Purchasing A Home In Spain
Are you considering buying a property in Spain?
How much research have you done?
Terrasur Homes will set out to explain the buying process and terminology to help make your research just a little clearer.
Since the global financial crisis of 2007/8, the Spanish property market has been regaining momentum.
The Costa del Sol especially, has seen plenty of land being acquired by developers and magnificent new developments under construction and completed at a rapid pace.
Thankfully, the old infamous Marbella days are becoming a distant memory. We now enjoy tighter regulations on bank loans and mortgages and, along with an upturn in the Spanish economy, we have a very positive property market.
If you purchase through a reputable agent and a reputable independent lawyer, then it’s pretty much plain sailing and Terrasur Homes will happily help you along the way and assist you with your search for mortgages, notaries, lawyers and anything else that may crop up on the way.
The Buying Process
When you have found the property you like, the first thing an agent will ask you to do is to sign a reservation agreement to take the property off the market at the price agreed.
This is normally between €3,000 and €10,000 (maybe more if it’s a very expensive villa)
The agreement will normally last for 30 days, with the money held in a ‘client’ account, by the selling agent’s lawyer or with yours.
The 30 days normally allow the lawyer to investigate the following due diligence:
- outstanding debts on the property
- any discrepancies with the dimensions of the property duly registered
- a review of the building permits and/or certificates and taxes
This period also allows you to arrange a suitable mortgage.
The vast amount of time, the deposit is refundable but it’s worth checking to make sure this is the case before you pay it. Your lawyer should be able to clarify this.
In most cases, in the event that your lawyer should discover any legal impediments pertaining to the property in question, the deposit is refundable.
If your desired property ticks all the correct boxes at this preliminary stage and you continue with the purchase, then the deposit will be used towards the purchase price.
As a ballpoint figure, one generally allows 10-15% of the purchase price to cover all taxes and fees.
Costs payable by the purchaser are the following:
- I.V.A /Transfer tax
IVA is a tax applied to a new residential property which is normally 10%
Transfer tax is a tax applied to re-sale properties. 8-10%
- Stamp Duty
(IAJD Impuesto Sobre Actos Jurídicos Documentados).
This tax is applied when purchasing a property and is between 0.5% and 1.5% depending on which autonomous region the property is located.
- Land Registry Fees
Expenses related to inscribing the sale with the land registry are also paid by the buyer and are calculated in relation to the purchase price declared in the deeds of sale.
Normally around 1% depending on the property and its location.
- Notary Fees
A notary is a public official within the Spanish law system who certifies many types of documents and ensures that private agreements fulfill specific legal criteria.
His job is to ensure that both parties understand the terms of the contract, which have to be within the law, and that the appropriate taxes generated by the transaction are paid.
By obtaining a notary signature this enables a private contract to become public deeds and inscribed into the land register as proof of property ownership. Notary fees are 1%.
- Lawyer Fees
The appointed lawyer conducts due diligence, this being checks on ownership of the seller, any outstanding debts on the property, permits etc.).
Once due diligence is completed and everything is found to be in order, then a private purchase contract between the buyer and seller can be prepared.
A private purchase contract would contain the following:
- A legal declaration from the vendor that he/she is legally positioned to sell the property respectively.
- The exact address and dimensions of the property and its features as set out in the ‘referencia Catastral’ Government registration of the property.
- The completion date and hand over of the keys etc.
- The agreed terms and conditions as agreed by the buyer and seller
For an uncomplicated and straightforward process, expect to pay 1% plus VAT.
It’s quite easy really!
From the day you find the property you want, to the day you get the keys and can move in, can take anywhere from two to six weeks.
If all is in order, and everyone has the right bits of paper, then it’s a pretty smooth ride.
Like any other property you own, there will be some running costs once you move in and get settled, but the hard work of ownership is done (albeit by lawyers) and you are good to go.
In our follow-up blog about purchasing a property in Spain, we shall explain in details the running costs involved in owning property here on the beautiful south coast of Spain.
Visit our advanced search to find the property of your dreams from Malaga to Gibraltar.