Andorra Property Guide. Where should I buy or rent?
Introduction to Andorra
September 2023. A temporary moratorium on foreign investment approval for the purchase of property in Andorra. What this means for you.
As from September 7th 2023 the Government rushed through legislation to provide for a temporary moratorium on the purchase of Andorran property by foreign residents. If already a contract of purchase has been signed and a deposit paid you will not be affected., nor will you be affected if you are an existing resident in any of the categories. If you are intending to apply please see below for ways around this moratorium and any subsequent legislation for non resident property purchases.
During the next three months relevant government departments will be putting forward proposals in order to tighten future foreign investment approval to stop speculation and runaway prices. Suggestions so far include a 10% deposit payable to the government which is refundable upon completion. This they say would stop off the plan properties being sold on at a quick profit. Other suggestions include having designated areas where nonresidents can purchase property so as not to price out local residents. Whether it is a main home or a secondary home is likely to have a bearing on any restrictions that come into force.
This means for those of you that are looking at passive residency Category A, you will need to become a resident first before you agree on the purchase of the property in order to avoid foreign investment approval. That is not too serious an issue however immigration do require an address for application and it seems that this invariably would be a temporary rental in order to become a resident and to avoid the foreign investment approval requirements.
As stated above this is a temporary moratorium in the coming months will dictate the future of foreign investment for property in Andorra and what those new requirements will be.
Ways around the Foreign Investment Moratorium
It is clear that the current moratorium, albeit temporary, will allow the Government to make it more difficult and probably expensive for a non resident to purchase property in Andorra. ALL residents including passive residents are and will not be affected by any changes in these requirements.
Logically then you need to apply for residency first to avoid the moratorium and future restrictions, BUT you need an address for Immigration, so what can be done ? There seems to be 2 options:-
- Rent a small apartment/convenience address to get through Immigration and then purchase a property. The downside to this is there is very little on the rental market and this new demand may tighten availability further, if you are offered one that is available then take it quickly if it fits exactly with your plans for residency, but option 2 may be best......
- Immigration now accept as an address for a residency application an official promise to purchase with completion set within 12 months from application. There is no requirement for a rental address if you have this contract. This is clearly an advantage as completion will then be in the period when you are a resident and can avoid non resident requirements. I have asked Immigration what happens with a delay in completion ( not uncommon), and they do not seem too concerned and just advised if the 12 months look as if they will expire, simply to rent an address at that time.
How can I help You ? Updated June 2023.
The property market is currently very difficult both for rentals and purchases. There are very little properties available, and whilst there are many construction projects in process they are high-end xalets and premium apartments.
There are many internet based lists of properties out there, many which are just databases, some out of date and some overvalued. Identifying the suitable primary agent for your needs can be a minefield for the unprepared. As part of my services I can act for you in finding the right property. I am partnered with some reliable and trusted registered agents. If you are interested in viewing apartments or xalets I would suggest that you let me know in advance what exactly are your requirements and then I can have the right agents prepare on your behalf a short list of properties to view without you wasting time viewing unsuitable or overvalued properties.
Please note I do not charge for this service, so in effect you have the advantage of my local knowledge and I can act on your behalf and in your interests.
Please note I do not charge for this service, so in effect you have the advantage of my local knowledge and I can act on your behalf and in your interests.
Please contact me if I can assist or represent your interests in any purchase or rental, whether in support of your passive residency application, investment or that holiday home.
The current state of the property market in Andorra (2023)
The government has announced proposals (September 2022) to limit the number of licences for construction. This also comes on the tales of the announcement that the dump for earth and spoils in Anyòs is being closed, effectively limiting some construction projects. What effect the cost of living, inflationary increases, and the state of the European market has in store for the winter may well mean that construction itself reacts to market demand as it did in the 2008 crisis.
The dynamics of the Andorra property market have continued to change markedly into 2023. The market continues to be dominated by off plan developments, high-rise towers and top end xalets and this seems to be keeping construction companies in Andorra very busy. What is not so forthcoming new developments at the middle and lower end of the market.
Any form of rental is very hard to come by, if at all. This is now the most challenging part of the residency application process for those looking for an apartment to rent.
