Have you just bought your second home on the Mediterranean coast or invested in student accommodation in the heart of Valencia? Then you probably have some work to do.
In fact, 80% of Spanish properties are over 20 years old and have remained “as they were”. Above all, properties to renovate are still the best investment opportunities, so don't miss out!
To help you see things more clearly, the experts at Terreta Spain have written a practical guide to support you at every key moment, so you don't neglect anything: “Renovating your property in Spain, your complete guide”.
Real estate renovation in Spain is booming
The renovation of Spanish homes is experiencing impressive growth in 2024. In the first six months of the year, the country almost reached the same number of permits for this type of work as those issued during the whole of 2023! This represents an increase of 149% compared to 2019, according to the Higher Council of Associations of Architects of Spain.
Why? Because renovating your property means living better, more comfortably. It also improves rental yields and resale value.
What types of renovations add the most value to a property in Spain?
In Spain, the renovations most valued by tenants or when reselling a property are the following:
- Energy efficiency improvements
- Modernization of kitchens and bathrooms, which are very often outdated
- Creation of attractive outdoor spaces. They have been highly sought after since the Covid pandemic and by foreign buyers
- Renovation of certain typical traditional features (beams, terracotta floors, ceramics)
- Installation of air conditioning and heating, as many homes are not equipped with either
3 essential points to remember as a preamble to a renovation project in Spain:
- Increases the value of a property by an average of 15 to 25%.
- Lasts between 3 to 6 months in the case of a complete renovation.
- Costs an average of €28,000.
Now, let's move on to your 7-step practical guide.
Step 1: Preparing and evaluating your renovation work in Spain
The first step when embarking on a renovation project in Spain or elsewhere is to carry out a (very) thorough assessment of the property.
- A complete technical diagnosis of the electrical system, plumbing, and insulation is essential to identify priority work.
- Next comes the structural analysis: will you need to break down a wall to facilitate circulation? Will you be able to do it, or is it a load-bearing wall?
- Then, take stock of your main objectives and preferences: do you need to create an office? What type of living space would suit you, etc.?
- Consider the property's intended use: a renovation project is not conducted in the same way if the property is intended for shared accommodation or family life.
- Also, ask yourself how you could optimize light and space? In Spain, it is not uncommon to find dark apartments, the initial goal being to escape light and heat.
- Analyze the energy efficiency of your property and carry out the necessary work if you can. Spain is placing increasing importance on the energy performance of buildings. In September 2024, the government approved the 2023-2030 Energy-Climate Plan, which goes in this direction. Installing solar panels or improving insulation can not only reduce your bills but also significantly increase the value of your property on the Spanish market, which is increasingly sensitive to environmental issues.
- Finally, when defining your objectives, start thinking about the style of decoration and the materials you will use. In Spain, the integration of traditional materials and local techniques (ceramics, artisanal textiles, natural materials, etc.) is valued because it preserves the authenticity and charm of the properties. This can increase its appeal on the local real estate market, both for rental and resale.
Our advice: after this assessment, draw up a specification document. It will be very useful to you later.
Step 2: Establish a realistic budget for your works in Spain
Developing a realistic budget is a fundamental step, especially when embarking on a renovation project in a country where you do not necessarily master the language or customs. So, what should you include in this works budget? 5 main elements:
- The renovation costs themselves
- The cost of labor
- The fees of an architect if needed
- The reserve fund
- Additional costs, such as taxes and administrative costs related to building permits
Good to know before dissecting the budget, works are still largely cheaper in Spain than in France today. The average budget is €28,000, compared to €60,000 in France for similar works. Renovating in Spain is necessarily a good investment.
Are you looking for a property to renovate? Terreta Spain specializes in turnkey rental investments in Spain: we find the property, we renovate it, and we even rent it out for you. Contact our team and let us guide you.
In Spain, renovation costs vary considerably depending on the region and the quality of the desired finishes, but on average, you can expect expenses ranging from €400 to €1000 per square meter depending on the extent and complexity of the project.
Let's detail it to give you an idea and make it more concrete:
- Basic renovation: 100-300€/m²
- Standard renovation: 300-700€/m²
- High-end renovation: 700-1500€/m²
Let's get to the labor costs. Another pleasant surprise is that it is also more affordable, with an average hourly rate of €25 excluding VAT, compared to €35-65 excluding VAT in France.
