how much may the exemplary renovation of such real estate cost?
Usually these are ruins or houses that are badly damaged and require major renovation. There are houses that can be used after refreshing, and there are also after general renovation – only these do not cost "1 euro" anymore.
The cost of renovation depends on the condition of the property, the investor's plans for it and the size of his portfolio. I read that a municipality in Italy, when considering the offers of investors, used a clear selection criterion: only those investors who could spend the equivalent of USD 20,000 on renovation were invited to the competition. However, this is not a determinant, because the valuation of the renovation of a ruined 60-meter house will look different, and an old castle or monastery.
Who is most often looking for such real estate?
Both Spaniards and foreign investors from all over the world are looking for this type of real estate. The British, Belgians and French bought whole towns at bargain prices.
For Spaniards, the attraction is the opportunity to start a new life in a completely different place. Sometimes, on the contrary, it is a return to the roots. There are hashtags like #yomevuelvoalpueblo, meaning "I'm going back to the country side", circulating on the Spanish Internet. There are also special applications that, apart from real estate offers in Spanish villages, present job offers or provide information about towns. A few of them are: "Yo me vuelvo al campo", "Yo repueblo", "Volver al pueblo" or "Vente a vivir a un pueblo".
What should you pay special attention to when looking for such offers?
First, you need to have a specific plan for yourself and your life, because buying a house for "1 euro" often means moving and / or changing your profession.
The second very important issue is the selection of appropriate partners for this undertaking. A reputable sales office or a trusted broker who will contact such an office and guide the investor through the entire negotiation process with the city / commune office. A good lawyer, preferably experienced in this type of transaction, will check every document and make sure that the property is free from any encumbrances. An architect who, knowing his client's vision perfectly, will help him choose a property that suits his needs. If the transaction is to be financed with a loan - a bank representative who will be able to defend his client's vision against ruthless analysts. Finally, a construction company that will be able to implement this vision.
The biggest challenges when buying real estate for 1 euro in Spain
For a foreigner, the challenges start as soon as he starts looking for his home for "1 euro". Offers on websites are usually translated into English, but obtaining more detailed information – e.g. about the purpose of a given property, which is, after all, a key issue – might be very difficult, especially if the questioner does not speak Spanish.
Another challenge will be to establish the criteria for the purchase of real estate with the commune office. After that, the investor will have to renovate the property, and finding a professional renovation team in a foreign country is really an art.
Investors seriously thinking about the subject are looking for partners in the area where they want to buy real estate. A good lawyer, bright broker who cares not only about the commission, but also about the implementation of his client's vision, an experienced architect – preferably with contacts at the town hall – with such a team you can take on any challenges.