Spanish Property Buyers Guide

Buying Process In Spain
Buying a property in Spain should be an unproblematic procedure. However, we would advise you that this will only be the case if the appropriate steps are taken to insure that all goes smoothly. The majority of foreign buyers find that if they follow the procedures and stick to the rules then they encounter no difficulties whatsoever.

First Steps
Once you have decided upon a property to purchase (which can often be the hardest decision to make), finding an independent solicitor should be made a priority. This means a solicitor who is not associated with the building in any way and will therefore always act in your best interests. This solicitor will help you through the whole process, and we would not recommend trying to go it alone.

The next thing to do is to make a thorough check of the property. Although it may look pleasant on the outside, you never really know about any problems it may have until a proper check has been carried out. This may not be possible with an off-plan property, but the legal checks below will still apply.

The legal checks include making sure that there are no outstanding debts on the property and ensuring that all building licenses have been approved and are above board. This is usually achieved by obtaining a nota simple informative, and your solicitor will confirm that there are no problems before proceeding. For an off-plan property, the checks include making sure that there are no planning disputes involved with the construction.

The other essential step you will need to make is applying for an NIE number. Without this you will not be able to purchase any property, and the application procedure takes about 15 days. Once this has been received, you will be free to carry on with the next stage of the buying process.

Agreements
When you are happy that there are no outstanding issues involved with the property, you will then have to reserve with a deposit that will cost anything up to €3,000. When making the payment, we would advise you to ensure that your solicitor checks through the entire contract for any irregularities.

At the same time as the payment is made, the pre-agreement will be arranged. This is sometimes referred to as the contrato de compra-ventra, and it establishes the terms of the sale. It is an official agreement until the public deed of purchase is ready, and again should be overseen by your solicitor. A 10% deposit is then usually required, which will be lost if you then back out of the agreement.

When buying off-plan, the process is not entirely dissimilar. Although the property will not be complete, you will need to reserve it in the same way, which usually costs about €3,000. Payments will then be arranged which will continue throughout the construction process.

Finalising The Deal
When the property is ready to be sold, the process is completed with the help of a notary. All parties should meet up on a particular date, where the final payment is then made and the contract is signed by all parties. If all conditions in the contract have been fulfilled then the public notary will then sign the deeds. At this stage the insurances and the transfer of utility services will be switched into your name.

After this, you will have to arrange the land registry entries and tax issues. You will be required to pay transfer tax and stamp tax, and we strongly advise that your solicitor fully oversees this to avoid any mistakes.

The Mortgage
Buyers in Spain are only able to get a mortgage of up to 80% of the total price of the property. It is therefore essential that you are able to produce the rest of the money upfront.

When applying for a mortgage, there is a lot of documentation which your solicitor can advise you on. You will also need to employ an appraiser, or a tasador, to check that the mortgage is going to be a safe risk for the bank.

The Fees
Legal fees are normally between 1% and 2% of the purchase price plus Value Added Tax (IVA), currently at 16%.

Notary fees are fixed by law and are based on a sliding scale depending on the amount of land and size of property. Fees usually amount to between 1% and 2% of the declared value of the property.

Land Registry fees – to register the new owner at the Land Registry costs around 60% of the notary fees.

Taxes
Transfer tax (ITP) at 7% of the purchase price on resale properties. If you're buying from a developer, this is replaced by Value Added Tax (IVA) at 7% plus Stamp duty at 0.5%.

Added value tax ('Plusvalia') – this is a land tax based on the increased value since the last sale. It's normally payable by the seller but it can be stipulated that the buyer has to pay. That’s something for your lawyer to negotiate.

If you have a Spanish mortgage allow an additional 1% for registering your mortgage and a 1% arrangement fee.

Example costs for a property costing €250,000 (with no mortgage)
Purchase Price (includes agent's fees) 250,000€
Legal Fees (1% of purchase price) 2,500€
Notary Fees (1% of purchase price) 2,500€
Land Registry Fees (60% of notary fees = 2,500€) 1,500€
Transfer Tax (7%) 17,500€
Total payable 274,500€