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Buying A Property in Spain

A guide to the process of buying a property in Spain

Viewings

Visiting different types of properties, often in different areas, is the beginning of finding your dream property. We select a number of properties that could be of interest based on your search criteria. The more specific you are with your search criteria, the more relevant the selection we can show you.

Before starting to view, you should have an idea of your budget, and if you need a mortgage we recommend you pay a visit to your own bank to know your mortgage allowance. We are happy to introduce you to one of our mortgage brokers to confirm your buying budget, if required.

When this has been clarified, we are ready to start viewing, and we hope you to be ready to purchase, when we find you the right property.

We are currently in a Buyer’s Market, since early 2009. Even though there are still fantastic deals to be made, we clearly do see number of especially bank repossessed properties, distressed sales and unsold stock in developments either to be a lot less than just 12 months ago, or as is the case in many developments to be completely sold out.

We are members of the biggest property database on the Costa del Sol, and so we are able to show you properties from our own listings, but also from shared listings. Since we share multiple properties, we may occasionally show you properties from our colleagues in the business, which means that sometimes viewings will be with 2 agents, one having the property listed, and the other bringing the buyer. We believe this is an excellent way of working together and it enables you to stay with only one or just a few agents.

Finance

Non-residents can get a maximum of 70% of the purchase price or valuation, whichever comes in lowest.

An example: Property price 200.000 €. Mortgage maximum 70% (=140.000 €) + buying costs (10 - 14%) need to be added on top of the purchase price. Self-finance needed is minimum 80.000 €. In addition you will have costs for furniture, decoration, etc.

To get rid of still unsold stock in new developments, a few developers offer favourable conditions on mortgages with up to 80 - 85% finance, depending on the buyer’s status and background. Ask us for advice.

Opening fees on a mortgage are normally between 1.25% - 1.75% on the capital + fees for registering of the mortgage at the Land Registry.

Please note!  Mortgages in Spain are based upon the Euribor rates, considered to be the most important reference rates in the European money market. It continues to be at a historic low of around 0,50% (August 2014). In addidtion to the Euribor all mortgages have an additional, which can be anything from 0,50% to 2,50%, terms and conditions apply. Mortgages can be either fixed or mixed.

Buying costs (10 - 14% on top of the purchase price)

For a resale property the following costs on top of the purchase price are added;

  • Property transfer tax increases with the purchase price: 8% (0 – 400,000 €), 9% (400,000 – 700,000 €), 10% thereafter
  • Legal fees, normally 1% of the purchase price + 21% VAT
  • Notary fees 500 – 1,500 €, pending on the value of the property
  • Land registry fees 300 - 1,500 € depending on the value of the property.

For a new property directly from the developer the following costs on top of the purchase price are added;

  • 10% in purchase tax (VAT). In addition you have these additional costs;
  • 1.50% stamp duty tax
  • Legal fees, normally 1% on the purchase price + 21% VAT
  • Notary fees 500 – 1,500 €, pending on the value of the property
  • Land registry fees 300 - 1,500 € depending on the value of the property.

For a plot of land the following costs on top of the purchase price are added;

  • 21% VAT that comes on top of the purchase price. Legal-, notary-, land registry fees as above.

The buying process

When you have found the right property, it is necessary to take it off the market. More or less all properties on the Costa del Sol are listed with several agents, and we are not in control of visits made by other agents to the same property. Placing a deposit is therefore important.

Reservation contract
Placing a deposit ensures that the property is taken off the market and is followed by the Reservation contract signed by both buyer and seller. When signed, all further viewings stop. The deposit amount normally varies between 3,000 € and 6,000 €, pending on the purchase price. If the price of the property is substantial, the deposit amount can be up to 15,000 €. The reservation period is typically 2 weeks, to allow your lawyer sufficient time to make a due diligence on the property, local planning, master planning, etc. The deposit is not refundable, except in cases where your lawyer advises against the purchase.

Private Purchase Contract
The Private Purchase Contract replaces the Reservation contract and is followed by making an additional deposit of 10% of the purchase price, minus the already paid deposit. The Private Purchase Contract outlines all the specifics of the purchase, including the final completion date.

Completion
Completion and payment of the balance, takes place at the Public Notary. Any outstanding debts on the property, including mortgage obligations and any unpaid taxes, must be cleared by the seller before completion can take place. After completion, you will receive the keys to the property and you will be the new owner. All future obligations on the property are now your responsibility. Before leaving the Notary you are handed over a copy of the new title deed, the Copia Simple. The original is sent for the final registration of the property in your name at the Land Registry. This normally takes a few months.

What is needed to purchase a property in Spain?

You need sufficient funds to buy the property with cash, or a mortgage, or a combination of both.

Also you need a foreigner’s tax registration number, called N.I.E.

A Spanish bank account, where you will be asked to place funds sufficient to pay your regular running costs on the property.

Legal assistance

We advise all foreigners to seek legal advice during purchase from a locally based Spanish lawyer, and we are happy to introduce you to one of our collaborating, English speaking lawyers. By law any lawyer on the Costa del Sol must be an associated member of the Lawyer’s College in Málaga, and they are obliged to have an insurance that will cover you in case of any mistakes made in the purchase of your property.

Running costs

As an owner of a property on the Costa del Sol, you have the following running costs:

  • Council tax to the town hall (paid once a year)
  • Rubbish collection to the town hall (normally paid twice per year)
  • Community fees (normally paid monthly or per quarter)
  • Electricity (normally paid every 2 months)
  • Water (normally paid every 2 months)
  • Home insurance (paid once a year)
  • Non-resident income tax (paid once a year)
  • If you need a mortgage, monthly mortgage repayments

After your purchase

We can assist you with suppliers and collaborators for; architects, builders, furniture & interior design, internet, home- & car insurance, rentals, telephone, satellite TV, etc.

Further Information

For information about selling a property in Spain, see our Guide to selling a property in Spain. Feel free to Contact Us if you have any questions.