Buying in Spain
Buying in Spain – Frequently asked questions and detailed information about the buying process in Spain.
Where do I start my Spanish property search? There are such a vast amount of portals and websites.
The internet is a great indication of market prices and types of properties for sale on the Costa del Sol. There is a great deal of properties available on the internet, however searching online can both be very overwhelming and time consuming. We recommend to quickly browse the internet for properties offered in your desired area, and to directly contact the local listing agent to establish primary contact. Established local agents will have the knowledge of available properties in the area and will be able to start working for you directly by sending you different prospects of interest. Once the estate agent has selected a few properties that have caught your interest, plan a trip to the area for viewings.
Please note that when you first get in touch with us, be as specific as possible about your requirements. Let us know: what area are you interested in, your maximum budget, desired number of bedrooms, proximity to amenities/ airport, etc.
Should I arrange to view with one agent or various agents?
Many buyers seem to believe that they will benefit from going to various real estate agents in order to find a greater variety of properties for sale. This is not true, local established agent’s work closely together sharing properties with one other; this creates an extensive and similar portfolio of properties for sale for each agent. What is important is finding that one real estate agent that you trust and that you feel comfortable with, the rest they will take care of. Your trusted agent can arrange viewings of any property even though you might have seen it on another agent’s website.
Also to be taken into consideration is choosing a local agent that has an established office in Spain. Anyone can set up and virtual estate agency on the internet without having the qualifications or experience in the local real estate sector. For your own safety ask for the companies registration number to ensure you are dealing with a proper and genuine agent.
Is there a certain time during the year that I should plan my trip to view properties?
Keep in mind that about 70% of holiday homeowners rent out their properties. This means that during the busy summer months and holidays homeowners tend to rent out their property. When properties are rented out it can be difficult to arrange viewings. Therefore we recommend to avoid peak summer months for travelling to Costa del Sol specifically for viewing properties.
What do I need in order to buy a property in Spain?
For Non Residents you need to apply for a NIE number (Foreigners’ Identification Number). This can be done at the local police station in Spain or at the Spanish consulates and embassies.
We also suggest you to:
Open a bank account in Spain for direct debits for water, electricity, and another fees related to your property.
Make a Spanish will for Spanish assets. If there is an unfortunate death this will reduce costs and complications and speed up the closure of the estate. Your lawyer will arrange this for you.
If you need finance and mortgage, please let us know and we will advise you on a selection of options.
I have found my dream property, what is the next step?
The buying process in Spain is not complicated. It consists of four simple steps which are explained below.
It is advisable to appoint a lawyer as early as possible in the purchase process. If you have no preference we can recommend a suitable lawyer who will deal with you in your own language. We work closely with one of Spain’s biggest law firms; Martinez Echevarria, which was founded on the Costa del Sol in 1983 and today have five offices throughout Spain.
Buying Process Step 1:
Reservation of the Property
When you have found the perfect property the next step is to put down a deposit. This is a Refundable Reservation Deposit of either €6,000 or €10,000 (depending on the selling price). This deposit is used to remove the property from the market while your agent negotiates the best price for you. When the price has been agreed, the deposit becomes un-refundable. The deposit is usually made to the estate agent until further instructions from your lawyer.
Never put down a deposit of a property that you have not seen! If you are an investor, please contact us for further details on putting down a deposit for investment purposes.
Buying Process Step 2:
Property Check
When the deposit has been paid your lawyer will immediately start to check all legal aspects related to the property. The lawyer will check there are no debts or embargos against the property, approve all property documents and confirm that the owner is the legal vendor. When all the checks have been satisfactorily carried out one moves on to Step 3 in the buying process.
Buying Process Step 3:
Private Contract
Once the lawyer has confirmed that all the property details are correct the PRIVATE PURCHASE CONTRACT will be made and signed. This usually tends to be done approximately 20-30 days after the payment of the deposit has been made. When the private purchase contract is signed a 10% deposit would be paid. That is 10% of the selling price. The contract will state all the terms and conditions of the sale, as well as the final date by which the title deeds must be signed and final payment made. Should the buyer withdraw from the purchase, the buyer would lose the deposit. If the seller withdraws from the purchase, the seller would need to repay double the amount of the deposit to the buyer.
