Buying a Home in Spain

Like all things in life deciding to buy a property in Spain needs careful planning and consideration of all possible eventualities. It is vitally important, in our opinion that you seek and are given the correct advice. At Suncroft you may rest assured that the advice we give is to your advantage not ours.

So you've decided to take the plunge, what next? well, planning that is what is important starting with the rotten subject of finance. Best to tackle this thorny subject before you start gazing through the tempting glossy brochures. Well Let's face it there no point setting your heart on a five bedroom villa with a pool on the seafront when you budget will only stretch to one bedroom apartment in the town. Establish how much you can borrow (We would be please to help), add the amount you have in savings, and you have a good idea of how much you have to spend. Once you know your budget you can go househunting. Let us know what your looking for and the price range you are in and we will keep you advised of properties fitting the bill. Most of us though wll surf the net, order all the brochures, got to all the exhibitions but in the end you will probably have to choose one of those agents to assist you in turning your dream into a reality. The only thing you should worry about is getting addicted to the search - paranoia about missing the perfect property could have you logging on to check out places in the middle of the night.

We will give you an insight into the buying process below, but donít worry at no time will you be on your own. We will be with you every step of the way.

The Process

The buying procedure in Spain is a little different to what you are used to in the U.K. It is always a good move to ensure that you have good legal representation and the back up of an agent who is interested in you for the whole of your transaction.

The Private Contract - Once you have decided on a property a private contract is drafted which will include a completion date and an assurance by the sellers that the property is sold free of charges, tenants and mortgages. It will also specify any special terms agreed as part of the sale (inventory etc). At this stage you need to make provision for a deposit - normally 10% of the purchase price - which is payable upon signing the contract (Contrato de Compraventa).

This is a binding contract for both sides with significant penalties for breaking it or failing to honour the terms of the contract. The deposit is NON REFUNDABLE if you do not complete the purchase for any reason. Similarly if the seller does not complete the sale then by law he must refund your deposit plus a further equal amount as compensation.

Signing of the Deeds - The next stage is to complete the purchase at the Notary's office, usually at least a month after the signing of the private contract. The signing of the Title Deed (Escritura Publica de Compraventa) is completed in the presence of a Spanish Notary (Notario) who certifies that the contract is officially made. It is at this point that you will be required to pay the balance of the purchase money, taxes and Notary's fees.

Registering the Property - When the Escritura Publica is signed you will officially become the new owner. The final step is to register the property in your name at the Property Registry Office (Registro de la Propiedad).

Hopefully this gives you an idea of what is involved in buying a home in Spain. Please don't underestimate the value of Professional, Legal and Financial advice.

The Costs

Apart from the actual purchase price of a property, you need to allow approximately 10% of the declared price (see below) to cover the fees and costs of acquiring the property. It is normal practice for the purchaser to pay all the fees despite the fact that it is the legal responsibility of the seller to pay the Plusvalia.

Solicitors Fees Normally 1% of the purchase price plus IVA (VAT).

Notary Fees & Registry Fees Calculated against an official scale. Dependent on the declared price, size of property and number of pages in the Escritura. Approx 1 to 2% of declared price for both fees combined.

Transfer Tax 7% of the declared price for resale properties. For New Build property 7% IVA plus 0.5% stamp duty.

Plusvalia, A small localised tax based on the increased value of the land since the last sale of the property.

Financial Advice

We strongly recommend you get independent advice on raising money for the purchase to ensure that sufficient funds are available at the appropriate times in the agreed currency. This is the one single area that causes most grief during the buying process and results in many failed purchases. Some early planning resolves many of these issues.

Lawyers (Abogado)

Whilst it is not a necessity to have a solicitor to purchase a house in Spain, it is highly recommended. They will be able to check out any outstanding debts which exist on the property as well as help with contracts and NIE numbers..You are free to appoint a solicitor of your choice, or if you prefer we can recommend one. Obtaining your NIE involves filling in a form with your solicitor, you also need to supply a colour 'passport' photo, a photocopy of your passport and your passport, the solicitor will then obtain your NIE number from the local police station.. The NIE number can take anything from 1 week to 5 weeks to be obtained and we strongly advise you to apply for one as soon after you arrive in Spain as possible. The price for this is generally included in the fee for the conveyancing however, if you wish to apply for one earlier the fee is normally around 60 Euros. (Please see notes on NIE below).

Using a local lawyer, using one in the U.K. could increase your bill dramatically. The Spanish legal system is very different from other European countries and, to avoid misunderstandings,disappointments and possible fraud, it is essential to seek expert professional advice from the beginning.

Why Buy in Spain?

