Flipping: for years it was a licence to print money in the Netherlands. Buy up an old place, smarten it up on the surface. Add a storey, extend at the back, knock through an open-plan kitchen and sell it on at a hefty profit. I reckon twice a week someone asks us to 'keep them in mind' if we spot an interesting little place to flip. But flipping is hard work. You pay a lot of tax when you sell on anyway, and 10% transfer tax on the way in. Those are already big chunks out of your return. So very little can go wrong if you want to make it pay.
Contents
- What decides whether you can build?
- The rules, municipality by municipality
- Do you need a building permit? Obra Mayor vs Obra Menor
- Renovating or extending: what's allowed?
- Why flipping is hard work in Spain
- What does Gusto Casa do for you?
- Plans to build or renovate? Start at the beginning
But we Dutch are also very used to buying a house and seeing the potential. A quick extension, an extra floor, a dormer window on the roof. Knock a few walls through. We want to renovate everything. No pool? Never mind, we'll just put one in ourselves. Or we'll build a casita in the garden.
We Dutch see the potential and want to renovate or flip
You can picture it already. A modern villa with an infinity pool, sea views and maybe a guest annexe as well. The northern Costa Blanca is tempting. Not just for the climate and the pace of life, but as an investment too. Prices are currently rising by around 17% to 18%. So there can be a lot to be said for buying a cheap house with potential that still needs work. And because you pay 10% transfer tax, buying something that isn't quite finished is all the more appealing. But are you actually allowed to build or renovate there?
Spain is beautiful, but the rules are complicated. There are plenty of risks and pitfalls. Every village has its own rulebook. And anyone who walks into that blind stands a good chance of losing both money and patience. In this in-depth blog we explain exactly how it works: by municipality, by zone, by pitfall. Because knowledge is the foundation of every smart investment. This is a short guide, but before you renovate anywhere, make sure it has been properly checked.
What decides whether you can build?
In Spain it is the zoning plan, the PGOU or PGE, that determines what you may do with a piece of land. Sadly it isn't like the Netherlands, where you can quickly check on the planning portal what is allowed. This is a good deal more complicated and you really need an architect for it. The plan is drawn up by each municipality and sets out:
- Whether you may build at all
- What percentage of the plot you may build on
- How high you may build
- What distances you have to keep to the boundary
- Whether you may renovate or extend
Most land falls into one of these three categories:
1. Suelo Urbano
Urban land. Already built on, or designated for housing. The most options.
- Building: allowed within the rules
- Extending: possible up to a maximum % of the plot
- Pool: usually no problem with a permit
2. Suelo Urbanizable
Developable land. Potential for building, but only where there is an approved detailed plan.
- Building: only once a plan parcial has been approved
- Watch out: some municipalities have put urbanizable land back to rustico!
3. Suelo No Urbanizable (Rústico)
Agricultural or protected land. Strict rules.
- Building: only on plots of ≥ 10.000 m², max. 2% built on (so 200 m² on one hectare)
- Pool: only alongside a legal dwelling and with a permit
- Extending: usually not allowed
This looks simple, but the reality is often different. Rules are applied inconsistently, plans are sometimes ancient, or political interests are at play.
The rules, municipality by municipality
Below is an overview by town or village. Because every area has its own rules (and its own pitfalls).
Dénia
- PGOU year: 2020 (partly out of date because of the new flood rules)
- Built-up percentage: 20–30%
- Max. height: 7 metres / 2 storeys
- Distance to the boundary: min. 3 metres
- Extending: yes, as long as you stay within the limit
- Pitfall: many plots fall within a zona inundable (flood zone), which brings restrictions with it
Jávea (Xàbia)
- PGOU year: 1990 (out of date)
- Built-up area: 20–30% depending on the zone
- Height: usually 6–7 metres
- Distance to the boundary: often 5 metres
- Extending: possible with a permit
- Pitfalls: Duplicate registrations in the Catastro and the Registro. Plenty of older properties with illegal extensions
Moraira (Teulada)
- PGOU year: 2018 (current)
- Built-up percentage: 25–30%
- Height: max. 7 metres
- Distance to the boundary: min. 3 metres
- Extending: allowed with a permit
- Pitfall: a lot of pools were put in without a permit, and they have to be legalised when the property is sold
Pedreguer
- PGOU year: 2007 (a new plan is partly in place)
- Built-up percentage: 20–25%
- Height: max. 6 metres
- Urbanizable put back to rustico? Yes, on a large scale
- Pitfall: plots look ready to build on but no longer carry any building rights. Check the legal position before you buy. The council here usually responds very quickly.
Benissa
- PGOU status: under review
- Built-up percentage: 20–25%
- Height: usually 6–7 metres
- Distance to the boundary: 3–5 metres depending on the zone
- Extending: limited and subject to a permit
- Pitfalls: Many houses without an LPO (habitation licence). Discrepancies between the registered details and what has actually been built
Altea
- PGOU year: 2013
- Built-up percentage: 20–30%
- Height: max. 7 metres
- Distance to the boundary: at least 3 metres
- Pitfall: some zones are covered by landscape or view protection, and building or renovating can then be limited
Lliber
- PGOU: unclear/out of date
- Zone: largely rustico
- Scandal: between 2000 and 2005 hundreds of homes were built illegally with the help of corrupt officials. It later emerged that permits had been forged.
