If you have ever purchased a property before you will be aware that each country has its own buying procedure. Whiles we sell properties globally, for those of our clients wishing to purchase in Spain we´re more than happy to guide you through this process.
Johnson Rommers with over 20 years’ experience buying and selling properties understand the informants of good advice. We can also provide you with independent specialised legal & financial advisors to make your purchase as straightforward as possible.
In order that you may familiarize yourself with the buying procedure, we have prepared an outline of the whole process:
Set your budget – do some careful maths and work out your budget. Don’t forget to account for between 10 and 12% of the purchase price for taxes and fees.
Pinpoint your chosen area – decide where you would like to live in the Costa del Sol. You may have a good idea already from previous research or visits or maybe need some pointers. Ask us for advice on which places and areas offer what you’re looking for.
Prepare a ‘must-have’ list – make a list of what you want in the property. Bear in mind that you may not find a home that ticks all your boxes but with our help you should be able to source one that gives you almost everything.
Use one property finder – make life easier for yourself and save time and stress by contracting us as your agent. Working together one on one we get to know you better and therefore find you the right property. Many buyers are surprised to find the same property advertised with different agents. This is normal practice in Spain as agents share properties. Do you see a property for sale elsewhere that you would like more information about, then we can undoubtedly help you with that too.
Survey – depending on the state and/or age of the property you’re buying you might want to get a survey. The survey findings may affect how much you want to pay – for example, to compensate if the property requires extensive refurbishment.
Make an offer – when you find your ideal home, you might want to make an offer on the price. Most property owners are open to offers, although they’ll expect it to be a serious one reflecting several factors including the current market, state of the property, whether you’re a cash buyer etc. Ask us as your agent for advice on negotiating the property price.
Once your offer has been accepted, the purchase process starts. At this stage of the procedure, you should do the following:
Contract a lawyer – do this before you pay a deposit or sign any legally binding paperwork on the property. Instruct your lawyer to carry out due diligence and basic legal checks; make sure that the property is free of any debts and/or encumbrances, request a review of building permits, licenses, certificates and taxes. We can introduce you to a lawyer that speaks your language and more importantly has knowledge of the law in Spain aswell as in your home country.
Draw up a reservation contract – A reservation contract or deposit (normally 6,000 euro) is used in Spain as a standard procedure to reserve a property for a specified period of time whilst your lawyer conducts the due diligence. This deposit can be paid by credit card or bank transfer at the escrow account of your lawyer and is fully refundable should your lawyer discover any irregularities about the property. If you proceed after the due diligence the amount will be used towards the purchase price.
Sign the private-purchase contract – this document secures the property for you and outlines the terms and conditions the transaction including the deadline for purchase. The contract is signed by the buyer and the seller (or their representatives) and the buyer usually pays 10% of the purchase price on signing. If the house is being sold with fixtures and fittings and/or furniture, the contract should have an inventory attached, which is signed by both parties.
In the case of a new build property, the payment terms will be detailed by the developer and will be specified in the contract. This normally involves stage payments throughout construction or one payment on private purchase contract and the remainder on delivery of keys. All payments made before keys delivery in new build developments will be duly accompanied by a Bank Guarantee securing your investment.
Mortgage application – if you need a mortgage to buy the property, now is the time to start the application process. Ask your bank how long the application will take to approve and make sure the pre-purchase contract factors this timeline into the purchase.
Legalities on the house – meanwhile, your lawyer will carry out a comprehensive checklist on the property to make sure it’s 100% legal. These checks include:
Property register checks – to ensure the property description and legal owner match and to find out if there are any charges or encumbrances.
Planning checks – to ensure the property was built with the appropriate building licence and planning permissions. Or in the case of an off-plan property, to make sure the developer has all paperwork in order.
Tax checks – to ensure the current owners are up-to-date on payment of all taxes related to the property.
Community checks – to ensure the property is up-to-date with payments to the community of owners.
Sometime after you sign the pre-purchase contract – usually between two to eight weeks – it’s time to complete.
