Buying a property in Spain

Please note that the following is only a guide and offers no legal advice.  It is not exhaustive and may well bring up more questions.  If you would like more information please contact us.

The procedure to buying in Spain although not difficult is quite different to purchasing a property in the UK.  It is certainly worth knowing how the system works before you start looking and also what additional costs are involved.

Location

The first step is finding a location, unlike buying a property in your own country where generally you know the area you are purchasing in, finding a property in Spain requires a lot more research.  The internet is obviously a good source of information but it’s certainly worth taking some time out to come to Spain and visit different areas.  Spain is such a diverse and beautiful country, with its many Costas to more rural inland areas with mountains, lakes and vast planes.  Often when we think of Spain, places like Benidorm spring to mind.  It certainly has its own charms but for a permanent residence or a getaway holiday home, the busy areas along the coast are not what every one is looking for.

Living in rural Spain offers a completely different lifestyle to that on the Costas.  This area known as the Atliplano de Granada offers a much slower pace of life and an opportunity to appreciate the real Spain.  The area has lots to offer, for the more adventurous types the area is ideal for all outdoor activities, including mountain climbing, mountain biking and walking in the surrounding Sierras (Castril, Cazorla, la Sagra, Baza and Maria).  The empty roads are excellent for road cycling or motor biking and the stunning scenery is perfect for painting or photography.  There are also a number of lakes in the area and this offers the opportunity to swim, kayak or fish.

If the most outdoor activity you want is to sit outside sipping a beer then the many restaurants and bars in the surrounding villages, Castril, Huescar, Galera, Orce, Castijellar, will certainly accommodate this strenuous pastime!

Access to the Altiplano de Granada is also very good.  The roads from Granada, Almeria, Murcia and Alicante are all excellent offering easy access to many airports with good links to the UK and also down to the coast.

There are many things to consider when choosing your ideal location.  Is it a permanent home or is it for holidays only?  A main factor for many people is the access to airports and the coast etc.  Do you need special medical facilities?  If so, how far away are they?  If you have children you need to think about their educational needs.  Does it offer the kind of facilities / amenities / activities / lifestyle you are looking for?  Is it for investment purposes and is there potential for capital growth?  Can you afford a property in that area?  These are just a few points to consider and it is worth making a criteria check list with your requirements allowing for some compromise and flexibility.

What type of property?

Once you have located your ideal area, the next step is to find a property.  Unless you have a good knowledge of Spanish it is worth using an Estate Agent that speaks the language.  It can be very difficult finding a property without speaking Spanish and often when an English voice is heard, an inflated price is given!

Allow plenty of time to view property.  Areas are wide spread and it may only be possible to see 3 or 4 properties in one viewing, you may also find that your requirements change when you see what property is available.  Because the property here is so different, there are rarely two properties the same.  It is often difficult to pinpoint what type of property you are looking for.  So it is certainly worth being open to looking at many different options.  It can be so easy to get swept away by a location of a property but it might need more work than you anticipated, do you have enough in your budget to get the work done?  Property for reform, be it a cave house, cortijo or village house, vary considerably in the amount of work that is required and it can be quite a formidable task.  We can give advice on builders, plumbers, building merchants etc.

Popular in this area are cave houses, they offer a unique living experience, many people love them and wouldn’t live any where else but again they are not for everyone.  And if you are unsure, it maybe worth spending a night or so in one to appreciate what living in a cave could be like (we can arrange this if required).  Often the first sight of an unreformed cave is enough to put many people off, but they still remain affordable and if a newly reformed cave is not in your budget, it is certainly worth taking a look at a few to see what can be achieved.

Unlike on the coast urbanisations are unusual this far inland but if a new property is what you are looking for then there are many available.  The other option is to get one built this allows for more input, from deciding on the aspect to choosing the tiles in the en-suite bathroom.  There are many plots available to build on but ensure that all permissions are obtainable.  There are certain stipulations dependent on where and how the land is classed and this can affect the size and type of property you may want to build.  Again we can help with building licenses and permissions if they are required.   We can also arrange the plans down to building the property for you.

When searching for a property, consider the following:

How much work do you want to do?  Complete reform or partial reform?  Rebuild or new build?  Will you do the work yourself or are builders readily available?  How rural do you want to be?  Will neighbours nearby be a problem?  Do you want to integrate with the Spanish?  How important is access to amenities?  Do you need medical care close by?  Do you want to walk into town?  How much land do you want?  Are schools nearby?  Can you afford it and the cost of any work involved?  Does it have water and electricity – if not is it a problem?  (We can also help with the connection of services and help obtaining solar energy).

