New Build vs Resale vs Off-Plan property on the Costa del Sol.

12th June 2024
Home > News > New Build vs Resale vs Off-Plan property on the Costa del Sol.

New Build, Resale, Off-Plan

Dolan Property

Your trusted Marbella real estate agent and property specialist on the Golden Mile.

28th May 2024

By Michael Dolan

 

New Build vs Resale vs Off-Plan property on the Costa del Sol.

As one of the leading real estate agencies in the sun-drenched city of Marbella, we understand the unique challenges and opportunities that come with purchasing a property in this sought-after region of Spain's Costa del Sol. Whether you're a seasoned investor or a first-time homebuyer, the decision to buy a resale, new build, or off-plan property is a significant one that requires careful consideration.

 

 

New Build, Resale, Off-Plan.

 

 

When it comes to purchasing a property, there are three main types to consider: resale, new build, and off-plan. Here's an overview of each:

 

 

Resale Properties: Resale properties are existing properties that have been previously owned and lived in. These can include apartments, houses, or any other type of residential or commercial property. Resale properties are immediately available for occupation or investment.

 

 

New Build Properties: New build properties are brand new properties that have recently been constructed by a developer. These properties have never been lived in before and are sold directly by the developer or builder. New build properties can be part of a larger development project or standalone units.

 

 

Off-Plan Properties: Off-plan properties, also known as pre-construction properties, are properties that are sold by developers before they are actually built. Buyers purchase these properties based on plans, renderings, and specifications provided by the developer. Off-plan properties are typically sold during the early stages of construction or even before construction has begun.

 

 

When deciding which type of property to purchase, it's essential to consider factors such as your budget, desired location, investment goals, and personal preferences. Each option has its own advantages and disadvantages, so it's crucial to carefully evaluate your needs and do thorough research before making a decision.

 

 

Next, we look at the pros and cons of purchasing each type in more detail.

 

 

What are the pros & cons of buying a resale property?

 

 

A resale property refers to a property that has been previously owned and lived in, as opposed to a newly constructed property. When you buy a resale property, you are essentially purchasing it from the current owner rather than directly from a builder or developer.

 

 

Here are some of the pros of buying a resale property:

 

 

Lower cost: Resale properties are generally less expensive than brand-new properties, as the initial depreciation has already occurred. They tend to be more budget-friendly per square metre, enabling you to afford a larger living space, or allowing you spare funds to make any renovations, alterations, or upgrades.

 

 

Potential for renovations: Buyers can renovate or remodel a resale property to suit their tastes and preferences, potentially adding value to the property, but more importantly for some buyers, is to get the home they want, modified to their specific needs and requirements.

 

 

Established community: Resale properties are typically located in established neighbourhoods with existing communities. This means you can get to know the area; the schools, shops, community centres, amenities, and the character of the neighbourhood; before making a decision.

 

 

Developed infrastructure: Alongside an established community, resale properties are generally in areas with fully developed infrastructure. Roads completed, schools built, public transportation running, and services such as doctors, pharmacists, fitness centres, and post offices, are already in place providing easy access and stability.

 

 

Mature landscaping: Another benefit to an established home and community is the mature landscaping. Frequently, resale homes will come with fully developed gardens (individual and within the urbanisation), well-established trees, and beautiful shrubbery that has taken years to plant and cultivate.

 

 

Proven efficiency: As with the garden, an older home has had more time to settle, to get over any teething issues and to prove its efficiency. Upgrades have often been made to enable previous families or individuals to live there comfortably, and economically. You can review past utility bills to get an idea of costs for heat sources or air-conditioning units.

 

 

Immediate availability: Resale properties are typically readily available for purchase and move-in, unlike new construction, which may take several months or years to complete. With a resale home, you can move in relatively quickly compared to the extended timeline and occasional delays that are often associated with building a new home.

 

 

Negotiating power: When you buy a resale home, you may have more room to negotiate the price with the seller, as they are often able to be more flexible in their pricing, especially in a buyer's market, if the property has been on the market for a while, or it requires minor renovations.

 

 

Less uncertainty: Overall, when you buy a resale home, there is less uncertainty in many areas, you can generally see exactly what you're getting, and you are able to base your decision on what you see, rather than relying on plans and renderings. There are no surprises in terms of layout, energy efficiency, or the development of the neighbourhood and community.

 

 

And here are some of the cons of buying a resale property:

 

 

Wear and tear: Resale properties may have signs of aging or wear and tear, which could require repairs or renovations, which is great if you want to put your own stamp on things, but not so good if your budget is constrained.

 

 

Outdated features: As with wear and tear, older resale properties may have outdated features, such as kitchens, bathrooms, or appliances, which may need to be updated or replaced. If this needs to be done sooner rather than later, it can put a strain on budget or time.

 

 

Increased maintenance costs: Older properties may require more frequent and costly ongoing maintenance compared to new constructions. In addition to improvements that are deemed necessary at purchase, older features/appliances may need replacing quicker and more frequently than anticipated as they have already experienced use.

