Introduction

Do you dream of transforming an old Andalusian finca into a modern haven or increasing the profitability of your student rental in the heart of Valencia? Property renovation in Spain can be an exciting and profitable adventure. But beware of the pitfalls: building permits, hidden costs, etc. There are plenty of challenges ahead. In this practical guide, you'll find our expert advice on how to complete your renovation project easily and without unpleasant surprises, from budgeting to works supervision.

The potential of property renovation in Spain

Around 25% of Spain's housing stock is over 40 years old, which means that a significant proportion is in need of modernization or rehabilitation. The ground is fertile for investors, and the potential considerable. 

Terreta Spain offers complete support, from estimate to completion. Contact us for more information. 

Why opt for renovation in Spain?

• Property renovation in Spain offers a number of significant advantages, including a substantial increase in the value of the property, with an average increase in the sale price of more than 30% for renovated apartments;
• It also preserves the unique character and charm of old Spanish properties while modernizing them;
• But also to improve the energy efficiency of the property, a vital aspect in Spain where the construction sector accounts for 31.6% of the country's final energy consumption. More on this later;
• Renovated apartments sell faster than others. Buyers prefer turnkey properties. Some seasoned investors, aware of the opportunities on the Spanish market, are even turning to express purchase/resale to make the most of their investment in record time;
• A final advantage: it's less expensive than in France. 

How much does it cost to renovate a property in Spain?

One of the main advantages of property renovation in Spain is the cost of labor, which is significantly lower than in France. On average, the hourly cost of labor in Spain is €25 plus VAT, compared with €35 to €65 plus VAT in France. This difference means substantial savings on the overall work budget.

How much does work cost in Spain?

• The average cost of a renovation in Spain is around €28,000, which is also lower than the French average (€60,000 for a standard renovation);
• For a 100 m² home, the renovation budget is generally between €30,000 and €50,000, a real bargain for investors;
• The price per square metre generally ranges from €400 to €900 per square metre, depending on the size and nature of the project;
• Note that in recent years, quotations have risen by more than 20%.

How much do building materials cost in Spain?

Recently, material prices have been rising in Spain. The cause? The pandemic and inflation. In February 2024, the construction cost index reached a record level, the highest since records began in 2005. Although the upward trend stabilized somewhat in 2023, prices remain well above pre-pandemic levels.

The materials most affected are : 

• Ceramics (+52% over the past 10 years) ;
• Cement (+ 49%) ;
• Aluminium (+48%) ;
• Wood (+ 32%) ;
• Glass (+31%).

Despite these increases, materials remain cheaper on the other side of the border. 

Renovating a property increases its rental potential

In Spain, where the seasonal rental and student-sharing markets are particularly dynamic, a renovated property can see its rental potential and return greatly improved. 

Tenants will be more than willing to pay a higher rent if the quality and comfort of the property are up to scratch. What's more, tenants who are willing to pay a little more than the average rent are generally reliable tenants who take good care of their property. An advantage for the landlord and guaranteed savings. 

The renovation market in Spain

Renovation in Spain: a booming sector

Since the 2020 pandemic, Spain's property renovation sector has been booming. Why is this? 

• Because successive confinements have made us realize how important it is to feel at home. 
• Because improving the energy efficiency of homes has become necessary and unavoidable.
• Because foreigners, whose purchasing power is often greater than that of Spanish buyers, have bought more than 15% of the properties available in 2023, and have not hesitated to carry out work. 
• Because the number of tourist rentals has exploded, and with it the need to carry out work to satisfy travelers. 

The most common types of property renovation in Spain

Property renovation projects in Spain cover a wide range of works, including :

1. Modernizing kitchens and bathrooms is a popular way to increase the rental value of properties;
2. That of the rooms, when the apartment is to be shared by students; 
3. Improving energy efficiency (insulation, window replacement, installation of energy-efficient heating and air-conditioning systems);
4. Complete renovation of old properties, particularly in historic city centers and for properties intended for tourist rentals;
5. The design of outdoor spaces, such as terraces and gardens, is highly valued on the Spanish market.

Terreta Spain can accompany you from the estimate to the completion of your renovation work in Spain. Contact us for more information.

Regulations, licenses and work permits in Spain

The most important thing to remember is that you should never embark on a property renovation project in Spain without consulting your co-ownership and contacting an architect. You could be risking a lot.

What are the local regulations for property renovations in Spain?

In Spain, each locality and municipality has its own regulations governing renovation work. For example:

• Catalonia: in Barcelona, strict rules govern the conservation of architectural heritage. Renovations often require specific permits, and technical inspections are mandatory for older buildings. The regulations are designed to preserve historic architecture and ensure the durability of buildings.
• Andalusia: in Andalusia, on the other hand, rules can be more flexible. Light renovations may require less red tape, and permitting times are often shorter, encouraging a faster renovation process.