- Consequence: many homes with no valid registration, no mains connections and no way of selling them on. Around 385 homes are illegal. Getting a mortgage on these properties is often difficult.
- Lesson: always have the full legal position checked before you sign!
Jalón (Xaló)
- PGOU year: 2005 (only partly updated)
- Zone: mixed urbano and a lot of rústico
- Built-up percentage: 20–25% in urbano
- Maximum height: 6 metres (often 2 storeys)
- Distance to the boundary: min. 3 metres, and often more in rustico
- Extending: possible in urbano with a permit, limited in rustico
- Pitfall: many properties sit on agricultural land with no clear building rights; check whether there is an LPO and whether the house is fully registered in both the Registro de la Propiedad and the catastro. A lot of homes lie in a zona inundable (flood zone). That means stricter requirements, often compulsory flood insurance, and it isn't very pleasant for you either.
So in principle you may live on rustico land, provided you:
- Have at least 10.000 m² of land
- Build on no more than 2% of the plot (including house, pool and terrace)
- Meet every permit requirement, including access to a road, water and electricity
But even with 10.000 m² there are municipalities that add extra conditions. Think of a minimum plot width, rules on agricultural use or landscape protection.
Be warned: since 2020 illegal building on rustico land has been tackled ever more strictly. Municipalities refuse to issue a cédula (habitation certificate) and can order demolition.
Do you need a building permit? Obra Mayor vs Obra Menor
You need to be careful when you renovate. You need a permit for practically everything. Unlike in the Netherlands, you can't carry out small non-structural work without one. Nor can you add an extension or fit a dormer window permit-free. A shed in the garden or a jacuzzi? Even then you need a permit. All we ever hear is that everything in Spain is illegal and everyone just does as they please. But officially you do need those permits, and the checks are getting stricter all the time. In Spain they work with the permiso de obras, in other words a building permit. There are two main types:
- Obra Mayor – a permit for major works such as new build, adding an extra storey, a casita, an extension, or demolishing or moving load-bearing walls. For this you need a full set of plans (from an architect) and it takes rather longer to get approved.
- Obra Menor – a permit for smaller alterations. Think painting, fitting (different) frames or windows, replacing bathroom fittings or minor insulation work. The application is simpler and often comes through quickly. You usually don't need an architect, but you do have to submit a description or a simple drawing.
Examples: fitting solar panels usually counts as obra menor (a small installation), but check with the ayuntamiento (town hall), because the rules can differ from region to region. Building a conservatory or putting up a sizeable extension has to go through obra mayor. Without the right permit you risk fines and you may even have to pull the finished work down again later. In short: always check with the town hall which permit you need!
Renovating or extending: what's allowed?
In urbano zones:
- Up to the maximum built-up percentage (often 20–30%)
- Always apply for a permit (obra menor or obra mayor)
- An architect and a set of plans are often needed
In rustico:
- Maintenance and renovation only
- No extensions allowed (apart from exceptions approved by the Consell)
Putting in a pool?
- In urbano: usually allowed with a permit
- In rustico: only alongside an existing legal dwelling, and often no bigger than 30–40 m²
Why flipping is hard work in Spain
Flipping, in other words buying, doing up and quickly selling on again, sounds appealing. But in Spain there are catches:
- Slow permit procedures: waiting for approval takes months
- Unexpected legal obstacles: hidden defects or illegal elements
- The new buyer wants guarantees: an LPO, registrations, energy certificates
- The market moves more slowly than in the Netherlands: sales take longer
- High selling costs: think estate agent, lawyer, taxes (plusvalia)
So: if you want to flip, get proper advice up front on the legal status of the property. And have every document checked before you invest. But do the sums carefully too. Don't forget the agency fees, which are far higher here, the tax on your profit and the transfer tax. The margin has to be many times bigger than we were used to in the Netherlands. On top of that you can only finance 70% of the value, and a building deposit works completely differently here. You also need to get the energy label pushed up straight away.
What does Gusto Casa do for you?
For us it isn't only about buying. Sometimes a no is the best advice there is. However excited you are, now and then we have to bring you gently back down to earth. We see the potential. But with a lot of houses we know straight away whether something might be possible or not. And you need to be certain you're on solid ground. We make sure the right people check the right documents, and we run a quick scan up front:
- Check the zoning plan
- Assess whether building or renovating is possible
- Check the Catastro and the land registry
- Flag any illegal elements
- Guide you through permit applications
- Work with local architects, lawyers and town planners
We're honest when something isn't right. Even when that means advising you not to buy.
Plans to build or renovate? Start at the beginning
Buying a Spanish house is not a game. Certainly not if you want to build or renovate. The rules differ from village to village, from zone to zone and from plot to plot.
A dream home starts with knowing exactly where you stand. And we sort that out for you. So you can invest with confidence and, above all, enjoy your place in the sun.
Want to know whether your building plans are possible? Have the zoning plan checked and your situation assessed.
Are you looking for a lovely house and do you enjoy adding value and renovating? Great! We'd love to go hunting for a gem.
