Buying property in Spain

Purchasing a property in Spain is the beginning of a great adventure, full of excitement. The first step you need to decide on, is your budget. When buying a property in Spain, the buying costs are roughly 13-14% (see bottom of this article). The buying costs are especially important, if you are financing your purchase. The Spanish banks will finance up to maximum 80%, of the property price, excluding expenses. If you need more advice on financing, we work with several banks and finance brokers, and are happy to help.

When looking for a property for sale, keep in mind that we have access to all properties for sale. Partly through the networks we are part of, and partly due to the good relations we have with rest of the agencies. As a result, you don’t have to engage many different agencies or agents, but just one or two. If you are ready to find your dream property in Spain, head over to properties for sale. In this guide we describe the process of buying a property in Spain, and explain the different steps. If there are some elements where you would like more information, don’t hesitate in contacting us. You can write in the live chat, send us a mail, or give us a call

Deposit & Reservation agreement

Paying a deposit is the first step to buying a property, and to remove it off the market. Deposit amount is min 6.000 € and up to 10% of the property value, when buying a property in Spain. It should be paid either to the developer, your agency, agency of the buyer, or your lawyer. A reservation agreement always follows with the deposit, and will stipulate the conditions. The deposit to reserve a property is normally non-refundable. Exceptions can be made for example if a mortgage needs approval or if there are unresolved legal questions.

We will always scrutinise any reservation document, and verify the conditions are reasonable. You can pay the deposit by bank transfer, with a credit card, or in some cases with cash. Sellers representative (agency) and you sign the reservation agreement, which is then valid with proof of payment. With the reservation agreement signed, and deposit in place, the property is yours for now. Next step is either a private purchase contract (PPC), or directly to notary to sign the deeds!

 

Due Diligence

Due diligence is a process your lawyer carries out, and is a very important aspect of buying a property. The Spanish administration system for debt, property ownership and construction licenses is very complex. As a consequence, it takes experience to thoroughly check all aspects of the property. Outstanding tax, community fees, irregularities in size, and existing mortgages will all show up during due diligence. Your lawyer will inform you about the consequence of any irregularities, and include it in the private purchase contract (PPC). It is also possible to uphold the PPC until these matters are in place. It is possible to carry out the due diligence your self, but it is not something we advice to do. When buying a property in Spain, the lawyer fee by far outweighs the problems and complications which can arise.

 

Private purchase contract (PPC)

The private purchase contract is a legal binding document, outlines the conditions for the property purchase you are about to do. It stipulates any special conditions agreed between you and the seller, and replaces the reservation agreement entirely. The contract is typically signed within 1 month of deposit payment, and will be uphold until the day of signing of the property purchase at the notary. It is important to study the private purchase contract (PPC) in detail, especially when buying an off-plan property. The reason for this is any stipulation regarding selling the property before completion, delays and so on.

The seller and you signs the private purchase contract, when both parties agree on the terms. With the private purchase contract (PPC) in place, it is common to pay 10%, minus the already paid deposit. If the seller fulfil their responsibilities, this payment is not refundable, are you are on your way to purchase a property in Spain.

 

Signing at the notary

When all the steps above have been carried out, the big day is finally arriving. At the Notary, the new deed will be signed, and you have officially purchased a property in Spain! At the notary, the lawyers and the Notar will go through all documents, and ensure everything is correct. The Notar will also explain to you direct or through a translator, what is the process. With everyone in agreement, the new deed will be formally signed and stamped. From this point on, you can now call your self property owner in Spain! Remember to bring your passport or personal identification card, as without you can not sign the deed.

Buying costs when buying property in Spain

• 1,2 % (approx) Notary & Property Registry fees – both fees are fixed depending on the price and size of the property or plot
• 1,5% Stamp duty for new construction only – Paid to government and non-negotiable
• 1% Lawyer fees – The common fee for a lawyer, and rarely negotiable
• Transfer tax (ITP) or IVA. Transfer tax is applied to any existing property or plot, and IVA is applied on new properties, and off-plan projects or properties
  • Transfer Tax (ITP)
    • 0-400.000 = 8%
    • 400.000 – 700.000 = 9%
    • 700.000 -> = 10%
  • 10% VAT (IVA) on a brand new property purchased from a developer (villas, town houses, apartments, plots, commercial premises & garages sold with the property)
  • Properties acquired by a company with the purpose of selling within 5 years, only pays 2% ITP
• Plots & commercial premises are liable to pay 21% VAT (IVA) when the transaction is made between two companies.

What you need to buy a property in Spain

• NIE number
  • The NIE number is your official tax number, and serve many purposes. It is the main form of identification in Spain. It cost around 25€ to get on the Police station, but can be a lengthy process. Your lawyer often carries out this task, and we can also help if you would like.
• Passport
  • Passport or national identification document is necessary in its original form.
• 6.000 € (or more) to reserve a property, paid by credit card, bank transfer or in cash.
• A Spanish bank account is necessary if you own a property in Spain. Water, electricity and tax will automatically be drawn from this account.