Once you have found your perfect property – What’s next?

• Contact your Abagado or Gestor.  They will make any relevant checks on the property:
  • Who owns the property?
  • What does the property consist of?
  • Where are the boundaries etc?
  • Is the property free of debts, mortgages etc?
  • And anything else that is relevant to the purchase.
• You will also need to obtain an NIE no. (Número de identificación de extranjero).  Dependent on where you sign it may be required at the time of completion at the Notario.   If not, it is needed within 30 days of signing for transfer taxes.  You can obtain this yourself by going to your nearest police station with a foreigners department (in this area Baza).  You need to take a copy of your passport and fill in the appropriate form POSSIBLE LINK TO FORM.  It should be ready within a week or so.   It can be a very time consuming and frustrating process and therefore it may be easier to pay your solicitor or gestor to obtain it for you.
• It is also a good idea to open a local Spanish bank account.   Ensure that you obtain your IBAN no. for this account as this will be required when transferring funds from the UK.  There are a number of companies that offer this service, offering better rates of exchange and less or no commission.
• Once a price has been agreed and all the relevant checks have been made then a Contrato Privado or Private Contract is signed between the buyer and the seller.  This normally gives a time frame, for example 90 days, and the seller and the buyer should be ready to complete within that time.
• Once the contract is signed a 10% deposit is required.  This deposit is non-refundable if you decide not to go ahead with the purchase.  If the seller pulls out they have to pay back double the deposit.
• Ensure that you transfer the remainder of the balance to your Spanish account in good time and in readiness for the completion date.
• When a completion date is set you need to arrange a cheque for the declared amount on the escritura and the balance is normally in cash.  This is usually handed over to the seller prior to going into the notary.
  • The declared amount is the amount written on the escritura this is normally lower than the agreed asking price.  When you buy a property in Spain a transfer tax (Impuesto de Transmisiones Patrimoniales) is paid and this is a percentage (7%) of the declared amount.   It is common for the declared price to be significantly lower than the asking price.  Be warned as the tax authorities are clamping down on this.
  • Although it may mean less initial tax, if you come to sell it in the future your capital gains tax liability would be higher.
• If you are a non resident a letter from you bank with the declared value on it and stating your non resident status will also be required by the notario.
• At the notary, the new Escritura de Compraventa will be read through and checks made, any amendments noted and then the seller, buyer and the Notario will all sign the escritura.  Ownership is then transferred to the buyer.
• Once the formalities with the Notario are complete, your lawyer should arrange to pay any taxes due. He should also send the signed and witnessed Escritura to the Land Registry and pay the appropriate fees.
• You should now have a set of keys and a new home in Spain!

What are the costs of buying a property in Spain?

When you look for a property it is worth bearing in mind the additional costs involved and when you determine your budget ensure that it includes these extra costs.

• Your first fee will be that of your Spanish lawyer (abagado) or Gestor.  They may either charge a fixed fee from around 600 euros upwards or possibly a percentage of the sale price.
• When you sign at the notary this also incurs a charge.  The Notario is a Spanish public official and his job is to witness signatures and ensure that certain legal requirements have been met.  He will also make both the seller and the buyer aware of their tax obligations.  The Notario fee varies and is dependent on various things – size of land and house and also the price.  Costs vary from around 300€ to 600€.
• When you buy a property it will be registered in your name at the local Land Registry (Registro de la Propiedad). Approximately 300€ to 600€.
• Estate agents commissions are normally included within the asking price – make sure you check they are otherwise it could be a nasty shock when you come to buy the property as it is normally the buyer who foots the bill.  These commissions can vary considerably and may well be less when Spanish sell to Spanish; they know the system and language is not an issue.  On average you are looking from around 3% upwards, in some areas like on the coast it could be as high as 15%.
• Connecting to services, water and mains electricity may incur additional costs charged by the supplier plus the cost of materials and labour of your builder.  Be aware even if a property has electricity close by, it does not always mean it is readily available to your property.  If a new transformer was required this could be in the thousands.
• Don’t forget that once you own a property you will also have to pay insurance, local taxes etc.  Also there is a yearly fee for water and rubbish collection.

A figure of around 9% – 11% should be kept for these additional costs and should cover all your legal fees, transfer tax (7% in Andalusia), notary fees, registro fees etc.  It is probably a good idea to have a contingency budget set aside also, to cover any unexpected problems.