What would a Spanish Lawyer do
- Review the seller’s title deed
- Review a recent nota simple
- Review the full catastral certification document
- If buying in an urbanisation, check the plan of building plots
- If buying a plot check that building is a legal possibility
- Review the IBI receipt or the declaration of new construction
- Review the community charge receipt and the statutes if buying in a communally owned development
- Review the sellers utilities receipts
- Draw up a private contract in Spanish and have it translated into your own language
- Agree a price, method and currency of payment
- Sign the escritura de compraventa in the presence of a notario
- Pay the required fees and taxes
- Establish how and when you will receive the escritura publica making you the legal owner
What fees and taxes are involved in buying a property in Spain
As a general guide the fees and taxes involved in buying a property amount to about 10% of the purchase price of the property so it is important to bear this in mind when choosing a property.
The estate agent’s fee is normally built into the asking price but it is always worth checking on this with any particular agent you are thinking of buying a property through.
The biggest fee will probably be the VAT or transfer tax on the property you are buy. If it is a new property you will be charged 7% tax (IVA as it is called in Spain). If it is a re-sale property you will pay a property transfer fee of 6% of the sales price.
If you buy a new property it also incurs stamp duty of 0.5%. If you are planning to make any additions to the property e.g. swimming pool or garage it is a good idea to get them included in the sale documents as otherwise you will have to pay 16% tax on any new construction project. Buying a plot of land incurs a 16% new construction fee as well as 0.5% stamp duty.
The lawyer will probably charge you approximately 1% of the sale price but this can vary so it is important to agree the fee in advance and to ensure you get all the legal services required.
All property sales have to go before a Spanish notary who will charge approximately 1% of the sale price. This is payable at the point of signing the purchase agreement. There is also a property registration fee to pay and this is approximately 40-50% of the notary’s fee.
Financing a Spanish Property
Buying from a developer
If you are buying a brand new property or 'off plan' the developer will generally have the most attractive financing options to offer to the purchasers. The paperwork will be standardised but you will need to check the terms and conditions carefully. Check that the contract stipulates the initial payment, the number of the subsequent payments and when these payments will end. From the sum of these payments you will be able to see the true cost of the developer's financing compared to other options. Make sure you know what happens if you should miss a payment. Usually there will be provision for you to make a certain number of late payments and incur only a small penalty. Make sure that you are allowed to pay off the remainder of the contract at any time without incurring the total remaining interest. Developers generally offer excellent terms to purchasers who begin payment before the building is finished. This can work in your favour but you must be sure that the developer is reliable and solvent, and that he is able to bring the project to completion. The developer must offer a bank guarantee that assures the return of your total investment if the project stalls or fails. It is important that this guarantee does not cost you anything and details of the guarantee must be documented in the contract or a separate document.
Bank Loans and Mortgages
With the introduction of the euro and the lifting of virtually all exchange control, both residents and non-residents can now obtain loans and mortgages against a Spanish Property. With inflation and interest rates at an all-time low in Spain, Spanish bank mortgages are now being offered at low rates compared to the rest of Europe. Mortgages of 20 and 30 years, and mortgages of 100% of the property value, are available in Spain. For a non-resident buyer, the mortgage is usually limited to around 70% of the property valuation. It's certainly worth shopping around as terms, penalties and interest rates do vary significantly. Typically, the building societies in Spain offer lower interest rates and lower penalty fees but Spanish banks are waking up to the potential from foreign investors.
Is an investment property in Spain a good buy?
Spain’s property market over the last 20 years suggests it is one of the best investment opportunities in the current economic climate. Spain has seen spectacular property prices rises in recent years and values have increased substantially year after year. If you are looking for a rental income from your property you will need to make sure it is in a good tourist location close to all amenities to ensure the maximum rental potential. Southern Spain boasts of around 320 days of sunshine a year so attracts tourists all year round whether it’s for the beautiful sandy beaches in the Summer or the top class golf courses in the cooler months.
Do I pay a deposit to secure the property
The deposit is usually paid to the selling agent or lawyer representing you in your purchase and not directly to the vendor. The amount payable depends largely on the price of the property but is often around 3000 - 6000 euros. This reserves the property until exchange of contracts when 10% of the property price is required.
What is a Notary
A Notary checks that the title deeds and purchase are in order before the final payment is made and the purchase document is signed. He then sends these to the local Land Registry Office and the final registration normally takes around 2 months.
What if I decide not to proceed to Completion
It depends at which point you decide not to proceed. Basically you will lose all the money you have paid to that point. If you have only paid the reservation you will only lose that but if you have also paid your 10% deposit you will lose that as well. It is the same as in the UK.
Can I open a Spanish Bank Account
Normally all that is needed to open a Spanish bank account is a passport and a small deposit to go into the account. Most banks have English speaking staff to help you.
What are Community Fees
These apply to properties that share benefits e.g. swimming pool, gardens, security, general maintenance. There is a committee with a president who are voted for from the property owners once a year. Depending on the shared benefits depends on the price of the community fees.
Do I need to speak Spanish if I live in Spain
It is obviously a good idea to learn Spanish to fully enjoy the Spanish culture but a lot of British only know a few words after many years of being in Spain. If you are planning to live anywhere other than a popular tourist area it will be essential but in the popular tourist areas you can get by most of the time without it. If a particular problem arose there are always many translators whose services you can use at a very reasonable price.
How do I move to Spain
The cheapest way is to hire a van and drive down. This is a lot easier as there is no customs clearance in EU countries.
The easiest and less stressful way is to find a removal firm to take your belongings. There will be a lot of advertisements in local papers or Yellow Pages but prices vary astronomically so it is best to shop around to find the best deal. It will normally only take a few days to arrive. You need to remember that a lot of Spanish properties are sold furnished so it is best to check exactly what furnishings there are in the property and which are acceptable to you before going to the expense of having all your belongings transported to Spain. It is also a good idea to look around the furniture and electrical shops whilst you are in Spain as prices are usually far cheaper than the UK so it might work out cheaper to buy in Spain rather than having them transported over. Most of the electrical goods purchased in the UK will work alright in Spain with the use of an adaptor plug.