Spanish Property Buying Process
What should you do if you want to buy property in Spain?
As long as you prepare well and make sure you don’t cut corners, buying property in Spain can be plain sailing.
Firstly, think what you are setting out to do. Are you buying a home in which to relocate, an investment property or something else?
Make sure you put in proper time for research so you know exactly what you need before you start looking and view at a variety of properties so you have something to compare.
Deposits can be paid by credit card or bank transfer and will be held in your name. We wouldn’t recommend carrying cash in your pocket but the money should be easily available as a delay with your deposit could mean losing out to someone else.
This deposit payment fixes the price, confirms your intention to buy and means that the property is taken off the market without fear of being gazumped.
When budgeting for your new property, remember, you will have to pay about 10/11% of the price of your property in taxes and fees.
After paying your initial deposit, you will need a Spanish lawyer so you should probably engage one pretty soon after confirming your intention to buy.
It is a good idea to choose one with local knowledge that has been approved by us and who speaks your language. Your chosen lawyer will carry out numerous checks to ensure that your chosen property is indeed owned by the person selling it and that it has been marketed correctly. They will also ensure there are no debts owing on the property and that all the service bill and taxes are up to date.
By using a lawyer, you are safeguarding your investment to make sure you don’t inherit any outstanding debts. If purchasing off plan, the lawyer will make sure the developer has insurance policies or bank guarantees, so that if anything goes wrong and the purchase doesn’t proceed (due to the developer), you will have your money returned plus 6% interest.
Obtaining a mortgage
If buying off-plan, the developer may offer a mortgage with very favourable terms and conditions.
However, make sure you choose the right mortgage for you – you may wish to raise capital in your own country before you come to Spain, for example.
If you need a Spanish mortgage, we can tell you what documents you need and give you lots of other advice.
In general, your repayments should not exceed 35% of your net monthly income or joint monthly income if applying for two people. Remember that you will probably end up paying about 3-4% of your borrowing amount in costs.
Usually, a lawyer charges 1% of the purchase price of your property plus 16% VAT for his services during the sale process.
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. You can’t transfer services such as water and electricity until licences to occupy are in place.
Signing at the Notary
The final stage of purchasing your property is completed in front of a Public Notary, when the vendor signs the property over to you. This is when you exchange final payment and get the keys to your new home.
If buying from a promoter or developer, you have to pay 7% transfer tax or 7% VAT plus 1% Stamp Duty. You’ll also have the Notary fees which range from 300-1000 Euros, depending on the price of the property you’re buying, plus fees to register the property. These are about 60% of the Notary charge.
You may want to seek advice from an expert as to whose name to put on the title deed. There can be complicated inheritance taxes to consider.