Before embarking on a renovation project, our experts find out about the specific regulations of the Autonomous Community concerned. Get in touch with them.

What are the different work permits in Spain?

Two main types of permit are required for renovation work in Spain:

1. 1. Licencia de Obra Menor for minor works that do not alter the structure of the building. Please note that once issued, this permit is only valid for 3 months;
   2. Licencia de Obra Mayor for major renovations affecting the structure or external appearance of the building, requiring the submission of detailed plans by a registered architect.

How much do construction licenses cost in Spain?

• The price of a works license in Spain is generally estimated at less than 300 euros, i.e. 3 to 3.5% of the estimated cost of the work. 
• A processing fee will be added, depending on the municipality.

What are the procedures for obtaining work permits in Spain?

• Permits are requested from the town council(ayuntamiento) and, for major renovations, on presentation of a Proyecto de Reforma (renovation project) signed by an architect.
• The time required to obtain a license varies from 1 to 3 months for the Licencia de Obra Menor, and can extend to 6-8 months for the Licencia de Obra Mayor. However, this depends on the complexity of the project and the municipality. 

What are the risks of renovating without a permit?

If you don't comply with the procedures, you risk paying a fine (from 600 to 1000 euros for small jobs) or forced demolition.

On the other hand, it's important to note that undeclared work can lead to difficulties when reselling the property (complicated transaction, drop in property value). In other words: don't try to get around the rules. You'll pay dearly for it. 

Energy renovation in Spain

Where does Spain stand on energy renovation?

Did you know that 80% of homes in Spain do not meet the European Union's strict energy standards? Under new legislation, by 2033, all homes sold or rented out will have to achieve at least a class D energy certificate. Faced with this challenge, energy renovation is becoming not only a necessity, but also a promising investment opportunity.

When planning your renovation, make sure your project complies with new regulations. This may include:

• Thermal insulation of walls, roofs and windows;
• Installation of energy-efficient heating and air-conditioning systems;
• The use of sustainable, environmentally-friendly materials.

Terreta Spain can help you with your energy renovation in Spain. Contact Terreta Spain. 

Energy efficiency certificates in Spain

In Spain, the energy performance certificate(Certificado de Eficiencia Energética, CEE): 

• Is mandatory for the sale or rental of real estate since 2013 ;
• Evaluates insulation, ventilation, air conditioning and hot water production;
• Provides recommendations for improvements and their estimated costs.

In 2024, unlike in France, asbestos and lead diagnostics are still not mandatory in Spain. 

How much does energy renovation cost in Spain?

The average cost of energy upgrades for a 100 m² apartment is estimated at around 12,000 euros. Nevertheless, these investments will pay for themselves in the long term. Homeowners can count on :

• Potential savings of 1,000 euros a year on energy bills;
• An average increase in the value of the property of around 30%, as mentioned above.

Energy renovation grants and incentives in Spain

As in France, the Spanish government has introduced several measures to encourage energy renovation:

• Subsidies that can reduce the cost of insulation work by up to 40%;
• Tax deductions for investments in energy efficiency improvements;
• Access to tax benefits on residents' income tax for energy renovation work. 

Tax benefits of energy renovation in Spain

Here's what homeowners living in Spain who improve the energy performance of their property are entitled to: 

• Tax reduction of 20% for renovations that reduce heating or air-conditioning requirements by 7% (please note that this reduction is capped at €5,000 per property).
• 40% tax break for improvements that reduce the use of non-renewable energy by 30% (maximum €7,500).
• Tax relief of 60% for homes that reduce their non-renewable energy consumption by 30% (limited to €15,000).

Practical aspects of property renovation in Spain

Renovation lead times in Spain

The average lead time for a complete renovation in Spain is around 3 to 4 months for a 100 m² home. However, this timeframe can vary considerably depending on the scope of the work, the complexity of the project and the region in which the property is located.

How do you choose your contractor in Spain?

How do you choose your construction professionals? 

• By requesting several detailed quotes;
• By checking that the company is certified and insured.

Our tips for organizing your property renovation in Spain and optimizing your budget

Meticulous work planning

Careful planning is the key to a successful renovation:

• Start by drawing up a detailed plan for your work. Clearly define your objectives and priorities;
• Obtain all the necessary permits before starting work. As we've said, permits can take a long time to obtain;
• Make sure materials are available before starting work, and explore the use of prefabricated and durable materials to reduce costs and increase your property's energy efficiency;
• You can also keep an eye out for promotions and clearance offers on materials and equipment at Bahaus or Leroy Merlin, two of Spain's leading renovation and construction retailers; 
• Establish a clear schedule with your contractors to monitor progress.

