Buying Tips · A Quick Guide to Buying in Spain
Before you make an offer on any property in Spain, you need to make sure you are in a position to buy. Whether you need to open up the equity in an existing property or arrange a new mortgage, our team of experts can advise you. The GOLDEN RULE is to be prepared to move quickly, when you have found the right property & to budget for an extra 13- 15% of your purchase price for all fees & taxes.
NEW OR RESALE
A new property is owned by a developer or a builder. All new properties in Spain are sold freehold & carry a 10 year structural guarantee. Casa Consultants carefully selects its partners & collaborates with only the best quality builders in the Costa Blanca & Costa Calida.
A resale property is owned by a private individual/family. Casa Consultants offers a wide range of resale properties to suit all tastes & budgets.
AFTER CHOOSING A PROPERTY – WHAT NEXT?
Once you have found your property, you will need to be in a position to place a holding deposit in order to reserve the property & remove it from the market. While the amount can vary from purchase to purchase, it is best to budget for 6000 Euros. This needs to be brought with you, in the form of cash or bank transfer through internet banking or credit card, but the card company needs to be informed that you will be making a large withdrawal in a foreign country.
This holding deposit is paid to the agent (or builder in new build purchases), and is generally only passed on once the purchaser's lawyers are fully agreed on the legalalities. Whether you buy resale or new, will depend when the next payment needs to be made. With resale, you may be asked to make the initial deposit of 6000 Euros, then up to 10% of the purchase cost & completion then normally takes place within 4-6 weeks. With new, you will have to pay a further deposit within 30 days of reserving the property, of 30% to 50% of the purchase price, depending on the builder's terms of contract. The balance being paid on completion.
The holding deposit is non-refundable, in accordance with Spanish law, which denotes that if a purchaser pulls out of the purchase/sale, the deposit is non-refundable and will go to the vendor less a 25% finder's fee/administration fee for the agent(s) involved. If the vendor pulls out, it states that the purchaser will receive his deposit back less a 25% finder's fee/administration fee for the agent(s) involved and will also receive the same amount again from the vendor.
When putting a deposit on a property you need to sign a reservation/holding agreement to reserve the property & remove it from the market. This contract will also act as a receipt for monies paid.
WHO IS AN ABOGADO?
An abogado is a Spanish solicitor who carries out all the necessary searches & handles all payments on your behalf. Casa Consultants recommends Legal Iuris, who are a team of experienced multi-lingual lawyers and assistants, who will ensure the property is properly registered & has no debts attached. Please ask to see the pdf document issued by the Orihuela Bar Association about not taking a risk, use a lawyer - DON'T TAKE A RISK!
If you sign for Power of Attorney, which we strongly advise, the lawyer should contact you every step of the way, to have their actions authorised by you in writing. This gives a paper trail. Power of Attorney will generally cost around 250 Euros for the two of you. This also alleviates the need for you to go to the Notary on the day of completion and waste a lot of time hanging around for the signing. It also cuts out the air fares etc. needed for that.
This is the date in which the balance of the purchase price must be paid, together with all the fees, & the title deeds are signed over to the new owners. This date is normally set when signing the reservation/holding contract.
The Escritura is your title deed. This is done on completion in front of the Notary in Spain. Either yourself, or someone to whom you have given Power of Attorney, will sign the Escritura. It is at this point, that the full payment plus fees (less the deposit) are required to be paid to the existing owner before the title deed can be transferred into the names of the new owner. Therefore, you will have a representative from all parties to the sale/purchase present, including the bank, if a mortgage is being obtained.
The Notary is a lawyer appointed by the Spanish Government to ensure the title deed is properly executed. It is the Notary's job to ensure the seller is legally entitled to sell & the taxes are paid. The Notary will register the change of ownership with the Land Registry Office.
LAND REGISTRY OFFICE
This is where all Escrituras (Title Deeds) relating to property transfers are registered after taxes have been paid & where Title Deeds of any property can be checked.
All fees are due on completion and are as follows as from 01/01/21:
- 10% for I.V.A. (Spanish equivalent of VAT) for New Builds (This may be requested on new build properties in proportion to the stage payments) OR
- 10% for Stamp Duty for Resale Properties
- 1.5% (approximately) for legal fees
- 1.2% for transfer tax on New Builds
- 1.5% for the Notary Fee and Land Registry
These percentages are approximate, and some do have minimum fees applying, therefore, if a purchase is under 100,000 Euros, these percentages will increase.
Power of Attorney – approx. 250 Euros in Spain, or 100 Euros for a Power of Attorney to be drawn up and sent to England to be notarised. Please bear in mind, there will also be costs in England for the notary and any legal representative there.
Also there can be charges for military authorisation, depending upon where the property that you are purchasing is located; and another charge for a certificate from Valencia regarding previous ownership of the property. These charges will be charged under the heading of "others" from your lawyers.
The handing over of the property & the keys will take place when the full purchase price & all fees have been paid on the completion date.
TRANSFER OF UTILITY SERVICES
Your solicitor takes care of the transfer of services (electricity & water – there is not much mainline gas available) into your name upon completion, obviously charges are incurred, which are approximately 400 Euros. Casa Consultants will help & assist you with other after sales services.
BUILDING & CONTENTS INSURANCE
This is a legal requirement & your responsibility upon taking possession of your property. Casa Consultants can assist & advise you on this matter.
MORTGAGES/FINANCING THE PROPERTY
There are several ways of financing your property, either by opening up the equity in an existing property or by a Spanish mortgage. See details in tab.
The following recommendations are intended to protect your investment and if followed should ensure a problem free purchase.
- Do your research and get some idea of what to expect when you arrive in Spain.
- Bring with you a deposit of 6.000€ so that you don't miss out.
- Visualise yourself in the property. Prepare a checklist, take notes and ask yourself questions, such as; is the balcony large enough for a dining table? etc.
- Try to save money by not using a lawyer. The pitfalls of going it alone could prove very costly.
- Pay a deposit to a private vendor as you may have trouble getting it back in the event of non completion, should the vendor be at fault.
- Buy the first property you see. Try to set aside at least 3 days for a viewing trip and make comparisons to ensure you buy the right property.
- Forget to include costs such as tax when calculating your budget. As a rule these amount to 13 – 15% of the property price.
- Don't rely on advice from friends who have been there and done that. Ask the experts, use your common sense and make up your own mind.