If you want to know how to buy a property in Spain, rest assured that it is a straightforward procedure. Experts say buying a property is highly stressful, so purchasing a home overseas naturally makes buyers nervous. However, research, knowledge, and taking your time go a long way in making buying easier. After all, we can’t avoid red tape and the hassles it brings. But we can prepare and be fully aware of each step of the process. Don’t forget that if you buy a property in Spain through us, we will guide you through every step, but in the meantime, here are ten steps on how to become a homeowner in Spain.
How to Buy a Property in Spain
1: Financing and Budgeting
Many house buyers in Spain go head first into finding a property. But the first step is to sort out finances, both for buying property and closing costs. Aspects include how much hard cash you have, mortgage repayments, and the yearly costs of managing a property. It is no good buying a luxury villa if you can’t afford maintenance and upkeep costs. Closing costs differ depending on whether you purchase new-build or resale property and whether you buy with a mortgage or outright cash.
Generally, factor in 10 to 12% for closing costs, including ITP, notary fees, land register fees, lawyer’s fees, valuation fees for mortgaged properties, and stamp duty. On new build property, buyers pay 10% VAT rather than an ITP and 1.5% of the total purchase price towards stamp duty. Remember, Spanish property prices in Euro don’t change, but you are buying in a foreign currency, so there will be disparity because of fluctuations in exchange rates. Find a foreign exchange company like WISE for better exchange rates and lower bank transfer fees.
2: Obtaining a Mortgage
Developers of off-plan properties sometimes offer mortgages with favourable terms and conditions. However, most foreigners raise capital in their own country rather than in Spain. We can guide buyers through applying for a Spanish mortgage, but remember, repayments should not exceed 35% of your net monthly income or joint monthly income if applying for two people. Also, factor in 3-4% of the borrowing amount in costs.
3: Find Your Spanish Dream Property
Start your search for a property in Spain by browsing our website of apartments and villas for sale. Each listing contains the price, location, home features, photos, floorplans, and contact details to receive more information via email or arrange viewings. While on a viewing trip, we don’t only show properties for sale, but the surrounding areas and where banks, supermarkets, bars, restaurants, schools and public transport links are.
If you are thinking of buildings a house in Spain, the disadvantages outweigh the advantages. For example, getting planning permission on land plots to build a house or on a dilapidated building in Spain is complex. Also, consider land plot costs, notary, and land registry fees, before you start building the house.
4: Making an Offer and Paying the Deposit
Buyers can make an offer in Spain and, once accepted, then pay a deposit. Deposits can be paid by credit card or bank transfer and are held in your name. Money should be readily available, as a delay could mean losing out to another buyer. This deposit payment fixes the price, confirms the intention to buy and takes the property off the market to avoid being gazumped.
5: Lawyers in Spain
After paying your initial deposit, employ a Spanish lawyer. Choose one with local knowledge who speaks your language. Your lawyer will check that the seller owns the property, the structure is being delivered as marketed, for outstanding debts attached to the home, and that service bills and taxes are up to date. In addition, using a lawyer safeguards your investment, and if purchasing off-plan, they check if developers have insurance policies or bank guarantees.
Other legal documents required include identification, capital, and ownership, including additional transaction details. In addition to this, other Spanish documents will be the nota sample. This shows the land and house deed details. It also indicates whether there are mortgage or collateral issues. The community tax is IBI (Impuestos Sobre Bienes Immuebles), and the refuse and drainage tax (or Basura Y Alcantarillado) documents reveal the property’s debt status. To ensure a smooth sale, your lawyer will check all these.
Usually, lawyers charge 1% of the property purchase price plus 16% VAT for services. If you want a third party to sign for the property on your behalf, ask your lawyer to arrange power of attorney. This might be worth doing if purchasing off-plan, as you sometimes don’t have the occupancy licences granted for weeks after the property is completed. Also, water and electricity services cannot be transferred until licences to occupy are in place.
6: Spanish Contract of Sale Considerations
There are some things to consider when getting your contract of sale, which you should read through carefully. Firstly, ensure there are no fees by requesting a note from the Land Registry. Also, make sure that the property is not impacted by future urban planning, which will affect whether the property is liveable. You can authorise a third party to complete both checks if you are not in Spain as the sale goes through.
7: NIE Tax Number and Bank Account in Spain
The next step is to obtain an NIE, your Foreigner Identification Number. Spanish embassies (in your country) or local police stations in Spain will issue the NIE number. Just present your passport for proof of identity. NIE cards come in plastic or paper form and include a fiscal number and visa card features for shopping and other transactions. A Spanish bank account is not a legal requirement but valuable to pay taxes, get mortgages and transfer money for recorded property payments. You can also use it to pay monthly bills.
8: Deeds and Managing Your Property
At the last stage, the seller signs the property over, In front of a public notary. You will also take the keys and make the final payment. At this point, you will also register the property with the Spanish Property Registry. If you buy a Spanish property that belongs to a resident’s association, they will help with managing your property. Resident associations engage property management services for all properties in their care. When you buy property in Spain but live elsewhere, this can be a massive weight off your shoulders. Otherwise, property management services keep keys and look after your property while away.
More About Buying Property in Spain
So, we hope we have given you lots of helpful information. If you have not yet decided on where to buy, our article about the six most popular places will be of use. Anyone looking at the best places to buy property in Spain has a wide choice. Having been a firm holiday and second home destination for Brits and other nationalities over many decades, the towns, cities, and small coastal resorts all over Spain bring something unique to the international real estate market. Also, call us if you want to know more or have any questions on how to buy a property in Spain.
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