ShelleyJack

Hi Everyone,
We're planning on selling everything we own in the UK and moving to Southern Spain later this year. We are fluctuating between spending everything on a villa by the coast - possibly renting out part of it during the summer - OR buying a smaller villa there and keeping a flat here in the UK to keep as a 'base' and to generate a rental income. Many people have suggested we should be safe and keep a base in the UK but why exactly? If we stayed in Spain for 5 years and then came back what are the repercussions apart from the possible negative financial ones?? Are we unable to use the NHS etc? We'd keep a British bank account but what are the other possible problems? We just don't understand why friends are telling us to be so cautious? Thanking you in advance, Sheila

Smithy73

OK, so I am not sure where you are in the UK or what your budget would be to buy that dream villa by the coast.

Many people have suggested we should be safe and keep a base in the UK but why exactly? Yes why exactly? We also went up and down this in 2016 and we were 43 at the time with UK property that we owned outright. That would have funded a villa here and an apartment in Hertfordshire. Being a landlord anywhere can be a pain and full of pit falls, particularly if you don't live in the same country as the rental property. We make more in a week during the summer season from our short term rentals, than we would in a month in the UK on a 3 bedroom flat.
The UK has seen a property boom particularly in the south east of Endland that has lasted 21years. Spain hasn't recovered from the property crisis of 2008 and your money here buys a lot.

Are we unable to use the NHS etc? The Spanish system is generally better (it is rated more highly on patient outcomes than the NHS) - You have to buy private heathcare in the first year (if you are not getting a UK pension yet) to gain residency - the private insurance is much cheaper than the equivalent UK ones. Then in the second year you can pay into the Spanish system for access - €60 per month - Generalitat: Detalle de Procedimientos
If either of you are 65 and in receipt of a UK old age pension, then you can request an S1 form to gain free access to the Spanish system (paid for by the UK), then you lose access to the NHS, while living in Spain.

possible negative financial ones? If you really hate living here then selling can take longer than in the UK and you move back to the UK.. I assume you would be downsizing anyhow... you will have wasted the 10% purchase tax on buying a property and then estate agents fees are expensive at 5-6% plus VAT

We just don't understand why friends are telling us to be so cautious? I had the same from the in-laws... but we could not have been happier 18 months later!

After 18 months of being here, we decided that if we were to move, because perhaps we didn't want to live in Spain for the rest of our lives. We would move somewhere else in the world, but NOT back to the UK.

tebo53

hi Sheila,
We did exactly that!! We sold everything we owned ( House, 2 cars, 2 motorbikes, furniture etc) in the UK and rented here in Benidorm. We've been here 4 years now and never looked back and no regrets. We didn't want to keep our house in the UK because if Spain didn't suit we would not want to live back in our old town. We didn't want to be renting it out either with all the hassle it entails. We made sure we really wanted to be here and thought about it for a couple of years. Make yourselves fully legal in Spain before Brexit and you won't have any problems.

Go for it.

Steve

mikelincs

I would strongly suggest renting for at least a year first, by that time you will have experienced the weather changes and winter, you will also have found out if Spain is really for you.

spainrico

Whatever you decide to do I would strongly suggest you keep a UK bank account because you may need it to receive your pensions (not all providers will pay directly into a foreign bank account) and it is handy when you do trips to the UK. If you close it - it is difficult (impossible?) to reopen when you live abroad.

murfmeister

We've decided to go for 'Option 1' ie buy in Spain(currently going through now), and keeping the house in the UK to rent out and generate income. Agree with Smithy that it can/could be a pain in the arris not being in the UK, but we're going to use an agent(I've factored in the agents fees of 15-17%pm) as that seems the most hassle free(at the moment) - only time will tell on that one.

So if anything goes Pete Tong in Spain(or indeed back in the UK for whatever reason) we'll be able to head back to the UK without worrying about being able to afford a cardboard box(as the housing market in the UK is mental and our house in the UK could have increased by 50-75% in 10 years, who knows)...and the market in Spain is fairly flat from what I can see and has been since '08. eg you sell up an realise £200k and plough it into Spain... then in 10 years something happens, and the house in spain is worth £250(and takes a year a year to sell(unless you drop your pants as it were), but to move back to the UK costs £400..(crystal ball a bit fuzzy on that )

We're currently working on paying as much of the mortgage off in the UK before we move to Spain permanently and get to a level where the UK rental will give us enough PM net income to live reasonably(many excel spreadsheets are in operation! ) supplemented by a small pension..

Deffo keeping the UK account though..

