Many Expats choose to buy a property in Spain for either a holiday home, investment, relocation or retirement. What ever the reason, it means spending your hard earned cash. Our guide aims to navigate you through the buying process, and provide you with help and advice on the pitfalls and what to avoid when purchasing a property in Spain.
Depending on what your reasons are for purchasing a property in Spain, it will most likely dictate the location of your property purchase. For example if you are buying a Spanish villa or apartment for investment purposes to rent out in the holiday season, you would be best looking in the coastal areas of Spain. Spanish coastal properties are far more popular with holidaymakers, and receive a higher rental income. If you are purchasing a property for just your personal use or relocation, then you need to think about the lifestyle you want to lead in Spain, and what kind of property suits your needs and works best for you. If you want to use the property for quick weekend getaways for example, then being located near an airport would make the journey much easier.
You must work out a budget that you are comfortable with and can afford. If you are a cash buyer, always remember that there are buying costs on top of the purchase price of the property. Below, we have added a simulated buying cost chart to help you calculate the final purchase cost of a property. You should budget at least 10% on top of the purchase price for buying costs. Allow up to 13% when buying with a mortgage.
If you need a mortgage or bank loan to purchase a property in Spain, as many of us do, you will need to provide the following documentation in order to qualify.
· Income tax declaration for the past 2 years
· Payroll or other proof of income for the past 6 months
· Bank statements
· A list of mortgage loans already held if any.
· A statement of your assets and outgoings from your accountant.
· Copy of your Passport.
It is worth speaking to a mortgage provider or bank before you start the viewing process, to confirm with them how much deposit you would need to secure the mortgage, and what the estimated monthly repayments would be. Thus ensuring that the figures coincide with your budget, and what you can afford to pay back monthly.
Always remember to consider the "on" costs of buying a property here in Spain, for example, local property taxes, maintenance and travelling expenses to get to the property. Additional fees such as community charges and local bin collection taxes may be payable depending on what type of property you are considering buying.
Do shop around for the best mortgage; check the interest rates, repayments, and any fees for setting up the mortgage and/or early repayment costs. If you have any doubts with the terms and conditions just ask!
|
Notary Fees + land registry fee |
Up to 1% of purchase price |
|
Valuation Fee |
€300 – 800 depending on the bank |
|
Legal Fees |
1% of property price |
|
Mortgage fees |
1% of Capital loan |
|
Property Transfer Tax (ITP) |
8-10% of purchase price |
Please note the above chart is a guideline of Spanish property buying costs. Please consult with a qualified tax specialist and your Lawyer for confirmed charges based on your own personal circumstances and property purchase.
Once you have decided on the right property type and location for you, the fun starts. You can of course send direct requirements to estate agents, but beware that they may only show you properties that they have for sale direct from owner and exclusive. Therefore you could be missing out on the property of your dreams. On www.propertiesforsaleinspain.com we work with 1000´s of different Estate Agents, banks and private property sellers and have thousands of Spanish properties on the website ready for you to view. All you need to do is search the website, place an enquiry on our website that you wish to view and we will take care of the rest.
Once you have a selection of Spanish properties on your viewing list, you need to take time out to view them. Make an extensive list of properties to view, to make sure that you see all the properties available in your budget.
Always remember - Do not get carried away! It is easy to with all the excitement of buying your new Spanish property. Always have a second viewing on properties the following day to make sure you are making the right decision, and consult Independent Legal Advice.
Although it is not a legal requirement to instruct a lawyer to act on your behalf of a property sale, we STRONGLY recommend it.
Your lawyer will be able explain the buying process, legalities and tax implications of buying a property in Spain.
Always choose an independent lawyer who specialises in Spanish Law, The Spanish property system works differently to the U.K.
Your Spanish Lawyer will be able to understand and translate any and all of the paperwork necessary to complete a Spanish property transaction.
He / she will also be in charge of doing all due diligence on the property that you wish to buy, this will include
· Ownership of the property that you wish to buy.
· Does the owner have the legal right to sell the property?
· Checking that the property and current owners are up-to-date with all community fees and taxes, and that there are no outstanding debts on the property. For example a mortgage or court judgement. Any debts on the property can be carried forward to the new owner - so beware!
· Is the property built legally and does it have all necessary documents in place?
All of the above information should be obtained before any further payments are made after the initial deposit payment. The deposit is fully refundable if any of the above points are found not to be legal or satisfactory. If you are seeking a mortgage, do not leave a deposit with the Estate Agent or Seller unless the contract you receive for the deposit states that your purchase is subject to obtaining a mortgage. If you don't, and you can't get the mortgage, you are likely to loose your deposit.
To purchase any property in Spain, you will need to have a NIE number (Identificacion de extranjero). This is also needed to open Spanish bank accounts, getting utilities connected and mortgages here in Spain. This process can take up to 6 weeks. In busy periods or over summer it can take longer. So if you are seriously considering buying a property in Spain, we would recommend that you start this process as early as possible. That way when you find the right property you can move on it without delay. Your chosen lawyer can help you with this process.
When purchasing a property in Spain you will need to set up a Spanish bank account. This is easily done and there are many banks to choose from, with most Spanish banks having personnel that speak English. A Spanish bank account is a necessity for the payment of utilities.
When transferring money, we have found time and time again that by using a Currency Specialist it could save you €1000´s. Not only do the specialised currency firms offer a far better exchange rate than the Spanish banks, but they can also provide advice and transfer strategies like fixing the exchange rate today for purchase later. Thus being able to secure the price of the property in pounds having agreed the price of the property in Euros. With the fluctuating exchange rates from Euros to GBP and uncertainty about Brexit, this could save an untold amount of money for you. We work closely with Currencies Direct, a trusted FX firm.
1. Once you have chosen the Spanish property of your dreams, you will need to put down a holding deposit/reservation fee of around €3000. This is a good will gesture that takes the property off the open market and stops any other potential buyer from making an offer on the property. This should stop anyone gazumping you. From the date of the signed reservation you have approximately 3 weeks for your chosen lawyer to do the due diligence on the property (as mentioned above), this agreement to purchase the property is subject to the preliminary legal checks. You should ensure that the holding contract states that the sale is subject to getting a suitable mortgage or loan as an extra clause. The deposit should be returned if any problems are found and cannot be rectified.
2. Once the due diligence on the property has been carried out and the reservation contract is at an end, you will then be asked to sign a deposit contract as well as paying 10% of the purchase price less the reservation fee already paid. This is then a binding contract that you will be purchasing the property, if you decide to pull out of the sales contract for any reason you will then loose the 10% paid to the vendors. If the vendors pull out of the agreement however, they have to then pay the deposit back to the proposed buyers, plus an additional 10%. So if the sellers back out after you have placed a deposit on the property, you get double the money back.
3. The next step is completion of contracts. This has no set time scale as such, it can be arranged at the convenience of both seller and buyer, to be completed as quickly or slowly as is suitable to both parties. Generally however completion is around 6 weeks from the signing of the deposit contract.
Don't be tempted to rush this process, so many people come unstuck because they are eager to move in. Visit the property you intend to buy as late as possible in the proceedure or just before you go to the notary. You may have seen the property you want to buy a few weeks earlier, and may not be able to visit it until after you have signed the documents at the notary.
It has been known for homes to be stripped of all contents and such things as units, fridge freezers, plug sockets and lighting fixtures because the buyer has not been back to check that they are still in place prior to the purchase.
Updated 9th June 2023