Hire an expert to monitor your construction site in Spain

This is our most important piece of advice. Even if it seems like an extra cost, hiring a local professional to oversee your project is a wise, if not necessary, investment. An expert in the Spanish market can help you to :

• Navigating local administrative procedures;
• Communicate effectively with craftsmen and suppliers;
• Manage unforeseen events and meet deadlines;
• Ensure work complies with local regulations.

Terreta Spain offers comprehensive support, from estimating to carrying out your renovation work in Spain. Contact Terreta Spain. 

What are the main challenges facing property renovation in Spain?

The challenges of property renovation in Spain are many:

1. Ignorance of local regulations;
2. The complexity of obtaining the necessary permits and authorizations;
3. The difficulty of supervising work for non-resident owners; 
4. Budget underestimation; 
5. The language and cultural barrier to communicating with local craftsmen and suppliers;
6. Ignorance of specific technical constraints, such as adaptation to local climatic conditions (heat, humidity, salt spray for coastal properties);

To overcome these challenges, it's advisable to do your homework well in advance, to surround yourself with experienced local professionals, to plan a realistic budget with a margin for unforeseen events, and to be patient in the face of administrative procedures.

Know the hidden costs of your renovation work in Spain

What additional costs are involved in renovating a property in Spain?

1. Building permit fees (3% to 3.5% of the cost of the work) ;
2. Architect's fees: around 10% of the total cost of work for major projects (compulsory if you obtain a licencia de obra mayor);
3. The reserve fund of 10% to 20% of the total budget for unforeseen expenses;
4. Fees for occupying the public highway: €5 per day if you install a skip in front of your building;
5. Costs and taxes associated with permits, such as the payment of a tax to the city's urban planning department (Tasapor Actuaciones Urbanísticas : around €150 for less than €6,000 worth of work, and up to €1,000 for major works) and the municipal tax on constructions, installations and works (ICIO), whose tax rate varies between 0.5% and 4% of the cost of the work; 
6. The risk of substantial penalties: fines ranging from 600 to 1,000 euros for minor work without a permit;
7. Project management fees, especially if you don't live locally;
8. The cost of temporary accommodation in case of need; 
9. Upgrading costs, which may be mandatory for certain renovations;
10. Specific insurance to cover work-related risks.

Conclusion

Property renovation in Spain offers interesting prospects for investors, but requires careful preparation. The key to success lies in understanding local rules and regulations, and working with industry experts. A well-structured approach, taking into account regional particularities, can turn your project into a profitable and rewarding investment. 

Sources : 

• Idealista
• Proalt
• Synergyinsurance
• Five
• CaixaBank Research
• Camif Habitat

FAQ : Everything you need to know about property renovation in Spain

What permits are required to renovate a property in Spain?

There are two main types of permit:

Licencia de Obra Menor Licencia de Obra Menor: for minor work that does not affect the structure or facade of the building. Allow 1 to 3 months to obtain it. It is valid for 3 months.
Licencia de Obra Mayor Licencia de Obra Mayor: required for major works affecting the building's structure or facade. This permit can take between 3 and 8 months to obtain, depending on the region and the complexity of the project. Even longer for listed or protected buildings.

How much does renovation cost in Spain?

Renovation costs in Spain are relatively affordable compared to France :

Light work is estimated at €400/m², while more complex renovations using top-of-the-range materials can cost up to €900/m². It's advisable to allow a 10-20% safety margin for unforeseen circumstances.

How do I obtain a renovation license in Spain?

To obtain a renovation license, you'll need to submit a renovation project(Proyecto de Reforma) drawn up by an architect to the local council (ayuntamiento). A complete file including plans, budget estimate and technical details is required.

What are the penalties for renovating without a permit?

If you undertake work without the necessary authorizations, you risk fines ranging from €600 to €1,000 for minor work. For more serious or recurrent offences, more severe penalties may be applied, including stoppage of work or demolition.

What are the tax benefits of renovation work?

Certain renovations, particularly those aimed at improving the energy efficiency of buildings, may be eligible for tax deductions.

What are the average lead times for a complete renovation?

In Spain, a complete renovation can take between 3 and 4 months for a 100 m² home, depending on the nature of the work and the region in which the property is located. However, this timeframe can vary depending on authorizations and unforeseen circumstances.

How can you find professionals you can trust for your renovation?

It's a good idea to get several quotes, and to use local, experienced professionals. Check references and make sure the companies you choose are certified and insured. Hiring an architect to oversee the project is a good option, especially if you're not on site.

Is condominium approval required to renovate a property?

Yes, in Spain, you need the agreement of the co-ownership before you can submit your permit application to the town hall. Co-ownership approval is required for work affecting common areas (such as facades, terraces or balconies), as well as for minor works.