For an architect's fees, you will have to spend 10% of your overall budget. Your reserve fund should be equivalent to 10-20% of this budget.
Regarding additional costs, such as building permit fees, we will come back to this point just below, but be aware that you should expect 3 to 3.5% of the total amount of the works.
To delve deeper, discover our comprehensive article: "All you need to know about property renovation in Spain"
Step 3: Regulations and permits for your construction work in Spain
Renovation regulations in Spain may seem complex at first glance, but compliance is essential to avoid any legal issues. Here's an overview.
- Point number one: the required permits depend on the scope of your work. For minor renovations, such as redoing a room or installing a bay window, a Licencia de Obra Menorr is generally sufficient. However, for more significant work, such as creating an extension or modifying the structure of your property, you will need a Licencia de Obra Mayor.
- Point number 2: procedures and regulations vary from one region to another. The country is made up of 17 autonomous communities, and they are responsible for managing renovation work. Therefore, you will need to consult the local authorities or a legal expert.
- Point number 3: In Spain, it is advisable to notify the community of co-owners when you are planning construction work. They may, in fact, object to it.
Average permit processing times:
- Licencia de Obra Menor: 1 to 3 months
- Licencia de Obra Mayor: 3 to 6 months, sometimes 8 months depending on the nature of the project.
Terreta Spain's advice: take these deadlines into account and submit your permit applications as early as possible.
Step 4: Choosing professionals
"Time is money", "mistakes cost", etc. These sayings all apply to your renovation project. Its success depends, in large part, on the quality and reliability of the professionals you hire. From the architect to the worker, each plays an essential role. Here's how to proceed:
- Take the time to conscientiously search for reliable professionals.
- Check online reviews and look for testimonials from former clients.
- Make a list of several experienced local professionals.
- Make sure they are registered with the Companies Registry (Registro Mercantil) and have civil liability insurance.
- As around the world, ISO 9001 standard is a guarantee of quality.
- Compare quotes and estimated timelines.
- Ask what guarantees and insurance they can offer you. This could get you out of a tight spot if something goes wrong.
Once you have chosen your contact person, provide them with your specifications, the one you drafted during phase 1 of your project. This will allow them to know exactly what you expect.
Don't hesitate to negotiate prices or ask for clarifications on each aspect of the quote. Transparency is key to avoiding unpleasant surprises during the project. Establish a clear and detailed contract with a financial schedule together.
Our best advice? Contact us. Terreta Spain has managed renovation projects throughout Spain. We are your construction partner, regardless of the scale and location of the project, whether you can travel or not.
Step 5: Financing your renovation in Spain
Be careful, Spanish banks generally do not include the amount of the work in the hipotecas, the mortgage loans. If you need to finance your renovation, you will have to opt for another type of loan.
- Compare interest rates and repayment terms to find the most advantageous solution for you, and note that there are options specifically designed for energy improvements.
Step 6: Taxation of your renovation work in Spain
Two main points regarding taxation:
VAT is 10% on renovation work, compared to 21% for the standard VAT rate. Please note that this reduced rate applies under certain conditions:
- The work must concern a private residence.
- The building must be more than two years old.
- The materials supplied by the contractor must not exceed 40% of the total cost.
- It is recommended to consult a tax expert to ensure the correct application of this rate.
Regarding incentives, Spain is generous in encouraging real estate renovation, particularly for energy efficiency improvements: tax credits or exemptions, depending on the nature of the work carried out.
Some regions offer specific aid programs for the renovation of historical buildings or the improvement of energy efficiency. For example:
- In Andalusia: the Junta de Andalucía offers subsidies for the rehabilitation of residential buildings and energy renovation through the Rehabilitación Residencial program. This aid can reach up to 40% of the cost of the work.
- In Catalonia: the Catalan Energy Institute offers subsidies for the energy renovation of existing buildings through the PREE 5000 program.
- The Community of Madrid has launched the Plan Rehabilita, which includes subsidies for the energy renovation of residential buildings. This aid can cover up to 50% of the cost of the work.
- The Generalitat Valenciana offers aid for the conservation and rehabilitation of architectural heritage through the Conservación y rehabilitación del patrimonio arquitectónico program. These subsidies can reach up to 50% of the cost of the work for historical buildings.
