Spain – The Buying Process
Buying a property in spain, whether it is a holiday home for you, friends and family, an investment property that you may be looking to rent. Or you may have decided on buying a property in Spain. Whichever it is, your first task will be to choose the region and what sort of home to buy.
The secret of successfully buying a property in spain is research.
Firstly, make a list of what you want from a home, to save time and avoid wild goose chases. Secondly, it is always better to speak to a Spanish based company, who understands the process of buying a property in Spain. If building your own home, it is advisable to build a swimming pool or garage at the same time, as the i.v.a. (tax) will be 10%. If they are constructed separately the i.v.a goes up to 16%.
We cannot stress enough how important it is to seek independent legal advice whilst going through the process of buying a property in spain. It is always recommended that a Spanish lawyer is appointed as they are experienced with the current property laws.
A variety of fees are payable when buying a property in spain. Which usually add up to around 10% of the property purchase price. The most fees are based on the ‘declared’ price of the property, which is traditionally much lower than the price paid.
The fees payable when buying a property in Spain may include:
• Transfer tax (resale property only)
• IVA (new property only)
• Stamp Duty (new property only)
• Utility fee (new property only)
• Legal document tax
• Land tax
• Notary Fees
• Legal Fees
• Deed registration fee
• Selling agents fee
• Surveyors fee (optional)
You may note that there are two types of exchange rate quoted on a site offering business transactions fro Spain. This is due to the fact that on purchasing a property in Spain, you are able to benefit from a higher, usually, exchange rate than the tourist rate. In order to take advantage of the commercial rate you should speak to your bank or other financial institutions to arrange a SWIFT transfer. The charges vary so it is worth shopping around.
Mortgages or home loans
These are available from most Spanish banks. AS with the UK, the amount you are able to borrow will depend on varying factors such s income, profession, property etc. You must usually provide proof of income and outgoings. If the mortgage is for a commercial property, you will need to provide a detailed business plan. In recent years Spanish mortgages have been the most competitive in Europe with rates varying at around 5%. The maximum mortgage in Spain is usually 80%.
A property costing £100,000 obtaining a 60% mortgage.
You must pay £40,000 deposit plus approximately 10% fees of £10,000, making a total to be paid of £50,000 and a mortgage of £60,000. Note that mortgages are granted as a percentage of the valuation and not of the selling price.
The first stage in buying a property is the signing of a private contract. When you sign the contract you must pay a deposit, usually of 10% although this is negotiable, with the balance to be settled on completion. Please note that before signing your contract, to safeguard your interests it may be necessary to have it checked by your lawyer as deposits are only refundable under strict conditions that are however some conditional clauses of a contract:-
• Ability to obtain a mortgage (its common in Spain to have a mortgage approved before signing the contract)
• Obtaining planning permission
• Confirmation of land purchased with the property
• Dependence on sale of another property
• Subject to satisfactory building surveys
The completion date is usually two to three months after signing or the date agreed by all parties stated within the contract.
• Transferring legal property ownership
• Signing the deed of sale
• Payment of the outstanding balance
• Payment of fees, taxes and duties
• The Notary will send you a bill for his/ her fees or taxes which must be paid within 30 days of completion, at this time the Notary should also provide a draft deed of sale.
Signing the Deed of Sale
This takes place in the Notary’s office before the deed of sale is signed the Notary checks all the conditions contained in the contract have been fulfilled. It is normal for both the buyer and seller to be present and read the deed of sale before it is signed and witnessed by the Notary. Most deed of sales are in Spanish so an interpreter may be required.
Upon possession of the property this becomes your responsibility. Fire, building and contents insurance should be investigated.
It is strongly recommended upon your property purchase that a notarised will is granted in front of a Spanish Notary related to the assets in the Spanish territory. This avoids costs and delays for the beneficiaries as they are granted a period of six months from date of death to pay inheritance tax. Delays in payment are penalised with additional late payment fines.
Escritura – Notarised deed of sale
ITP – Transfer tax payable when buying a resale property
IVA – VAT
Inmobiliaria- Estate agent’s office
Nota Simple – Property register
Contracto Privado de Compraventa – Contract of Sale
Notario – Notary who handles all the conveyance work for property sales
NIE – Tax identification required by all foreign property owners in Spain
Abogado – Lawyer or solicitor
Apostilli – An official stamp on the document which certifies the signature
Vendedor – Seller
Comprador – Buyer
Hipoteca – Mortgage
Honorarios – Fees
Impuesto – Tax
Ayuntamiento – Town or City Hall
Primera Copia – Signed original of the escritura or a certified copy
Useful House Purchasing Terms
Atico de Lujo – Penthouse
Baño – Bathroom
Bodega – Wine cellar
Calefaccíon – Heating
Calidad – Quality
Campo – In the Country
Casa – House
Dormitorio – Bedroom
Cocina – Kitchen
Puerta – Door
Ventana – Window
Comedor – Dining Room
Piscina – Swimming Pool
Ciudad – Town
Cuarto – Room
Ducha – Shower
Escalera – Stairway
Finca – Farm or farmhouse
Duplex – Maisonette
Gastos – Fees or expenses
Granja – Farm or farmhouse
Huero – Orchid
Lavadero – Utility Room
Lujo – Luxury
Muebles – Furniture
Parcela – Building plot
Piso – Apartment or floor of buiding
Pozo – Well
Precio – Price
Pueblo – Village
Propiedad – Property
Rustica – Rural or agricultural
Reformada – Modernised
Rio – River
Salon – Lounge
Trastero – Storage Room
Urbanizacion – Community Development
Se Vende – For Sale
Se Alquiler – For Rent