Buying A Property in Spain

A guide to the process of buying a property in Spain

Viewings

Visiting different types of properties, often in different areas, is the beginning of finding your dream property. We select a number of properties that could be of interest based on your search criteria. The more specific you are with your search criteria, the more relevant the selection we can show you.

Before starting to view, you should have an idea of your budget, and if you need a mortgage we recommend you pay a visit to your own bank to know your mortgage allowance. We are happy to introduce you to one of our mortgage brokers to confirm your buying budget, if required.

When this has been clarified, we are ready to start viewing, and we hope you to be ready to purchase, when we find you the right property.

New developments, either off-plan or under construction, is the main focus of this site. Recent statistics show that 20% off all sales on the Costa del Sol are now in new developments. Typically we see launch prices on the first 10 units, hereafter prices normally increase for each 10 – 15 reservations made. Often we see prices up 50% from construction start to handover to the client.

For resale properties please visit our partner site www.marbella-viewings.com. We are members of the 3 largest professional property networks  on the Costa del Sol.

Finance

Non-residents can get a maximum of 70% of the purchase price or valuation, whichever comes in lowest.

An example: Property price 200.000 €. Mortgage maximum 70% (=140.000 €) + buying costs (10 – 14%) need to be added on top of the purchase price. Self-finance needed is minimum 80.000 €. In addition you will have costs for furniture, decoration, etc.

To get rid of still unsold stock in new developments, a few developers offer favourable conditions on mortgages with up to 80 – 85% finance, depending on the buyer’s status and background. Ask us for advice.

Opening fees on a mortgage are normally between 1.25% – 1.75% on the capital + fees for registering of the mortgage at the Land Registry.

Please note!  Mortgages in Spain are based upon the Euribor rates, considered to be the most important reference rates in the European money market. It continues to be at a historic low of around 0,50% (August 2014). In addidtion to the Euribor all mortgages have an additional, which can be anything from 0,50% to 2,50%, terms and conditions apply. Mortgages can be either fixed or mixed.

Buying costs (10 – 14% on top of the purchase price)

For a resale property the following costs on top of the purchase price are added;

• Property transfer tax increases with the purchase price: 8% (0 – 400,000 €), 9% (400,000 – 700,000 €), 10% thereafter
• Legal fees, normally 1% of the purchase price + 21% VAT
• Notary fees 500 – 1,500 €, pending on the value of the property
• Land registry fees 300 – 1,500 € depending on the value of the property.

For a new property directly from the developer the following costs on top of the purchase price are added;

• 10% in purchase tax (VAT). In addition you have these additional costs;
• 1.50% stamp duty tax
• Legal fees, normally 1% on the purchase price + 21% VAT
• Notary fees 500 – 1,500 €, pending on the value of the property
• Land registry fees 300 – 1,500 € depending on the value of the property.

For a plot of land the following costs on top of the purchase price are added;

• 21% VAT that comes on top of the purchase price. Legal-, notary-, land registry fees as above.

The buying process

When you have found the right property, it is necessary to take it off the market, and this is done by placing a deposit directly with the developer or developer’s sales agency.

Reservation contract
Placing a deposit ensures that the property is taken off the market and at this point you sign a Reservation contract. The deposit amount is typically € 6,000, however pending on the purchase price. If the price of the property is substantial, the deposit amount can be up to 15,000 €. The reservation period is typically 2 weeks, to allow your lawyer sufficient time to make a due diligence on the property, local planning, master planning, etc. The deposit is not refundable, except in cases where your lawyer advises against the purchase. In some cases, especially in off-plan projects, the reservation contract is subject to the building licence.

Private Purchase Contract
The Private Purchase Contract replaces the Reservation contract. In new developments you typically pay 30% of the purchase price, minus the already paid deposit, when signing the contract. The Private Purchase Contract outlines all the specifics of the purchase, including the final completion date.

In new developments you often pay 2 additional amounts during construction. The amount may vary. On completion you would normally need to balance between 30 – 50%, as the rest has been paid already during construction. Please note! On each payment in new developments a full bank guarantee is issued.

Completion
Completion and payment of the balance, takes place at the Public Notary. On completion you will receive the keys to the property and you will be the new owner. All future obligations on the property are now your responsibility. Before leaving the Notary you are handed over a copy of the new title deed, the Copia Simple. The original is sent for the final registration of the property in your name at the Land Registry. This normally takes a few months.

What is needed to purchase a property in Spain?

You need sufficient funds to buy the property with cash, or a mortgage, or a combination of both. We can assist with mortgages.

Also you need a foreigner’s tax registration number, called N.I.E.

A Spanish bank account, where you will be asked to place funds sufficient to pay your regular running costs on the property.

Legal assistance

We advise all foreigners to seek legal advice during purchase from a locally based Spanish lawyer, and we are happy to introduce you to one of our collaborating, English speaking lawyers. We also collaborate with lawyers that speak fluently Danish, Norwegian, Swedish, Dutch, French, German, Russian – ask us for advice. By law any lawyer on the Costa del Sol must be an associated member of the Lawyer’s College in Málaga, and they are obliged to have an insurance that will cover you in case of any mistakes made in the purchase of your property.

Running costs

As an owner of a property on the Costa del Sol, you have the following running costs:

• Council tax to the town hall (paid once a year)
• Rubbish collection to the town hall (normally paid twice per year)
• Community fees (normally paid monthly or per quarter)
• Electricity (normally paid every 2 months)
• Water (normally paid every 2 months)
• Home insurance (paid once a year)
• Non-resident income tax (paid once a year)
• If you need a mortgage, monthly mortgage repayments

After your purchase

We can assist you with suppliers and collaborators for; architects, builders, furniture & interior design, internet, home- & car insurance, rentals, telephone, satellite TV, etc.

Further Information

For information about selling a property in Spain, see our Guide to selling a property in Spain.
Feel free to Contact Us if you have any questions.