Our advice: check with local authorities or a tax advisor to maximize these benefits.
Step 7: Managing your construction site in Spain
Once the work has started, regular monitoring is absolutely essential.
- Plan frequent visits to the construction site.
- Maintain regular communication with your contractors.
This vigilance will allow you to quickly detect any deviations from the initial plan and resolve problems before they become critical.
At the end of the work, a thorough inspection is essential. Verify that all aspects of the project correspond to the agreed specifications. Don't forget to collect all the guarantees to protect your long-term investment, particularly the ten-year guarantee that covers major structural defects.
Would you like to avoid spending your holidays and weekends there? Forget the headache and save on plane tickets, you no longer need to go there. Terreta Spain takes care of managing your construction site. Contact us now.
Conclusion
When embarking on a real estate renovation project in Spain, each decision, from the type of permit requested to the choice of materials, has an impact on the final result of your project. The key to success lies in careful preparation, attentive management, and a clear vision of your objectives.
With the right approach, your renovation project in Spain can transform your property but also increase its value. This guide will allow you to neglect nothing, and keep in mind that Terreta Spain can take care of this project for you. Consider contacting us, without obligation.
FAQ: Renovating your property in Spain, your Terreta Spain practical guide
What are the steps to follow to renovate a property in Spain?
To renovate your property in Spain, here are the steps to follow:
- Assessment: Start by inspecting the overall condition of the property (electricity, plumbing, structure) and identify your specific needs.
- Budget: Establish a budget that includes the costs of the work, labor, architect fees, a reserve of 10 to 20%, and administrative costs of approximately 3%.
- Permits: Depending on the nature of the work, obtain a Licencia de Obra Menor for small jobs (1 to 3 months) or a Licencia de Obra Mayor for major projects (up to 8 months).
- Professionals: Compare several quotes and hire qualified and insured professionals to carry out the work.
- Financing: Inquire about available financing options; be aware that Spanish banks generally do not include the amount of the work in the mortgage.
- Taxation: Be aware that some work may benefit from a reduced VAT rate of 10%.
- Project management.
For more details, consult our Terreta Spain guide “Renovating your property in Spain”.
Do I need a permit for all types of renovation work in Spain?
No, not necessarily. Minor work (painting, small repairs) generally does not require a permit. However, for more significant work affecting the structure or exterior appearance of the building, you will need a Licencia de Obra Menor or Licencia de Obra Mayor. Always consult your local town hall for specific requirements.
What are the average lead times for obtaining a renovation permit?
Lead times vary depending on the type of permit and the municipality. In general:
- Licencia de Obra Menor: 1 to 3 months
- Licencia de Obra Mayor: 3 to 6 months, sometimes 8 months, depending on the complexity of the project.
It is advisable to start the process well in advance of the planned start date of the work.
Can I benefit from financial aid to renovate my property in Spain?
Yes, several types of aid are available, particularly for energy renovations. The Spanish government and the autonomous communities offer various grant programs.
How to choose a reliable contractor in Spain?
Here are some tips:
- Ask for local recommendations.
- Check references and previous work.
- Make sure they are registered in the Business Register (Registro Mercantil).
- Obtain several detailed quotes.
- Verify that they have liability insurance.
– Establish a clear and detailed contract.
Which renovations add the most value to a property in Spain?
The most value-adding renovations generally include:
– Energy efficiency improvements (insulation, double-glazed windows, solar panels).
– Modernization of kitchens and bathrooms.
– Creation of attractive outdoor spaces (terraces, gardens).
– Renovation of traditional features (exposed beams, terracotta floors).
– Addition of air conditioning in hot regions.
What is the VAT rate applicable to renovation work in Spain?
The VAT rate for renovation work in Spain is generally 10%, instead of the standard rate of 21%.
Sources: Instituto para la Diversificación y Ahorro de la Energía, Consejo General de la Arquitectura Técnica de España, Idealista, Asociación Nacional de Empresas de Rehabilitación y Reformas , Agencia Tributaria, Generalitat Valenciana, Institut Català d’Energia, Comunidad de Madrid – Plan Rehabilita, Consejería de Fomento, Articulación del Territorio y Vivienda
