Spain: developer loans via crowdfunding platforms

In Spain a private lender reaches developers through platforms authorised by the CNMV. What a mortgage guarantee does and does not mean, and what to check.

In Spain, offers to lend money to a property developer usually come from crowdfunding platforms and are often described as "mortgage-backed". It is easy to read that as the same thing as a private loan to a German developer secured by a land charge. It is not the same product. A Spanish retail lender normally lends through a platform authorised by the CNMV, the borrower is a project company, and what protects you is written into each project's documents. This guide explains how the route works, what the law gives you and what it does not, and what to check. Your capital is at risk, and nothing here is financial, legal or tax advice.

Not the same product as a direct secured loan

The article on how a private loan to a German developer works describes a bilateral loan: one lender, one borrower and a land charge in the lender's favour. On a Spanish platform you lend, together with many other investors, to a developer chosen and described by the platform. You are exposed to the developer and to the platform between you and the developer, and the security is described in the offer, not guaranteed by the platform or by law.

How a platform loan typically works

The project owner, usually a developer company, publishes a project: amount, term, purpose, security.
Investors commit amounts online and the platform passes the funds to the developer when the funding target is met.
The loan is repaid, in the usual case, from the sale of the finished units or from refinancing, so the schedule of works and sales decides when you are paid.
Platforms say they select projects, but they also say they do not guarantee repayment.

Who regulates it, and which rules apply

The competent authority is the CNMV (the securities regulator). Platforms operate as crowdfunding service providers authorised under Regulation (EU) 2020/1503. A word of warning about older material: many websites still quote the earlier national regime, with caps of EUR 3,000 per project and EUR 10,000 a year for non-accredited investors. Check which regime a platform operates under before relying on any such figure. ESMA keeps a public register of authorised providers, with the countries each may serve; we could not find a single CNMV page listing the Spanish platforms in our research, so start from the ESMA register.

Under the European regime, a non-sophisticated investor gets:

an entry knowledge test and a simulation of the ability to bear loss. ESMA's Q&A calls the simulation a self-assessment that does not stop you from investing;
a pre-contractual reflection period (Article 22; check the length in the text);
a standard Key Investment Information Sheet for each offer (Article 23);
a ceiling, under the Regulation, of EUR 5 million that one project owner can raise through platforms in 12 months.

Platforms must also have arrangements to continue servicing loans if the platform itself stops operating. One Spanish summary says the continuity plan is approved by the CNMV; check that detail with the platform.

What the regulation does not do: the CNMV does not approve a project or judge the price, a platform loan is not a bank deposit, and the platform does not guarantee that the developer will pay.

What a "first-ranking mortgage" does and does not mean

Platforms commonly describe the main security as a first-ranking mortgage (hipoteca de primer rango) on the asset, which allows it to be enforced through the courts to recover at least the capital if the borrower defaults. That is a real protection, but analysts point out that other things matter more than the headline: the rank, the loan-to-value ratio, the term and the developer's solvency. Two cautions follow.

The value of the asset is not fixed. If the works stop, the real loan-to-value can exceed 100% because an unfinished building is worth less than the finished one it was valued as. Ask whether the valuation is for the finished building or for the site now.
Enforcement takes time. A default can lead to a long and costly process with partial recovery, so a mortgage means a route to recover money, not the money on the due date.

Ask also in whose name the loan is held: directly in the investor's name, through a vehicle, or by assignment from the platform. We did not find a general answer, and it decides what happens to your claim if the platform fails.

The risks, in plain words

Developer default or insolvency: the largest risk, and the security may recover less than you lent, and later.
Construction and sales delay: the term can be extended; the platform's repayment date is an expectation, not a guarantee.
Valuation risk: the asset was valued on a plan or on a half-built structure.
Platform risk: if the platform fails, the continuity arrangements should keep servicing the loans, but the quality of those arrangements is something to ask about.
Illiquidity: there is often no secondary market, so your money stays in until the project exits.
Concentration: one project can fail entirely; spreading money is your risk management, not a safeguard the law gives you.
A high advertised return on a short term is itself a reason to read the risk section twice.

Tax for a non-resident lender, in brief

Tax depends on where you are resident and on how the platform pays you. The Spanish tax agency's pages give 19% as the general rate for interest earned by non-residents without a permanent establishment, and they note that exemptions and tax treaties may change the result. We found conflicting statements on whether a platform withholds tax: one guide says that securities held in a Spanish custody account bear a 19% withholding, another says there is none, and the second was about residents. Ask the platform in writing what it withholds for a non-resident, and check with a tax adviser in your country of residence how the income is taxed there and whether Spanish tax is credited.

Can a non-resident invest?

Under the European framework a platform authorised in one member state can offer its services in others, and the ESMA register shows where. Whether a given platform onboards you depends on its own rules, your country of residence and its anti-money-laundering checks. We did not find a verified rule allowing or forbidding a direct private loan to a Spanish developer without a platform, so do not assume either.

Checklist before you commit

Is the provider in the ESMA register, and does it list Spain and your country?
Which regime does the platform operate under, and are the investor limits in the offer the ones you were quoted?
Have you read the Key Investment Information Sheet and the project documents, not only the summary?
What exactly is the security: rank of the mortgage, loan-to-value, valuation date, who holds it?
In whose name is the loan held, and what happens to it if the platform stops?
What is the developer's track record, and how much of its own money is in the project?
What do the permits, the works schedule and the sales plan say?
Which fees and taxes apply to you as a non-resident?
Can you afford to lose the whole amount, and for how many years can you leave it?

How we help

We do not offer platform loans in Spain, and we do not recommend any platform. If you are considering financing a developer, we can walk you through the German project financings we work with and show their documents and terms; they are a different, bilateral structure with its own risks, described in the German due-diligence checklist. If your goal is to buy property in Spain rather than to lend, we can discuss the purchase side, and the investment risks in Spanish property and mortgages for foreigners in Spain are a good start. General information only, not financial, legal or tax advice.

Lending to property developers in Spain through crowdfunding platforms: how it works and the risks