Are you thinking of buying a property in Spain?

 

Buying a property in Spain – 5 steps to a successful purchase

1. Financing

It is a good idea to consider at an early stage whether you intend to finance the property with a mortgage. Many of our clients choose to raise finance against their property in their home country. If you would like to explore the possibility of obtaining a mortgage in Spain, we are happy to assist you with contacts at Spanish banks.

2. Reservation

Once you have decided to purchase a property, the usual procedure is for the property to be taken off the market when you pay a reservation deposit, normally between €3,000 and €6,000. This amount is deposited into your lawyer’s client account.

Your lawyer will then carry out the necessary legal checks on both the ownership and the property. We recommend granting your lawyer power of attorney to represent you, as this can save you time and avoid the need to be physically present in Spain for certain stages of the process.

3. Purchase contract

A binding agreement is then drawn up between the seller and the buyer, setting out the purchase price, completion date and what is included in the sale.

When the contract is signed, you will normally pay a deposit of 10% of the purchase price. The reservation deposit is deducted from this amount and therefore forms part of the total deposit.

4. Legal services

Before completion, your lawyer prepares all the necessary documentation for the transfer of ownership to be registered with the Land Registry and completed before the Spanish Notary.

During this period, you will also need to apply for a Spanish identification number (N.I.E. number). This can often be a time-consuming and complicated procedure, so we recommend allowing your lawyer to assist you with the application.
Your lawyer will also assist you with any tax matters relating to the property.

5. Completion

On the completion date, the purchase is formally completed by signing the public deed of sale before the Spanish Notary. The remaining balance of the purchase price is paid to the seller at this stage. The keys are then handed over and you take possession of your new property.

 

Additional costs when buying a home

• When purchasing a resale property, Property Transfer Tax is payable. This is normally between 7% and 10% of the purchase price, depending on the region and the value of the property. You should also allow approximately 2–2.5% for legal, notary and registration costs.
• When purchasing a newly built property, VAT is payable instead at 10% of the purchase price. Stamp duty, registration and legal costs amount to approximately 3.5–4% of the purchase price.
• Ongoing monthly costs normally include electricity, water and sewage, which are charged according to consumption. Your lawyer can assist with registering these services in your name and, where applicable, a small registration fee may apply. If you live in an apartment or townhouse, you will normally also pay a community fee to the owners’ association, which covers services such as the maintenance of lifts, communal areas, swimming pools and gardens.
• You will pay Spanish property tax (IBI) on your property in Spain. The rate varies between municipalities and is generally between 0.4% and 1% of the property’s taxable value. If you are not a tax resident in Spain, you may also be liable for non-resident property tax, which is normally around 0.3% of the taxable value.

 

The costs outlined above are approximate and may change at any time due to changes in legislation, government decisions or other circumstances. We will be happy to help you estimate the costs applicable to your particular property.

 

The buyer’s responsibility when purchasing a resale property

It is important to inspect the property carefully before completing your purchase, as resale properties in Spain are generally purchased in their existing condition. The seller is not normally responsible for defects that could reasonably have been identified through an inspection before the sale.

The buyer’s ability to make a claim for compensation in respect of so-called hidden defects is limited, as the court must establish that the buyer could not reasonably have become aware of the defect through a thorough inspection prior to the purchase. Other factors, including the age and purchase price of the property, may also be taken into consideration when assessing such a claim.

 

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When you are looking to buy a property in Spain, our experienced estate agents are ready to assist you. Contact us if you have any questions or would like us to send you a selection of properties that may be suitable for your requirements. Visit our Contact Form >>