Sign the deeds – both parties sign the title deeds in the presence of a Notary Public. Your lawyer should check the deeds and make sure everything is in order as well as provide you with a verbal translation of its contents.
Payment – in tandem with signing the deeds, you make final payment for the property. The usual method of payment is through a banker’s draft.
Key handover – once the title deeds have been signed and final payment made you receive the keys to your new home.
Registration – your lawyer will take care of registering the property in your name at the nearest Property Registry (Registro de la Propiedad).
Payment of taxes – your lawyer will also pay the appropriate taxes and fees on your behalf.
Utility supplies – your lawyer will arrange for the connection of utility supplies or the transfer of utility contracts to your name. They will also set up direct debit with your bank so that bills are paid automatically.
You may require extra services after the purchase including:
Renovation and refurbishment services – We can recommend professionals to carry out the required improvements on the property.
Removal services – you may require our recommendations for a company to move your furniture and belongings to Spain.
Now you can enjoy your home and live the lifestyle you wished for. It is normal to come across some aspects during your stay or while you own the property, in which you want our advice, help or service. We are always here, no matter what the question is, we are here to help or will address the issue to well-known professionals.
Buying property in Spain: what taxes and fees can you expect?
Buying a property in Spain entails certain costs in addition to the purchase price. As well as taxes, you’ll need to pay fees for professional services bringing the total to between 10% and 15% extra. Don’t forget to factor this figure into your budget for the purchase. In this article, we list all the costs involved in buying a property in Spain and how much you can expect to pay for each one. We’ll assume you’re buying a home to live in and not a commercial property, as this makes a difference to the taxes to be paid.
Property purchase in Spain comes with a high fiscal obligation – between 8% and 11.5%. Which taxes and how much you pay depend on whether you’re buying a new or resale property.
The purchase of a new build (a property being sold for the first time) involves the payment of VAT (IVA in Spanish) which is 10% of the price, plus 1.5% Legal Documentation Tax (AJD in Spanish). This brings your total tax bill to 11.5% if you’re buying a new property in Spain.
If you’re buying a resale property (one that has already changed hands at least once), you’re liable for transfer tax (ITP in Spanish) that is levied on a sliding scale depending on the purchase price. On the Costa del Sol and the rest of Andalucia, you pay between 8% (on properties priced below €400,000) and a maximum of 10% (on properties priced over €700,000).
In addition to taxes, you’ll also have to pay certain fees when you buy in Spain. They include:
The notary charges for preparing the title deeds for the sale and witnessing the signature of the deeds by both parties. Fees are calculated depending on the purchase price and the complexity of the title deeds. Factor in between 0.5% and 1% of the price.
Land Registry fees
The Land Registry (Registro de la Propiedad) officially records the ownership of the property in your name once the purchase has been completed. For this, fees of between 0.5% and 1% are charged, depending on the purchase price.
Using the service of a lawyer during the purchase process is highly recommended. Do this before you pay a deposit or sign any legally binding paperwork on the property. He will carry out a Due Dilligence on the property, arrange your NIE (national identification number), represent you in front of the notary and in public identities. Expect to pay around 1% of the price for legal services.
Estate agent fees
Real estate agency fees are usually paid by the seller, you don’t need to budget separately for them in your calculations.
If you’re transferring money to Spain from your bank account in your home country, you may incur fees on the transaction, particularly if you’re transferring from a different currency to euros. Using the services of a specialist currency exchange broker can reduce bank charges.
Banks also charge for issuing the banker’s draft used to make the payment for the property when you sign the title deeds at the notary. Check with your lawyer and bank before you order a banker’s draft to avoid unpleasant surprises.
If you’re using financing to buy your property in Spain, you’ll need to include bank charges in your budget. You’ll have to pay for a valuation – this usually costs around €500. The bank may charge an administration fee depending on the type of mortgage and the amount loaned, but as a general rule, expect a fee of approximately 1% of the mortgage value. All other costs corresponding to the mortgage, eg. Land registry and notary for the mortgage deeds are covered by the bank.