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):
Under third section of expenses will be covered the one that gives a guarantee to the final owner. From all possible aspects the following are the most important:
3.1. TOPOGRAPHIC SURVEY (MEASUREMENT) OF THE SITE:
Before starting to design a building, it is essential to clearly understand the topography of the site, its specific location and subsequent ‘’linkage‘’ to the city and existing communications. An official topographic survey is carried out by authorised independent experts. The availability of a topographic plan guarantees further successful work of the architect and engineering staff. The cost of these services depends on the area of the plot and the final destination of the property, but on average the price is around 1,500 €
CASE STUDY: 1.200 €
3.2. GEODESY AND SOIL ANALYSIS:
It is also mandatory to carry out analyses of the soil: specific strength, thrust layers, composition, material, etc. The cost of these services depends on the area of the plot and on the final destination of the property, however, on average the price goes up to 1.500 €/expertise
CASE STUDY: 1.500 €
3.3. INSURANCE:
Spanish Legislation requires that the construction project must be insured both during and after construction for a period of at least 10 years. Insurance policies must be issued as follows:
- For the duration of the construction works (Seguro de Responsabilidad Civil - RC). Compulsory Civil Liability Insurance (R.C.). Required for the builder, but also recommended to the client. The cost depends on the insurance company and on the scope of construction, but on average it is around 2.00 - 2.50 €/m²
- 10-year liability (Seguro decenal de daños). The insurance guarantees the integrity and quality of the construction to the final beneficiary, i.e. the owner of the property, for a period of ten years from the completion of the construction. The cost of this policy is on average €8.00/m². There are three guarantee phases:
- 1 year: Esthetics and finishing materials.
- 3 years: Engineering communications
- 10 years: Supporting frame, reinforced concrete structure and foundations
CASE STUDY: 2.100 €
3.4 LABORATORIES and EXPERTISES:
The following mandatory technical examinations and analyses must be carried out during and after the construction work:
- Concrete and steel analyses. At the concreting stage, cylindrical concrete samples and steel reinforcement samples of each diameter are taken. The samples are subsequently tested in the laboratory for fracture and compression (two stages: after 7 days and 28 days, with the third sample stored for up to a year). Only after acceptable values, compliance with standards are certified and construction work is permitted to continue.
- Analysis of the waterproofing of flat roofs. After the construction work is finished, the laboratory - inspection comes and pours down the flat terraces to identify possible leaks. It is obligatory to perform one analysis for every 250 m² of roof.
The cost of the supervising company's services depends on the complexity and scale of the construction project, and the ratio of surface area to price is not proportional, but on average the prices do not exceed 5.00 €/m²
CASE STUDY: 1.200 €
3.5. THIRD INDEPENDENT TECHNICAL SUPERVISOR (O.C.T.):
Monitoring the execution of the project and the construction project. The involvement of a third independent supervisory company during construction is necessary, first of all, to protect the rights of the client. Spanish Legislation requires this in the case of construction for resale. The cost of this service depends on the complexity of the project and the surface area of the building, although the average cost is between 6.50 and 8.00 €/m².
CASE STUDY: 1.750 €
3.6. ENERGY EFFICIENCY:
Expertise by an independent company on compliance with all project regulations regarding energy efficiency and subsequent registration with the relevant authority. The thermal insulation in the walls and ceilings as well as the design and installation of utilities are monitored. Moreover, the profile and glass of windows and doors are checked. Examinations are carried out by an officially registered company. The cost depends on the complexity and surface area of the object, however, in average it costs up to 750 €.
CASE STUDY: 600 €
To summarise the third point, it would be appropriate to budget up to approximately 2 % of the total construction cost in Spain to cover the costs of insurance, expertise and laboratories. In our case, the amount is 8,500 €
- Topography: 1.200 €
- Geotechnical research: 1.500 €
- Insurance: 2.100 €
- Laboratories: 1.200 €
- Third independent technical supervision: 1.750 €
- Audit: 1.200 €
(C) TOTAL CASE STUDY: 8.950 €
4. THE COST OF THE CONSTRUCTION ITSELF (D):
The fourth and perhaps the most important item of expenses with a large percentage relative to all costs. The final cost depends on the quality of the materials and the skills of the professionals, but we will focus on the average for the Spanish market. The choice of quality of material and contractor will determine the final cost of the property. Three points should be emphasised under this subject group:
4.1. MATERIAL COST OF CONSTRUCTION:
This is the cost of raw materials and labour, ‘KEY READY’ or ‘ALL INCLUDED’ (‘settle in’, except for bedroom furniture and sofas). The final cost does not include taxes, it is calculated in relation to the total surface area and directly depends on the quality of materials used and design solutions. The average price level at the moment in Spain (quality construction with materials of middle level) established in the range:
- House construction: 1.600 €/m²
- Swimming pool water mirror: 450 €/м²
- Landscaping: 100 €/m²
CASE STUDY: 394.000 €
4.2. GROSS CONTRACTOR INCOME:
Despite the title of this item, the contractor's income is an expense for the client, along with other costs and expenses. Therefore, for transparency and a clear understanding of the cost of construction, it is recommended to separate this item from the total cost of construction and make it a percentage equivalent. On average, the gross income (excluding taxes) of a contractor or construction company is between 12.00 - 15.00 % of the material cost of construction (below that: you should think about the qualification of the company; above this value - is most likely to be overcharged); it should be noted that when this amount is underestimated, it is worth thinking about the professionality and reliability of the company offering the services of the contractor or the General Contractor.
CASE STUDY: 47.280 €
4.3. CONTRACTOR'S MARK UP COSTS:
In addition to the direct income, the builder or contractor includes in the cost of construction an amount to cover the costs associated with the salaries of qualified professionals such as site manager or head of the facility as well as the provision of the facility with its own infrastructure. There are many cheats and frauds on the Spanish market, so it is not advisable to save money on the selection of a contractor. This item does not affect the total cost, but its observance and the right choice of contractor guarantees peace of mind and ultimately savings. Overall, we can say that up to 7.50 % of the total cost of construction will be quite transparent and professional in Spain.
CASE STUDY: 29.550 €
We will discuss more detailed item-by-item construction costs in another publication, as this article covers the total costs. Concluding the fourth item, the cost of building a detached house stands at:
- Construction of the house: 1.600 €/m²
- Pool water mirror: 450 €/м²
- Site improvement: 100 €/m²
- Builder's mark-up: 7.50%
- Builder's gross income: 12-15 %
(D) TOTAL CASE STUDY: 470.830 €
5. FORMALITIES, NOTARY AND REGISTRY OF PROPERTY (E):
Last but not least share of the expenses associated with building a new home in Spain, known as legal and fiscal costs. Further on, we highlight the following items:
5.1. SIGNATURE OF THE COMPLETION OF CONSTRUCTION AT THE NOTARY'S OFFICE:
Once the property has been delivered into use, it is necessary to legally formalise the completion of the construction. A public notary is authorised to act in this capacity. In this case, at the time of signing the purchase deed or ‘escritura’ it is required to pay the value addition tax in the amount of 1.50% of the officially declared value of increase (as a rule, this is the project cost of construction, but there are basic standards, which are based on annual average statistical data). In addition to the previously mentioned tax, do not forget about the fees of the notary services, which are up to 1,000 € depending on the area and value of the property
CASE STUDY: 4.000 €
5.2. ENTRY IN THE PROPERTY REGISTER:
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