In this post, as of mid 2024, we will address one of the most frequently asked questions: “HOW MUCH DOES IT COST TO BUILD A HOUSE IN SPAIN AND WHAT ARE THE ASSOCIATED EXPENSES?”. We will look not only at the cost of the construction itself, but also at other costs besides the cost of the land itself.
THE PRICE OF A NEW HOUSE IN SPAIN
Cost of a new house in Spain (excluding land) = A+B+C+D+E = COST €/m², where:
- A: Professional fees
- B: Administrative costs
- C: Laboratories, quality control, insurance and appraisals
- D: Construction cost of hiring the services of a general contractor
- E: Formalization, notary and property registration
The above amount is an average and does not include the Value Added Tax (VAT), which may be 0%, 10% or 21% depending on the customer and the situation, and may or may not be refundable. For ease of interpretation, all amounts and costs will be shown below without this tax.
In order to “communicate in numbers”, let's take as an example an average single-family house with two floors without a basement, completed by our company in 2023 and commissioned in early 2024. A concrete example with the following indicators:
- Plot of land 600 m² with a fairly flat topography, the ground is not hard limestone
- Location: South Costa Blanca, Alicante, Orihuela Costa.
- The area of the house (total, not usable) is 200 m².
- Without basement and with solarium
- 4 bedrooms, 3 bathrooms, 1 spacious lounge and American kitchen, boiler room and hall - dressing room.
- Structural reinforced concrete construction with strip foundation and technical basement floor, standard / classic construction system.
- Outdoor swimming pool, classic skimmer system, size 7 x 4 m²
- Quality: medium - standard (tiles 25 €/m², smooth wall painting, GCL ceilings, etc.)
- Construction period 12 months
So here we go. Let's list the expenses as they are chronologically or logically presented:
1. PROFESSIONAL FEES (A):
In Spain, as in any other developed country, in order to build a new house and take it into use, it is necessary to hire the services of a so-called “Author's Team”, consisting of a minimum of an Architect and a Construction Engineer (Aparejador).
The participation of the Architect is approximately 60% and the Construction Engineer 40%, respectively. The first is the author of the project and the second is responsible for the proper execution of the construction works. The whole cycle of services is summarized in 5 big phases, according to the following percentages of the total cost and load:
- Phase 1: Contract Signing, 10%. Preliminary Urban Design Analysis and Sketch Design
- Phase 2: Functional approval, 25%. Basic design, submittal for municipal license.
- Stage 3: Final Design, 35%. Executive (Working) design, obtaining municipal license. Beginning of in-depth design and approval of structural engineering solutions
- Stage 4: During construction, 25%. Commencement of construction works. Author's supervision and supervising of the works
- Stage 5: Completion, 5%. Commissioning, collection and submission of documentation, issuance of certificate for first occupancy.
The cost of services in general for Spain and for all the previously listed stages is 100 €/m², and the correspondence is NOT proportional. This cost is for a house of 200 m², a house of greater value is proportionally cheaper and a house of smaller area, costs more. Therefore, here are some approximate values according to the area of the house:
- Total area up to 100 m² = 125 €/m²
- Total area between 100 m² and 200 m² = 100 €/m²
- Total area between 200 m² and 350 m² = 90 €/m²
- Total area between 350 m² and 600 m² = 80 €/m²
To summarize the first point, it is worthwhile to foresee approximately the following expenses of the total construction cost for the professional fees of the Architect and the Construction Engineer, two ways:
- 3-5 % of the total REAL construction budget. More often used for houses up to 100 m² in size
- 80-100 €/m² of the total construction area. More often used for houses of 100 m² or more.
(A) TOTAL CASE STUDY: 20.000 €
2. ADMINISTRATIVE EXPENSES (B):
An important cost of building property in Spain, often underestimated or simply forgotten, consists of the costs associated with building permits issued by the town authorities, as well as the following state fees:
2.1. NEW BUILDING TAXES:
Each city hall sets its own fee rate, and the calculation basis for this tax varies. In general, the fee rate is 4% of the declared project value, which of course is underestimated and has nothing to do with the actual cost of construction, although the limits of the official rates to approve are as follows:
- Residential properties: 750 €/m²
- Basements, underground parking lots and technical rooms: 600 €/м²
- Swimming pools and sports facilities: 450 €/м²
- Landscaping: 75 €/m²
Using our case study as an example, let's estimate the cost with real figures:
- House area 200 m²: 750 x 200 = 150.000 €
- Swimming pool 7 x 3 m: 450 x 7 x 3 = 9.450 €
- Landscaping 600 m²: 75 x 600 = 45.000 €
The total estimated construction work costs will be 204.450 €. Since the tax will be 4% of the declared value, we calculate it from the project value and get: 204.450 х 0,04 = 8.178 €
CASE STUDY: 8.000 €
2.2. ROADWAY USAGE TAX
This fee (municipal tax) is to obtain the right from the authorities to work or to store materials on the roadway, i.e. on the sidewalk or road near our construction site. The cost of the tax depends on the term and on the area occupied, as well as on the specific municipality and the construction project. In average, for the construction of a single-family house with a period of at least 12 months, this tax will be in the approx. 1.500 €
CASE STUDY: 8.000 €
2.3. TAX ON NEW DWELLING UNIT:
Before receiving the final documents for the first occupancy and after the Certificate of Completion of Construction (C.C.C.) is issued, it is required to notify the authorities that the construction has been completed. In order to do this, you need to collect the necessary documents and pay a state tax (tasa municipality), which varies for each city or municipality. In general, this tax is not huge, however, in range from 50 to 1.500 €, sometimes it is a fixed cost, and sometimes it is a % of the declared project value. In the example of Orihuela Costa, this tax would be 0.2% of the declared project value.
In our case study of 200 m² this tax would be: 204.450 х 0,002 = 408,90 €
CASE STUDY: 410 €
2.4. AVAL (DEPOSIT) AS A GUARANTEE OF SAFETY:
This tax is a guarantee for the preservation of the roadway, sidewalks, city networks, etc. attached to the site. In other words, the authorities withhold this amount while construction is in progress in order to make sure that after it is finished, everything looks safe and there is no damage. Only after the inspector checks that everything is in order, the amount previously paid is returned to the customer.
Although this tax is only refunded after the construction work has been completed, if the structure is fully preserved, of course, the authorities often misappropriate it and are very uncooperative in refunding the money. Therefore, we prefer in this publication to take this tax as a non-refundable cost, which directly depends on the length of the facade. The approximate amount is 3.500 € - 8.000 €.
CASE STUDY: 4.750 €
To summarize the second point, you should allocate from your budget up to about 3% of the total cost of construction in Spain to pay municipal taxes or one-time government fees. In this case study, the amount would be:
- Tax on new construction: 8.000 €
- Rights of use of the roadway: 1.500 €
- First occupancy: 410 €
- Aval or deposit: 4.750 €
(B) TOTAL CASE STUDY: 14.660 €
3. LABORATORIES, QUALITY CONTROL, INSURANCE AND EXPERTISE (C):
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