Buying Process Step 4:
Notary
The last step is going to the Public Notary to sign the Title deeds.
At the Notary the balance of the sale price is paid to the seller/vendor and the keys are handed over to the buyer. The title deed/Escritura is signed in the presence of the Notary.
When the title deed is in the new owners name the lawyer will register the property in the local land registry.
What expenses are involved when purchasing a property in Spain?
There are three main purchase costs when buying a property in Spain, they are explained below. Agent fees are paid buy the seller/vendor.
IVA/transfer tax
When you buy a Resale property the following percentage of IVA/transfer tax is applied:
- On the purchase of properties up to €400,000 the IVA/transfer tax is 8%
- On the purchase of properties between €400,000 to €700,000 the IVA/transfer tax is 9%
- On the purchase of properties above €700,000 the IVA/transfer tax is 10%
- When you buy directly from the Developer the IVA is 10%
Notary fees and Land Registry fees
The notary fees and land registry fees vary according to the size of the property and its vale. For a property sold of €200,000 the notary and land registry fees go up to €1,500, and for a property of €400,000 the fees go up to 2,000€.
Lawyer fees
The lawyer fees are normally 1% of the purchase price.
Any recommendations for transferring money from abroad?
When the excitement of a possible sale starts and the negotiations proceed it is easy to forget about what you’re best options might be to transfer the funds, either inwards, or outwards.
Generally people tend to turn to their traditional banks with whom they have had a long term relationship in the past. This is often not the most cost effective way of proceeding. We recommend our clients to speak to Rational FX about currency services and saving 2-3% on purchase prices. We have received excellent feedback from our clients that have used their services. If you would like more information about Rational FX and a direct contact, please contact us.
A rule of thumb on possible savings would be:
€100 000 could save you €1.400 on normal bank charges.
€500 000 could save you €6.000 to €7.000.
Of course this is currency based and will fluctuate but a good contact is important.
What costs will I have after having bought my property in Spain?
Before purchasing a property in Spain it is extremely important to be aware of the yearly costs that involve that specific property. This information should be provided by your estate agent when viewing a property. If for any reason this information is not given to you, make sure to ask.
The yearly property costs are the following:
IBI – Annual Property Tax
The IBI is the Annual Property TAX or Local Rates which are paid annually. The amount is calculated from the rateable value of the land and takes into account the type of property, the location and value of the building.
Example: In 2014 a 2 bedroom, 2 bathroom middle floor apartment in Hacienda Elviria pays approximately €800 to €1,200 yearly in IBI/ Annual property tax
Community fees
In each urbanization the homeowners are obliged to pay for the upkeep and maintenance of the community areas. Depending on the urbanization, the costs vary. Maintenance of the garden areas, the pool, security guards, cleaning of common areas, and upkeep of the community areas are usually what the community fees cover.
Example: In 2014 an apartment in Hacienda Elviria, Marbella, pays approximately €140 to €200 per month, in community fees. Independent villas tend to have far less community fees as the villas private garden and pool are not maintained by the community, but by individual gardeners/ maintenance men, hired by the private homeowners.
Rubbish Collection
The Town Hall applies the rate to be paid for the rubbish collection. For an apartment or villa in Elviria, Marbella, the rubbish collection costs approximately €140 to €200 per year.
Note! Electricity and water are not included in the above fees, this is paid separately by the homeowner depending on the individual consumption. These costs are generally quite low.
I’m thinking about renting out my property when I am not using it myself. How does it work? And how can I go about it?
About 70% of buyers that purchase a property in Spain decide to rent out their properties. Of of these 70%, more than half rent out on a serious basis having bought the property as an investment to start a rental business creating an additional income.
If you are interested in renting out your property and would like to property management teamt to deal with the rentals then contact us. Hacienda Estates has a specialized property management team that has been working on the Costa del Sol for the past 15 years focusing on holiday apartment rentals.