Buying Property In Spain
A guide to buying property in Spain
The following guide is intended to help you understand the various processes that take place in order to buy a property in Spain. It must be stressed, that it is not a substitiute for proper legal representation.
Choosing a property
There is now a considerable choice of different types of property available in the Costa Blanca. When choosing a property it is important to consider whether it will be used as a holiday home, retirement home or permanent residence.
Depending on this it will be important to establish what amenities are in the neighbouring area. In certain cases, access to health care, availability of public transport or the distance from the nearest airport may be a consideration. These may appear obvious, but it is surprising how many people commit themselves to a purchase without answering these very relevant questions.
Buying your property
Once you have chosen your home and agreed a price with the owner it is necessary to pay a 10% deposit of the purchase price in order to secure the property. This can usually be done by paying a reservation deposit of 3,000 euros followed by the balance to make 10% within the next 2-3 weeks. During this time, your lawyers will have carried out the necessary legal checks and drawn up the option contract (Escritura de Compraventa). Once this has been signed, the 10% deposit is paid to the sellers and the purchase is binding. It is not necessary to be in Spain for the signing of the option contract. This can be done via post, fax or email. The balance of the purchase price is then paid to the sellers at the agreed notary appointment on day of completion.
If you are purchasing an off-plan property from a developer, it is normal to pay a deposit of between 3,000 euros-6,000 euros to reserve it followed by a series of stage payments during the time of construction. The amounts and intervals will vary from one developer to another.
N.B. Your legal representative will only advise you to sign the contract and pay deposits if he is happy that there are no problems relating to the property.
Lawyer
The Spanish legal system is quite different to the one in the UK and other parts of Europe. Very often people purchasing property in Spain take little or no legal advice and are quite casual about the signing of legal documents of which in some cases they don’t understand. All sorts of problems can occur such as finding there is no title to a property, that it was built without planning permission or that it does not even exist! You will have no doubt seen horror stories in the media.
There is absolutely no reason why this should happen provided that you take independent legal advice. If required, we can recommend several local firms that all have English speaking partners. Their services include all necessary searches, drawing up of the option contract, attending the notary with you on day of completion, changing all utility bills and local tax payments into your name and arranging a Spanish will if required.
Purchase Costs
On average, it is important to add approximately 10% to the purchase price of your Spanish property to cover the costs of buying. This figure is broken down into the following
Transfer Tax & IVA:All re-sale properties are subject to 7% transfer tax, whilst new and off plan properties are subject to 7% IVA (VAT)
Notary & Land Registry fees :These are the fees associated with the witnessing and subsequent registration of your title deeds. It normally works out to be in the region of 1.5% of the purchase price.
Lawyers Fees: The cost for legal representation can vary from firm to firm, but should be approximately 0.5%-1% of the purchase price. For a cheaper property some firms may have a minimum cost of around 1,200 euros.
Financing your purchase
If you intend to purchase your property with a Spanish mortgage, then we can help you obtain the best deals from the local banks. As a guide for non-residents, they will normally lend in the region of 60%-70% of their valuation of the property, although in some cases it may be possible to borrow up to 80%.
Interest rates in Spain tend to be very competitive, although setting up and cancellation charges are normally higher than those in the UK
The Escritura
This is the title deed of the property which informs who the current owners are, along with a description of the property itself. It is necessary for this document to be signed before a Spanish public notary on the day of completion.
The Notary
The Notary is a public official who is there simply to put on the public record that the title deed has been signed in his presence and that both parties understand it. He is not there to offer legal advice to either buyer or seller.
Power of attorney
If for any reason, you are unable to attend the Notary on the day of completion, it is possible for you to appoint someone to represent you. Your lawyer will arrange this for you
Ongoing costs
Once you have purchased you property, there will of course be costs associated in the annual running of it. Listed below is a typical breakdown based on a villa costing 350,000 euros. You will notice that they are much cheaper than those that exist in the UK
| IBI/Local Rates | 350.00 euros |
| Basura/Rubbish collection (Daily collection) | 80.00 euros |
| Property insurance | 250.00 euros |
| Water/Electricity/Gas (Dependent on consumption) | 400.00 euros |
| Fiscal Representative (Will look after your tax affairs during year) | 150.00 euros |
| Swimming Pool Maintenance (If applicable) | 800.00 euros (Based on 8X4 private Pool) |
| Total: | 2030.00 euros |
N:B If you purchase a property that has use of a communal swimming pool then you will be liable for an annual community fee, the average cost being around 350 – 500 euros per year.