Just our approach/thoughts(I am a bit risk averse BTW )

Smithy73

Most agency management fees are a rip off... on top of the 15-17% that you pay for management you then pay for any tradesmen they send to your property at an inflated price!
Pay the 7-10% for them to collect the rent only and take out a British Gas home care contract - https://www.britishgas.co.uk/home-services/home-cover/

That way your tenants have a number to call for any issues and can deal directly and you don't get ripped off

murfmeister

Good call Smithy.. didn't even think about doing it that way as I didn't know you could go down the 'rent collection only' route.. cheers for that

ShelleyJack

My goodness! THANKS EVERYONE! Especially you Smithy! We talked to our accountant today and he said he personally wouldn't try and keep a rental house/flat going here - too much hassle and he sees time and time again his clients getting ripped off. Our plan at the moment is to put approx. £30K into a UK savings account (Premium Bonds?) to fuel any possible return where we may have to rent a house whilst waiting for the Spanish house to sell . . . . . And to buy a villa (anywhere between Valencia and Alicante - Gandia? - or even below?) for approx. £300K where there is the possibility of doing a few holiday lets within the property.
We are both 'Old Age Pensioners' !! (Yay!!) so getting our pensions is very important, as are the possible health arrangements. If our pensions continue to go into our UK accounts I imagine that is subject to fluctuating exchange rates etc. So more to find out on those two subjects!
Many thanks again for all your replies - can't tell how helpful its been to talk to people who have done or are considering doing something similar,
Sheila and Roy

Smithy73

The area from Altea all the way up to Valencia city is very green and beautiful. From Altea to Alicante the country side is more arid so it depends what you prefer. The best value for money is had a little away from Altea/Javea or Denia.
For a trouble free purchase you ideally want a villa on Urbano land and you need a good lawyer. NEVER use the lawyer that the agent suggests - they are only good for smoothing the sale along and never work for you!

I include this link, as it gives a run down of the land classification for you - Know the Different Types of Land in Spain - EasySpain

You should be able to purchase a 3/4bed villa, with a separate unit or apartment, with a pool for your budget. You won't want to be any further than 20mins drive from the sea, as you won't get any regular holiday rentals if you are further than this inland.

I am personally not keen on the urbanisations built on hillsides where there are no amenities within walking distance (or very short car drive). Where you spend five minutes driving round and round the road to get off the hill, even to collect the post at the bottom from the community post box.. Stunning views, but I would get bored quickly.

I saw a 100 properties last year in the search for 2 rental properties so I seem to have seen it all in the local area here...

mikelincs

Get your pensions paid direct into your Spanish bank account, better exchange rates and there are no fees, get a form from the DWP and use that to get into the Spanish health service, only one of you needs to qualify, the other will get it on the back of the one qualifier.

dougal03

I have a Spanish pension(had a business here & paid in for the required 15years consecutively) & also a small British pension.I agree with Mike,get your British pension paid directly into a Spanish bank,after all you will need to get cash for your everyday living here.I live a few kms.further down the coast from Altea,in Alfaz del Pi.Across the road from my home in the town centre are orange trees growing on pavement plots & Benidorm some 6kms.away does still seem to have plenty of greenery!.A few weeks ago I was in Murcia,south of Alicante city which is Costa Blanca.Murcia is further south & that is arid,often called Costa Plastico because of the poly tunnels needed for the vegetable growing which keep out the insects but also gather moisture.However people do still locate there in large numbers.I was quite surprised to see how many sites were laid out for new building.I have been here since before Spain joined the EU & now I am retired can enjoy visiting lots more parts of this big country to see how varied it is.All a case of what takes your fancy so have a good search.

ShelleyJack

Thank you Smithy73, mikelincs and Dougal03. I've so much to learn I can see! very interesting to hear about your views on where to put pensions too, really appreciate your replies,

bolton wanderer

I would echo other comments about renting before buying. Take your time, spend a few months in various areas of interest (coastal/inland, urbanization/Spanish village). It's about 20% to sell & buy property in Spain, an expensive mistake if you get it wrong.

Also compare the tax situation in Spain and the UK. The personal allowances are far higher in the UK (£11,800 ish per person v €6000 ish). Any rental income would become subject to Spanish tax and rental properties will soon require registering with the Spanish authorities.

We find that our pension goes a lot further if taxed in the UK rather than being taxed in Spain. At this point I must mention that to stay UK resident you can only spend 182 days in Spain in any calendar year. However, this could be just the thing while you decide whether to make a permanent move.

We are also 60 (ish) and took early retirement some years ago. We bought an apartment in a Spanish village and spend approx 6 months in Spain, returning to the UK in the summer when it gets too hot and in the winter when it gets too cold. We downsized our UK house to fund the apartment purchase and do not rent either property.

Smithy73

OK once you have moved it is very important to register for residency and become a tax resident. My lawyer told me a while ago you can not take advantage of all of the inheritance tax, tax discounts in Valencia (do not assume that a property automatically transfers to a married partner with no tax to pay) if you are not resident in Spain (and thus at least one of you tax resident and the other a dependant) ! For example in the Valencia region - a Spouse is entitled to a €100000 tax exemption. You can live anywhere in Europe and be entitled to this. There is then a further €100000 tax exemption if you are a resident in Valencia!

Also the tax allowance is not like the UK, so don't think of it as such... It is NOT the first €5500 of income that isn't tax.... It is a deduction of the first €5500 of tax on your tax bill for the year, that you don't have to pay! There is a difference!

The UK state pension is always taxed in the UK, but a private pension, tax should be paid here in Spain and not the UK if you live here.
You do not want to risk the inheritance tax implications on your home, should something happen to one of you, for the sake of paying perhaps a €100 more a year tax. If fact if you are not an ex company CEO, you may find you pay less tax here on a modest private pension.