Buying in Spain

Buying any property is without doubt one of life´s most difficult financial decisions so it goes without saying that buying in another country can be even more daunting but it can be made simple if you surround yourself with the right people.

First and foremost, we strongly recommend appointing a reputable Lawyer or Abogado from the outset to offer impartial, professional and honest advice throughout the process. Your Lawyer will assist you with your applications for an NIE number (Numero de Identidad de Extranjeros, a tax identification number) and the opening of a Spanish bank account, both legal requirements for ownership of a property in Spain and also necessary for dealing with utility companies and should you wish to purchase a car. Ask family or friends for recommendation if they have had personal experience or alternatively Jackson Grundy are more than happy to help with suggesting a selection of good lawyers for you to choose from if you should require.

Secondly, choose a good Real Estate Agent. Remember that in Spain there is no need to register with each and every agent, and there are over two hundred on the Costa del Sol, as most are members of a multi listing service which allows us to offer one another´s properties. At Jackson Grundy we not only search our own portfolio of properties but have access to thousands of properties up and down the coast. By registering your details with Jackson Grundy you are, in effect, registering with over 200 agents with only one point of contact saving you from endless calls, repeating the same information time and time again.

Once you have found the perfect property, you will complete a reservation contract detailing your full names and those of the vendor, the address of the property, the agreed price of the property along with any other special conditions agreed, a date to sign a private purchase contract and be asked to make payment of a refundable reservation deposit (typically circa €6,000) which can either be held in our client account or preferably with your lawyer. This deposit ensures that the property is taken off the market for an agreed period whilst your lawyer conducts due diligence, carrying out all the necessary legal searches – confirming that the seller owns the property being sold, there are no mortgages or charges and that all planning consents are in order. The reservation deposit is fully refundable during this time in the event that your lawyer should discover any legal impediments pertaining to the property.

Once all the searches have been satisfactorily carried out, the lawyers will draw up a private purchase contract to be signed by both buyer and seller detailing a date for completion, similar to exchanging contracts in the UK. On a resale property, you will be asked to pay a non-refundable deposit normally of 10% of the purchase price on exchange of contracts. If you are purchasing a new property the developer will generally require a deposit of between 20% and 30% (plus the 10% IVA on that payment) of the purchase price property to exchange contracts, although this percentage can vary from development to development. There may also be additional stage payments to make during the construction period, again depending on the terms of the development.

Finally on the day fixed for completion, your lawyer will go to the Public Notary to sign the Title Deeds, making the final payment to the vendor’s lawyer, who will simultaneously pass over possession of the property to you, handing over the keys. At this stage, the sale is complete and immediately your lawyer will have the original title deed submitted to the Land Registry for registration of your title. Your lawyer can also arrange for the transfer of utilities and services such as water and electricity, into your name, and organise their payment through your Spanish bank account.
With a new-build property obviously completion can take a lot longer, the payments are split over stages of the build process and the developer should provide bank guarantees against each payment. This protects your payments in the event the developer fails to complete the property or goes bust.

Fees / Taxes

Purchasing a resale property in Spain will involve the following expenses:

Property Transfer Tax (Impuesto sobre las Transmisiones Patrimonilaes or I.P.T.)

Notary and Land Registry Fees

These fees are calculated depending on the purchase price, the table below gives an indication to approximate costs.

Legal fees are typically 1% (plus IVA) of the purchase price.

If you are arranging mortgage finance in Spain to purchase your property this will incur further costs of between 2% and 4% of the principal mortgage amount dependant on your lender and financial advisor including a mortgage arrangement fee, valuation fee and additional notary and land registry fees for the registration of the mortgage.
IVA (VAT) is payable by the purchaser when the vendor is considered a developer who pays IVA and/or this is the first time the property has been sold or transferred. This is charged at a rate of 10% for residential properties. Stamp duty is also payable at the rate of 1.5% where VAT is payable.
Your total purchase costs therefore will be approximately 10% to 15% of the purchase price, dependant on the property and means of purchase.
PlusValía is a tax levied by the local Town Hall and is based on the particular area where the property is located, on the surface area of the land, on the cadastral value and on the date of the previous title deed. This tax may range from a few hundred Euros to as much as several thousand Euros on larger properties with substantial land. By law the vendor is obliged to pay this tax, but it is common practice for the parties to negotiate on who is to assume this liability.

Spanish Wills

Once you have bought your Spanish property we would highly recommend you arrange a Spanish Will to cover your assets in Spain in order to avoid any kind of problems arising from the differences between Spanish law and the law of your home country in the execution of a will. This will greatly simplify the winding up of your Spanish estate as well as reducing associated costs such as translation fees should the worst happen.