Buying Property in Andorra: New-builds and Brand New Construction
- elizabethhelenpier
- Jan 1
- 6 min read
Updated: Mar 7
There is always an abundance of new builds being constructed in Andorra at any one time, but the quantity of construction has taken an upturn in the last 5 years. In part due to the growing population putting a strain on the Andorran housing market. Developers have assuredly taken advantage of this new demand. Furthermore, with historical property price increases in the approximate range of 10% annually, building property in Andorra has always been a money maker for the savvy investor. Are you looking to buy new property in Andorra? Are you unsure as to what to sign and when or whether it is worth your money? Are you wondering how much you have to pay upfront and if your money is secure? Read on if so.
Steps to take when buying a new property in Andorra:
1. Agency contact
The promoting agency will likely have a show office space where you can see some of the interior details and furnishings and where they will give you a small presentation on the new building construction. If the build is in process, you may be shown the exterior but not the interior in most cases.
2. Sign the reservation
You will be expected to pay an amount on signing of a reservation. Here, you will be given a timeframe in which you are expected to sign the promise to buy-sale agreement which is the next step.
3. Sign the promise to buy-sell contract
This is the more official version of the reservation and is a legally binding contract. Here you will normally pay 10% of the total as a deposit. Sometimes you will be able to bypass the reservation stage and sign and pay the buy sell-contract immediately.
4. Make payments per schedule agreed
To buy new property in Andorra, you should expect to pay most of the price before you officially buy the property. We have seen up to 80% of the agreed price being paid before signing of the deeds. They do this because they can, ergo there is enough demand. No other reasons are given.
Each new build will be different but as an example for Andorra, the figures will usually lie between these:
10-20% of agreed price on completion of foundations
10-30% of agreed price on completion of finishing of structure
10-30% of agreed price on completion of roof and windows
20-60% of agreed price on signing with the notary when the keys are handed over
5. Book the notary
Once the build is complete and the local land planning department have okayed it as suitable to live in, you are able to sign the deeds with an Andorran notary. The agency will book the appointment for you with the notary. On signing you will be given your sets of keys and can then move in.
6. Sign on with the local parish
An important step that sometimes gets overlooked. You must go to the local parish and sign both yourself on to living in this property if it is to become your primary home, and yourself as the property owner in the land planning department also.
7. Pick up the final deeds from the notary
The listing or buying agent will often pick them up for you, if not you will be contacted directly to pick them up yourself, a month or so after the signing of the deeds.
Are new builds worth the price?
When you buy property in Andorra, you will pay a premium on new builds that will be approximately 15% over the price of existing second hand properties. Culturally, the Spanish like new-builds much like the Americans like new cars. This means that in Andorra, where there are a lot of Spanish buyers and Spanish cultural influences, the premium will be slightly higher than in other countries. Information in Idealista type webpages will contradict this, showing at times secondhand property being more expensive than new builds. This is people trying their luck and should not be taken as evidence of sales prices. The secondhand property will sell at 10-30% under its advertised price, while new build promoters will only usually budge 1-5% from the price advertised.
The value for money depends highly on what Andorran new build you are looking at. Some are certainly worth the value at this current time and with recent price increases it is fair to say it might be worth more by the time you sign the deeds as has happened with anyone buying into a new build in the 2019-2024 period. There are however other properties that are not worth the value proposed on the sales tag. The issue is more pronounced with the higher range luxury chalets or apartments, where the prices are extraordinary but the furnishings, plot size, or sunlight angle are very much not.
Are new builds in Andorra built to quality?
New construction in Andorra can vary greatly in terms of the quality of build. The basic structure for any build whether it is an apartment block or a chalet will likely be constructed out of a concrete structure. Nonetheless, the interior furnishings, exterior and interior architecture and quantity of windows for example can differ significantly. You can get all types of quality offered nowadays from basic MDF to high quality solid wood doors and kitchens. The price tag will tell you a lot but a high price does not always guarantee high quality.
Can I get a mortgage for a property under construcction in Andorra?
Mortgages in Andorra can be obtained on any property at the signing of the deeds. Nevertheless, a big issue occurs here in that you are expected to pay up to 80% of the price of a new build before signing of the deeds. To finance this 80% you would expect to get a mortgage. This is not feasible when you buy new property in Andorra unless you keep this 80% value in your Andorran bank account during the period of the build. In which case no mortgage would be necessary in theory. You can try and negotiate with the building promotor to change the upfront costs to something more workable, but they are often uncompromising unless the property has been on the market for a long time. The promotors here do not offer mortgage packages, only the banks.
What happens if the build is delayed?
Sincerely, nothing. It is very unusual to have any compensation agreement for build delays written into a promise to buy-sell contract in Andorra. We have seen it occasionally but usually in the higher price ranges and after much negotiation. By-in-large a new build planned date of completion will go over by 6-18 months in Andorra. When you agree the date of completion always take this delay into account.
What happens if the company building my house goes bust?
After the 2008 crisis in Spain, which had small a roll-on effect in Andorra, the rules and regulations behind construction in this part of the world got much stricter. Construction companies must now have insurance policies that cover the majority of the build in case of company liquidation. Furthermore, building promotors in Andorra are repeatedly receiving cash injections from the hand of the purchaser by means of the large 40-80% upfront payments before signing of deeds. We have never seen a build site go bust here that has investment already, precisely for these reasons. In the worst-case scenario if the cash flow and sales stopped and if a company does not want to call bankruptcy but cannot complete, they could offer to sell the build to another promotor. The delay however to find a buyer, to resell, and to re-agree to begin building could take years. This has never happened in Andorra, the only precedent of this is in Spain.
How to build a house in Andorra?
Have a look at our blog post How to buy land and build a house in Andorra? for more information on building your own property here.