If you can now find a one-bedroom apartment furnished the asking rental price can start at about EUR800, steep increase from one or two years ago. There has in the past few years been a noticeable increase in the number of property agents in Andorra or trying to cash in on a buoyant market, but you can expect many of these to disappear in the next year or two as a simply are not the properties for them to rent nor to sell.
If you are looking to buy property in Andorra currently then choice is very limited, not so limited as rentals, but buyers are finding it tough with what is available.
The lockdown and subsequent effects of the pandemic do not appear to have had any effect on the market in terms of slowing things down, if anything it has speeded the market up.
As always beware of the Internet databases and what is marketed there is certainly with the current state of the market they will be woefully out of date. Both rentals and properties for purchase are being snapped up before they make it to the Internet in most cases.
The above is my opinion and experience in Andorra, I am not a registered agent just a realist!!
Look no further, ROC Properties will guide you...
A Price Guide for Purchasing Property in Andorra
The purchase of property is relatively easy normally with the payment of a deposit and after a few weeks of legal work a visit to a notary to obtain title to the property. There is a stamp duty tax payable to the Comú (local parish) and which is fixed in all parishes at 1.5% of the purchase price. Also payable to the Government is the ITP at 2.5% (Impost de Transmissions Patrimonials). The buyer pays no commission to the agent for purchases, the commission paid by the seller is generally 5%. The Notary normally acts for both parties, it is not common for lawyers to be involved, nor for surveys. On the latter point this can be advisable under certain circumstances and I can get independent surveys for you if required.
Some years ago a capital gains tax was introduced to prevent speculation. There is a sliding percentage scale over a twelve year period which reduces from 15% to % 0 on the increase in sale value over purchase value.
Prices for purchases in 2023 ( If any property is indeed available) now start at around € 100,000 which will buy a basic studio apartment. Two bedroom apartments vary from € 250,000 to € 800,000 for a new quality finish, three beds are on the market up to a price of up to € 1,200,000 or even more in a new build. The average guide for an older three bedroom apartment would be in the region of € 450,000 - 700,000. For detached xalets generally you can now expect to pay well over € 1.5 million , and a lot higher for a new build. Top of the range Xalets may now set you back over € 10 million.
As always in Andorra there continues to be wide discrepancies in advertised and asking prices and that is due to a number of factors that are not often explained, especially whether the owner selling is Andorran or whether it is a second home that needs to be sold.
ROC Properties known in Catalan as ROC Propietats will be delighted to guide you through the mine field without losing that arm and a leg.
A Price Guide for Renting Property in Andorra
Through 2023 the rental market continues to be difficult with now very limited choice available and this will continue with rental prices already being forced up.
One thing to note in renting a property is the up front payment of four months rent, this can be unexpected if you are not prepared for it. You are required to pay at the time of signing two months refundable security deposit, one month's rent in advance and also one month's rent for the Agency commission ( plus local tax of 4.5%).
Historically the rental yield has been around the 2-2.5% yield, so property has not been as attractive as a rental investment compared to hotspots such as London and major financial centres. However with the squeeze on property rentals quite significant yields can be obtained but only if you can find the properties to buy. Those who purchased mid or lower range properties during the slump from 2009 until the market perked up just several years later are now reaping the benefits.
Rental contracts are by law for five years and are heavily weighted in favour of the tenant. To evict the tenant the landlord has to provide evidence of maltreatment of his property or non-payment of rent or a breach of the conditions of contract. He cannot decide in the five years that he wishes to sell the property and get you to leave. Also, the annual rental increase can be no more than the annual inflation rate, so again the landlord cannot unilaterally decide to raise the rent.
A tenant is now only required to give ONE month's notice to end the contract.
Rental prices start at about € 550 for a very basic studio or one bedroom, rising to about € 700- € 950 for a larger one bedroom, from € 950 up to € 1,500 for a good size two bedroom apartment and from € 1,500 to € 4,500 for the range of three beds and duplexes. There are some xalets and terraced houses for rent and you would expect to pay from € 3,500 to € 5,500 per month for the top of the range house.
Once again, ROC Properties known in Catalan as ROC Propietats will be delighted to guide you through the rental market.