 

 

Limited customisation: Unlike a brand-new construction or off-plan purchase, resale properties offer limited opportunities for customisation during the building process. Meaning if you want to have input into where dividing walls go, type of bathroom and kitchen suite, or other design features, a new build may be a better option.

 

 

Potential for hidden issues and limited (or no) guarantees: Resale properties may have hidden issues or defects that may not be immediately apparent during the inspection process, leading to unexpected expenses; and unlike new build properties, resale homes typically do not come with warranties or guarantees, leaving buyers responsible for any unforeseen issues post-purchase.

 

 

When considering a resale property, it is essential to have a professional home inspection conducted, to identify any potential issues and assess the overall condition of the property. Additionally, researching the neighbourhood, amenities, and future development plans can help you make an informed decision about whether a resale property is the right choice for you.

 

 

 

 

 

What are the pros and cons of buying a new build property?

 

 

A new build property refers to a newly constructed home or residential unit that has never been lived in before. These properties are typically part of a new housing development or construction project.

 

 

Here are some of the pros in buying a new build property:

 

 

Everything is brand new: From the appliances to the plumbing and electrical systems, everything in a new build property is brand new and unused, which can provide peace of mind and potentially fewer maintenance issues in the initial years.

 

 

Modern design and features: New builds often incorporate the latest design trends, energy-efficient features, and modern amenities that cater to contemporary lifestyles. New builds are typically constructed with better insulation and energy-efficient materials, which can lead to lower utility costs.

 

 

Customisation options: Depending on the builder and the stage of construction the property is bought at, buyers may have the opportunity to customise certain aspects of the property, including layout, finishes, and fixtures. This can give the buyer more input into design and features, such as tiling, flooring, bathroom, and kitchen suites.

 

 

Builder warranties: Most new build properties come with warranties from the builder, covering structural defects and certain systems for a specified period.

 

 

Here are some of the cons in buying a new build property:

 

Lack of established neighbourhood: Under the section on resale properties, we talked about the benefits of buying in an existing development or urbanisation: new build developments may lack the established character and mature landscaping of older neighbourhoods, at least initially.

 

 

Higher prices and (initially) a limited resale value: New build properties typically come with a premium price tag compared to existing homes in the same area, as buyers are paying for brand-new construction. In addition, new-build properties may not appreciate in value as quickly as existing homes in the first few years, because buyers have paid a premium for the "new" factor.

 

 

Potential construction delays and defects: There is always a risk of construction delays due to factors like weather, material shortages, or labour issues, which can postpone the completion and move-in date. Despite quality control measures, there is a possibility of defects or issues arising in new construction that may need to be addressed and can also lead to delays.

 

 

It's important to weigh these pros and cons against your personal preferences, budget, and long-term plans to determine whether a new build property is the right choice for you.

 

 

What are the pros and cons of buying an off-plan property?

 

 

An off-plan property, also known as a pre-construction property, refers to a real estate unit that is sold before it has been built or completed. In this arrangement, buyers purchase the property based on architectural plans, renderings, and specifications provided by the developer.

 

 

Pros of buying an off-plan property include:

 

 

Potential for capital appreciation: Off-plan properties are typically sold at a lower price compared to completed properties. If the property market rises during the construction phase, the buyer may benefit from capital appreciation when the property is completed.

 

 

Customisation options: As with buying a new-build property, some developers allow buyers to choose certain finishes, fixtures, and layouts during the early stages of construction, providing an opportunity for personalisation.

 

 

New and modern facilities: Again, similarly to buying a new-build, off-plan properties are brand new, often featuring the latest designs, technologies, and amenities. They will generally be constructed with the most up to date insulation and energy-efficient materials.

 

 

Payment plan flexibility: One of the big draws in buying off-plan (along with the often heavily reduced price) is the flexibility of payments. Developers regularly offer attractive payment plans, allowing buyers to spread out the payments over the construction period.

 

 

Cons of buying an off-plan property:

 

 

Construction delays and quality concerns: There is always a risk of delays in the construction process, which could postpone the completion date and your ability to move in or resell the property. Since the property is not yet built, it's challenging to assess the quality of construction and materials until it's completed.

 

 

Lack of resale market: It may be difficult to resell an off-plan property before completion, as there is no physical unit to show potential buyers.

 

 

Developer's financial stability: If the developer faces financial difficulties during construction, it could lead to project delays or even abandonment.

 

 

Hidden costs: Additional costs, such as service charges or maintenance fees, may not be fully disclosed upfront.

 

 

It is crucial to conduct thorough research on the developer's reputation, financial stability, and track record before committing to an off-plan purchase. Additionally, carefully reviewing the contract and understanding the terms and conditions is essential to mitigate potential risks.

