Buying A Holiday Home In Spain & Costa del Sol – Are The Most Popular Locations Really The Best?


Malaga and the Costa del Sol are currently the favourite destinations for buying a holiday home or second residence in Spain. Especially Marbella, Nerja and Málaga city appear to be the locations with the highest demand. However, latest market research suggests that less popular spots can turn out to be a more interesting choice for buying a holiday home. Malaga is the province with the 3rd highest volume of property sales in Spain (only defeated by Madrid and Barcelona). In this article, the team of Tejada Solicitors offers an overview of the latest data regarding property availability across the Costa del Sol.

Best places for buying a second home in Malaga Spain

buying a holiday home in spain

  • Malaga city: according to reports from the OMAU, an observatory belonging to Malaga’s City Hall, the average price per square meter has reached €2,000 in all Malaga city districts, with the sole exception of the Rosaleda neighbourhood. In the Eastern part of the city, prices can go up to €4,600. What makes Malaga an attractive city is indeed an active cultural scene, with plenty of events and a wide variety of restaurants. Nowadays, some of the most cherished areas for buying a holiday home near the beach are Carretera de Cádiz (next to the Misericordia beach), El Palo or La Malagueta. Nevertheless, others areas as for example Huelin still offer a chance to find a sunny apartment only a few steps away from the beach.
  • Axarquía region: although Nerja still remains a preferential area for most foreigners, a 2019 report from the real estate agency “Tinsa” suggests that most of the stock available for second residency-property is located in the area of Vélez-Málaga (in Benajarafe, Almayate and Chilches). In the village of Torrox some 250 new houses have been planned to be built. Property availability and prices remain relatively good in the village of Rincón de la Victoria (particularly in Torrebenagalbón), one the fastest growing towns in Spain, 12 km away from Malaga city centre- and with a high standard of life. Statistics show a high population of Scandinavians in Nerja, whereas Germans and Belgians tend to choose Torrox. One of the most attractive aspects of the Axarquia is the quality of beaches, a relaxed lifestyle and moderate prices, especially compared to the capital.
  • From Torremolinos to Mijas: during the last few years, Benalmádena had been the favourite choice for the British community, which made this become one of the 10 fastest locations in Spain. But things have changed and most of the available stock appears to be concentrated in the town of Fuengirola, home to the second largest community of Finns outside Finland. Still, some new building developments have been launched in Benalmadena. Since the 1970s, this area of Costa del Sol has had a strong presence of expats, as owners of local businesses, organisers of events or initiators of networks and associations.
  • Area of Marbella: Marbella is said to have the strongest real estate market in all Spain, having survived the previous crisis with relative ease. This can be interpreted as a safe investment. However, current legal restrictions are limiting the number of licences and therefore the amount of building surface available for new projects in the town of Marbella, where the current offer is mainly of luxury houses. As a result, the areas with a better offer are Estepona, Manilva and Casares.

The following table based on Tinsa’s Report on holiday homes, published at the beginning of 2019, offers an approximate idea of the current prices with the most and least expensive areas:

LocationPrice square meter/ euro
Rincón de la Victoria1,726

 * (over 2,000 according to data from end 2019)

What happens with the holiday home in Spain during the rest of the year?
As long as the number of days of the stay in Spain does not exceed 183 days a year, owners will be able benefit from a significant tax reduction, as they will be considered non residents. For example, many foreigners choose to live in Spain during the winter season and then return to their countries in summer, when the weather gets hotter and streets get fuller with tourists.

In the same line, a study from the banking firm “Self Bank” shows that landlords renting their holiday home during the summer season can make a profit of roughly €712 a week ( these values apply strictly to the summer period). Likewise, Idealista – one of the biggest online platforms for property purchase and rental – has found that by renting out a property in Costa del Sol bought for a price of €200,000 (with €20,000 additional costs) property investment can reach the following level of profitability:

RINCON DE LA VICTORIA4.70%€10,340.00€51,700.00

Cost of buying and renting out property in Costa del Sol

  1. As a thumb rule, costs involved in the purchase a property in Costa del Sol (including attorney fees, notary, taxes, property registration) will be as high as 11% of the purchase price.
  2. Before renting out the property, it will need to be registered at the Junta de Andalucia (regional office). You will need to provide a complaints book, send the Police a copy of the passport, specifying name and surname of the tenant who is renting your house among other obligations.
  3. If the property is rented out as a holiday home, non-resident owners must pay non-resident tax (IRNR) for the total income received, with a tax burden of:
    • 19% if the person is resident in another EU country or the EEE (Iceland, Liechtenstein and Norway), where some related expenses can be deducted.
    • 24% if the owner is resident outside the EU and EEE, where no related expenses can be deducted.

In case you are considering renting out your property as a holiday home or purchasing a new property in the Costa del Sol region, contact the TEJADA Solicitors team. We are an English speaking law firm of solicitors, tax advisors, lawyers and architects holding many years of experience in Malaga.

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Photo source: Pixabay,  Steve Bidmead

Tejada Solicitors is an English-speaking law firm based in Malaga and Costa del Sol, specialised in property conveyancing, inheritance tax, residence for foreigners, self-employed tax declarations and most legal and financial aspects of relevance to foreigners and expats living in Spain. For any questions and enquiries regarding the Spanish property market, don’t hesitate to contact us either by phone or e-mail.

Author: Rosana Tejada

Biographical Info: Rosana Tejada Crespo is a tax advisor holding a Master’s Degree in International Taxation. She specialises in companies and freelancers, tax regulations concerning foreign employees (Beckham rule), non-resident tax, inheritance tax and Spanish income tax. She is one of the founders of Tejada Solicitors, which comprises a group of English speaking solicitors, economists and architects.

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