There are many excellent reasons for buying a home in Spain, although it's important not to be under any illusions about what you can expect from a home there. To get a firm handle on what you expect, ask yourself exactly why you want to buy a home in Spain. For example, are you seeking a holiday or a retirement home.

Spain, especially the coastal resorts have the highest percentage of retired persons in the world, when both Spaniards and foreigners are included. If you're seeking a second home, will it be mainly used for long weekends or for lengthier stays? Do you plan to rent all or a portion of it to offset mortgage and operations costs? If so, how important is the property income? Are you primarily looking for a sound investment? Do you plan to work or start a business in Spain?

These are questions that need answers no matter where you purchase, but especially in Spain because of the variety of choices Spain has to offer.

Often buyers have a variety of reasons for buying a home in Spain. For example, many people buy a holiday home with an idea of living there permanently or semi-permanently after they retire. If this is the case, there are many more factors to take into account than if you were simply buying a holiday home that you will occupy for just a few weeks a year. If, on the other hand, you plan to work or start a business in Spain, you will be faced with a whole different set of criteria. You may be thinking of buying a home in Spain and commuting to another European country to work. Many people are doing just that because Spain has a lot to offer.

The Benefits Outweigh Drawbacks

There are both advantages and disadvantages to buying a home in Spain, although for most people the benefits far outweigh any drawbacks. Among the many advantages are guaranteed sunshine and comfortable Mediterranean temperatures. Some areas of Spain, especially the resort areas, are some of the least polluted areas of the world.

There's good value for your money, and Spain is easy and inexpensive to get to, at least for most western Europeans. There are great rental possibilities and good local tradesmen and services. There are fine foods and wines at reasonable prices and a relatively low cost of living. There's the slow, relaxed pace of life; the friendliness and warmth of the Spanish people; the dramatic, rugged beauty of Spain on your doorstep; and, last but not least, a superb quality of life.

Other taxes Effecting Home owners

Rates - This is like the old English rates system and is based on the declared value of the property. The average price paid is around 120 Euros per year.

Community Fees - These are payable yearly and the average price is 120 Euros per year. These are paid in respect of services ie. Street lighting, refuse collection, police.

Water - If your property has a mains supply then there is a standard charge for water which is approximately 12 Euros payable every 3 months. The charges for consumption are in addition to this.

If you have a supply from a balsa, underground store, then the fees are dependent on consumption and are payable when the water is delivered.

Electricity - This is very dependent on how much you consume, there is a standard charge of around 12 Euros payable every 2 months and then a charge for consumption in addition to this.

Telephone - The standard charge for a telephone line installation from Telephonica is around 180 Euros. The line rental and call charges are then payable every 2 months.

Frequently Asked Questions.

How can I be sure that everything is going ahead as planned once I return to the UK?

You can feel confident that we will be monitoring the progress of your property. In the case of new constructions to ensure that the stages are going ahead as planned, and in the case of re-sale property to ensure that once the property has been checked for encumbrances that the signing of the title deeds can take place as soon as possible. We will endeavour to keep you well informed at every stage.

What if I am unable to attend the Notary to sign the title deeds?

It is quite common to give your solicitor Power of Attorney in order that they can sign the title deeds on your behalf. You will need to have transferred the final balance for the property plus taxes to them prior to the signing of the deeds.

Is it possible to purchase a property from overseas?

If having returned home and reviewed your inspection trip you wish to make an offer on a property you have seen we can put this to the owner of the property. Once it is accepted we can arrange for the contract to be sent to you or your solicitor by fax or courier (for a small fee). You will need to sign the contract and transfer the deposit before your offer is officially accepted.

What if I change my mind on a property?

Once you have signed a contract for the property and paid a deposit this is considered an official intent to purchase the property. It is therefore extremely important that you are absolutely certain that this is the property you wish to purchase and that you do not feel under any duress to sign the contract.

How long does it take between signing the contract and completion?

Depending on the outcome of the searches made by the solicitor the process can take anywhere between 2 days and 3 weeks.

What happens to my deposit if the searches are returned unsatisfactory?

If for whatever reason the searches are returned unsatisfactory, you will receive your deposit back in full. It is for this reason that the initial deposit is not paid immediately to the owner.

Do I have to use your solicitor when I purchase a property?

No. You are free to use a solicitor of your choice or we can recommend one in the local area.

When will I receive the keys to the property?

You will be given the keys on the completion of the signing of the title deeds with the owner at the notary.

What is a Spanish Notary Public?

Although the Spanish Notary Public (notario) is a lawyer, their job is strictly to witness the signing of the title deeds and to ensure that all liable taxes are paid on the completion.

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