 

 

Marbella's real estate market offers a diverse array of options, each with its own set of advantages and potential drawbacks. Resale properties offer the charm of established neighbourhoods and the opportunity to renovate to your taste, whilst new builds provide the allure of modern designs and cutting-edge amenities. Off-plan properties, on the other hand, present the exciting prospect of customisation and potential capital appreciation, but also carry inherent risks.

 

 

Different taxes on property purchases in Andalusia, Spain.

 

 

In Andalusia, Spain, the tax implications for buying a resale property, a new build property, or an off-plan property in 2024 have specific nuances. Here is a comparison:

 

 

Resale Property

  1. Transfer Tax (Impuesto de Transmisiones Patrimoniales or ITP)
    • The general rate for ITP in Andalusia is 7% of the purchase price.
    • There are reduced rates for certain groups:
      • 3.5% for buyers under 35 years old purchasing their first home with a value up to €150,000.
      • 3.5% for large families (with specific conditions) on properties up to €180,000.
      • 3.5% for disabled individuals with a degree of disability of 33% or more on properties up to €250,000.
  2. Additional Taxes and Fees
    • Notary fees, registration fees, and legal fees.
    • Plusvalía municipal (local tax on the increase of land value), which varies by municipality.

 

 

New Build Property

  1. Value Added Tax (VAT or IVA)
    • VAT on new build properties is 10% of the purchase price.
    • A reduced VAT rate of 4% may apply to properties classified as “protected” housing (vivienda de protección oficial).
  2. Stamp Duty (Actos Jurídicos Documentados or AJD)
    • Stamp duty in Andalusia is 1.2% of the purchase price.
  3. Additional Taxes and Fees
    • Notary fees, registration fees, and legal fees.
    • The developer usually covers the costs associated with the first-time registration of the property.

 

 

Off-Plan Property

  1. Value Added Tax (VAT or IVA)
    • As with new build properties, off-plan purchases are subject to a 10% VAT.
    • The reduced rate of 4% may apply to certain protected housing categories.
  2. Stamp Duty (Actos Jurídicos Documentados or AJD)
    • Same as for new build properties, typically 1.2% of the purchase price in Andalusia.
  3. Payment Stages
    • Off-plan purchases often involve stage payments, which means VAT is paid in instalments as construction progresses.
  4. Potential for Greater Value Increase
    • Buying off-plan can often result in significant value increases by the time the property is completed, offering potential financial benefits if the market value rises.

 

 

Additional Considerations

 

 

  • Mortgage tax deductions: Spain offers some tax deductions for mortgage interest payments, particularly for primary residences, which can apply to all property types under certain conditions.
  • Capital gains tax: When selling a property, capital gains tax applies to the profit made from the sale. Various reductions and exemptions can apply, depending on the seller’s age, the length of ownership, and reinvestment in another primary residence.
  • Plusvalía municipal: This local tax is charged on the increase in the value of the land the property sits on and applies to all property types upon sale. The amount varies depending on the municipality.

 

 

The tax benefits and liabilities for buying a resale, new build, or off-plan property in Andalusia in 2024 depend on the specific taxes each property type incurs and the buyer's eligibility for any reduced rates. Resale properties are primarily subject to transfer tax with possible reductions for certain groups, while new builds and off-plan properties are subject to VAT and stamp duty. Consulting with a local tax advisor or real estate expert is recommended to fully understand the implications based on your personal situation.

 

 

Choosing between new build, resale, and off-plan properties depends on your priorities, risk tolerance, and investment goals. Thorough research, visiting potential properties, and consulting with real estate professionals are essential steps in making the best decision for your property investment.

 

 

Dolan Property, real estate specialists based in the heart of Marbella.

 

 

Whether you are drawn to Marbella’s relaxed way of life, the year-round temperate climate, its rich and varied culture, gastronomical delights, or any of the other rich tapestry of experiences that the Costa del Sol offers, for both residents and visitors alike – we at Dolan property are here to help.

 

 

We understand that choosing a new home is a big step, and for those of you buying or selling a property in a foreign country, it can be very stressful. At our real estate agency, we believe in empowering our clients with knowledge and guidance, enabling them to make informed decisions that align with their unique goals and aspirations.

 

 

From the financial implications and legal considerations to the practical aspects of location, lifestyle, and potential resale value, we leave no stone unturned. Our aim is to provide a thorough understanding of the Marbella real estate landscape, enabling you to navigate the market with confidence and make a well-informed investment.

 

 

Whether you envision a luxurious beachfront villa, a cozy apartment in the heart of the city, or a strategic investment opportunity, our team of experts is dedicated to helping you find the perfect property that meets your needs and exceeds your expectations.

 

 

We are based in the heart of Marbella’s Golden Mile and specialise in high quality, desirable properties in prime residential locations; Nagüeles, Sierra Blanca, Cascada de Camoján, East and West Marbella, Istan Road, Nueva Andalucia, and the new Golden Mile in Estepona.

 

 

Dolan Property specialists are committed to the highest levels of business and ethical standards, and we are proud members of the Leading Property Agents of Spain (LPA).

 

 

 

 

 

 

 

 

 


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