How to decide between buying and renting in Spain

Terms used

• ITP — ITP is the regional transfer tax you pay when buying a resale home.
• IVA — IVA is Spain's value-added tax, charged at 10% on new-build homes.
• AJD — AJD is the stamp duty paid on the deed when you buy a new build.
• IGIC — IGIC is the Canary Islands' own indirect tax, used instead of IVA.
• Gestoría — A gestoría is an office that handles paperwork and tax filings for you.
• IBI — IBI is the yearly municipal property tax paid by the owner.
• Modelo 210 — Modelo 210 is the tax form non-residents use to declare income from property they own in Spain.

Key rules

• Buying costs: Budget 10-15% on top of the price for a resale home and 12-16% for a new build.
• Mortgage size: Banks usually lend residents up to about 80% of the price or valuation and non-residents about 60-70%.
• Credit history: Having no Spanish credit history does not bar you from a mortgage.
• Time horizon: Buying usually pays off only after several years to around a decade, so short stays favour renting.

The short answer

Buying is not automatically cheaper. Whether it pays off depends on four things: the total cost of buying, how long you will stay, how much flexibility you need, and whether a bank will lend you enough. The decision guide below turns these into a recommendation for your situation.

Count the full cost of buying

The price is only the start. Buyer costs typically add 10-15% to a resale home and 12-16% to a new build.

• Resale home: the main cost is the transfer tax, ITP. It runs from 4% to 11% depending on the region. Examples: Madrid 6%, Andalucía 7%, Galicia 9%, Cataluña and Comunidad Valenciana 10%. Notary, land registry and gestoría add a smaller amount. The seller usually pays agent fees, though in some areas the buyer pays.
• New build: you pay 10% IVA plus stamp duty, AJD, of roughly 0.5-1.5% depending on the region. In Canarias the tax is IGIC at 7% instead.
• Yearly costs: IBI, community fees, insurance, rubbish tax and utilities. The FAQ below gives typical amounts.

Regions change their rates, and reduced rates exist for young people, large families and low-value homes. Check your region's tax agency before you budget.

If you own a home in Spain but do not live here, you also pay a yearly non-resident tax, filed with Modelo 210.

Think about time

Buying only overtakes renting after the transaction costs are earned back. Estimates usually put that point at several years to around a decade. It is longer when taxes are high or prices rise slowly. It is shorter when rents and prices are both rising fast.

If you might leave within a few years, renting is usually safer. Selling soon after buying often means losing the 10-15% you paid up front.

Compare monthly payments honestly

In recent years prices have risen faster than rents. In the tightest markets, such as Madrid, Barcelona, Baleares and Málaga, a mortgage payment on a new loan can match or exceed the rent for a similar home. In smaller cities and inland areas, buying tends to compare better. Look at real listings in your own area, both for sale and for rent, before you decide.

Remember that a deposit tied up in a home is money you cannot invest or keep as a cushion.

Check you can get a mortgage

Banks usually lend residents up to about 80% of the price or valuation, and non-residents about 60-70%. So you need a deposit of at least 20% of the price for a resident mortgage, and 30-40% as a non-resident, plus the 10-15% or more in costs.

Banks also check affordability. Your total debt payments are typically kept to about 35-40% of your net income. Each bank decides case by case.

Having no Spanish credit history does not bar you. Banks look at foreign payslips, tax returns, your employment contract and bank statements, and sometimes a home-country credit report. A stable contract, time in Spain and a larger deposit all help. The documents list below shows what to gather.

Mortgage rates follow Euribor for variable loans and swap rates for fixed loans. They fell after peaking in 2023. Check the current figures with the Bank of Spain, and compare offers from several banks, because the margin depends on your profile and on linked products such as insurance.

Weigh flexibility

Renting lets you change city, job or plans with little cost. Owning gives you stability and control, but selling takes time and money. If you are new to Spain and unsure where you will settle, renting first and buying later is a common route. Use the decision guide below to see which path fits you.

Buy or rent: which fits your situation?

Should you buy, rent first, or rent in Spain?

• Buy: You plan to stay in one home for many years (often several years to around a decade), have savings for the deposit and buying costs, can show steady income, and a bank will lend to you. Residents are usually offered up to about 80% of the price or valuation; non-residents about 60-70%.

• Rent first, then buy: You are unsure about the city, the job or how long you will stay, or you are a non-resident without income proof a Spanish bank accepts. Rent for a first period, build a record of income and residence, then look at a mortgage.

• Rent: You may move within a few years, want flexibility, or lack the savings for a deposit plus buying costs. In Madrid, Barcelona, Valencia, Málaga, Alicante, Palma and the Canarias, long-term rentals are scarce and rents are high, so start your search early.

Start with your time horizon: if you may leave within a few years, rent. If you will stay longer, check savings and income proof, then ask a bank how much it would lend you; if it will lend what you need, buy, and if not, rent first. In a region where rentals are very scarce, weigh buying more heavily if you plan to stay.

Check current mortgage rates and rent levels for your area with the Bank of Spain and local listings before deciding.

Documents you need

Documents banks ask for when you have no Spanish credit history

• Recent payslips from your employer, in Spain or abroad

• Your employment contract

• Tax returns from your home country or Spain

• Bank statements showing income and savings, including your deposit

• A credit report from your home country, if your bank asks for one

Frequently asked questions

How much extra does buying a resale home cost on top of the price?

Buyer costs typically add about 10-15% to the price of a resale home. Most of that is the ITP transfer tax, which runs 6-11% depending on region. Notary, land registry and gestoría (an agent who handles paperwork) add roughly 0.2-0.5%, 0.1-0.3% and 0.3-0.5%.

What does a new build cost on top of the price?

A new build typically adds about 12-16% to the price. You pay 10% VAT (IVA; 7% IGIC in Canarias) plus stamp duty of roughly 0.5-1.5% depending on region. Notary and registry fees are somewhat higher because the deed is larger.

What yearly costs come with owning a home?

Expect the IBI property tax of often 200-1,000 euros a year, community fees of 30-150 euros a month for apartments, and home insurance of about 100-400 euros a year. Non-residents who do not rent the home out also pay a yearly tax on imputed income, roughly 0.2-0.5% of cadastral value, filed by 31 December for the previous year.

Can I get a Spanish mortgage without a Spanish credit history?

Yes, you can get a Spanish mortgage without a Spanish credit history, but the bank will ask for other proof. Expect to show foreign payslips, tax returns, an employment contract and bank statements. A stable contract, time in Spain and a bigger deposit improve your chances.