Tucked away in the Pyrenees mountains, Andorra sees a high influx of expats and investors looking to settle down here. With a high quality of life, stunning mountain scenery, and low taxation rates, it’s no surprise why.
While buying property in Andorra isn’t complicated, it will require you to have a good understanding of the process and rules applicable to foreigners.
In this guide, we’ll take you through all there is know about buying real estate in Andorra and tips to help you choose the right fit for your needs.
How to Purchase a Property in Andorra: 6 Steps
The Andorran government lifted all restrictions for foreign investors 8 years ago and now foreigners can purchase property without having residency in the country, given that they obtain permission from the authorities.
To buy a house of your own here, expect the whole process to take anywhere from four to six weeks. Since Andorra has a solid process in place when it comes to real estate purchases, the whole thing is very streamlined.
Step 1: Open a Bank Account
The first step is depositing money into an Andorran bank account. Andorra has a developed Swiss-style banking sector with high anonymity. There is also a lack of exchange control in Andorra’s bank which means you can use any currency to deposit, but euros are preferred for local deals.
Opening a bank account in Andorra takes only 30 minutes. A foreign investor only needs a passport copy to open a bank account. The minimal deposit is around €100 and the bank issues a passbook in a matter of days. There are no limits on the amount of cash you can deposit in a bank account.
Step 2: Sign a Commitment Contract
Once you find a property listing you’re interested in, a commitment contract is signed between the buyer and seller. This contract is called a “Promesa de Compra-Venda” and stands for “promise to buy and sell”.
The contract guarantees that both parties will not bail on their duties. The contract also states the payment terms and the buyer has to put down a non-refundable 10% deposit on the purchase price.
If the property was listed by a real estate agent, then you will probably have to pay for their commission as well. Usually, their fee is somewhere around 5% to 10% of the asking price.
Step 3: Pay a Non-Refundable Deposit
The next step is paying a 10% non-refundable deposit to the seller to certify the sale.
The deposit serves as protection for both parties: If the buyer decides to back down for any reason or if the seller receives a higher bid for the property, both parties will be safe from any malpractice.
Step 4: Get Permission to Purchase
Foreigners must acquire authorization to purchase the property from the government. This is an application form for permission to purchase (suplica) and it has to be written in Catalan, then delivered to the official government offices in Andorra La Vella.
The authorization takes roughly 7-14 days to be approved.
Step 5: Acquire a Habitability Certificate
The next step for those who already have residency or authorization to purchase property is acquiring a Habitability Certificate (Certificat D’Habitabilitat). The seller will deploy a local architect on the site to investigate the property and guarantee it fulfils all Andorran requirements for living.
Once the architect delivers the Habitability Certificate to the seller, it will be passed on to the buyer.
Step 6: Finalize the Sale at a Notary Office
The sale will be finalized at the notary once the certificates and permits are issued. The notary will make the buyer and the seller sign a document called “Escriptura Publica” which certifies the transfer of ownership for that particular property.
The cheque or bank transfer draft is given to the seller while the keys are passed to the owner.
Capital Gains Tax on Andorran Properties
Capital gains tax applies for all properties unless the seller purchases another property within 6 months of selling his current property. The capital gains tax is progressive:
- 15% if the property is sold within 1 year.
- 13% if the property is sold within 2 years.
- 10% if the property is sold within 3 years.
- 1% less for each year thereafter.
- 0% after 12 years.
All properties that were owned for more than 12 years prior to the sale are not subject to capital gains tax.
Things To Consider Before Buying Property
Andorra may not have the biggest property market but deciding which home to purchase can be quite difficult. Once you see the stunning apartments and chalets scattered all throughout the country, you’ll want to have them all.
To make things easier, there are a number of deciding factors that you should keep an eye out for when looking at properties on sale.
Andorra may have some of the best views you’ll ever lay your eyes on but that doesn’t mean you should be indifferent to climate when buying property here. The weather here can vary drastically depending on where you reside, the same goes for sunlight too.
Some areas receive plenty of sunlight, others not so much. This is something to consider for the cold wintry months where sunlight can go a long way in reducing your heat bills and keeping your surroundings warm.
Since Andorra is basically tucked in the mountains, a lot of its terrain consists of snowy slopes and vast valleys.
While it paints a pretty picture in the winter months, travelling to and fro can get to be quite challenging. Roads often get snowed in during snowstorms and take a while to get cleared out completely.
Picking a suitable location will make all of this much less of an issue. You’ll have better access to roads, town centres, ski resorts, restaurants and more.
Keep in mind that all of this comes at a price. Property in prime locations will be more expensive than those tucked away somewhere far.
Insulation and Heating
Winters in Andorra may not be freezing to the point of discomfort, but they are cold and snowy. Most houses here have sufficient insulation and heating systems that should make the weather bearable. If you’re planning on living here, consider asking for previous utility bills to have some idea of what you’ll be spending in the colder months.
In any case, it’s best to test these out when you plan a visit to Andorra, preferably in early winter.
If you have or plan on having children, you should know about our education system. Education is mandatory for children aged 2 to 16, but unlike other countries, there are three education systems that parents can choose from. There’s a french system, a Spanish system and an Andorran system which is taught in Catalan. There are also international schools, which are often favoured by ex-pats since they are largely taught in English.
Every parish has a primary school, and most communities have a secondary school close by. Unlike other countries in the region, Andorra has both private and public universities. However, higher education is a little harder to come by, with most universities located close to, or in Andorra la Vella.
Buying Property in Andorra Made Easy
The Andorran government has made the entire process of purchasing property relatively straightforward.
Once the restrictions for foreigners to purchase property were removed, Andorra was on the radar for many ex-pats and investors looking for a new home. As long as you follow the regulations set in place and acquire the authorizations needed, you’re well on your way to owning property in Andorra.
Ready to purchase your first property in Andorra? Reach out to us and we’ll help make the whole process easier.