Buyers guide

In finding the right property for you our aim is to ensure that the process of coming to Spain with us is simple, enjoyable and ultimately a rewarding and successful experience.

To help you, here is a brief guide detailing the typical buying process when purchasing a property in Spain:

Defining your needs

Before visiting Spain it’s important to think about your requirements, including the type of property and lifestyle you want to achieve, so that we can help you find a property that meets your needs. Things to consider include: 

• Is it a holiday home or main residence?
• Is investment a primary consideration?
• What are the needs of the family members including amenities, schooling, work, transport etc?
• Size and type of property? 
• Location?
• Cost of maintenance?
• Future needs?
  

Research can be done using websites, magazines and books.  In addition, our experienced consultants can help and advise you both before and during your viewing trip.

Arranging your finances

It’s advantageous to have your financial arrangements in place before you begin looking for properties, particularly if you plan to finance your purchase with a mortgage. Forward planning helps you determine your budget, secure a mortgage that suits your requirements and to be in a strong negotiating position when you find your ideal home.

In addition, planning ahead will give you time to understand and manage the use of currency brokers. Using a currency broker is the cheapest and most effective way to convert and transfer money from one currency to another, and limits your exposure to exchange rate fluctuations.

Do be aware that you will need to pay taxes and fees amounting to about 10 or 11 per cent of the price of your property when you buy in Spain. This should be considered when calculating your budget.

Obtaining a mortgage

It is important to select the mortgage that takes into consideration your personal circumstances.
Do let us know if you require a Spanish mortgage so that we can ensure you bring with you all the necessary documentation and receive the expert advice you need.

If you require a mortgage and prefer to use a Spanish lender, you will need to provide proof of your ability to repay the mortgage. Although terms and conditions differ from lender to lender, as a non resident you will usually be able to borrow up to 70% of the value of your property repayable over 10 – 30 years depending on your age.

If you are buying an off-plan property the developer may offer a mortgage with very favourable terms and conditions.

The viewing trip

On arrival in Spain you will be met by one of our consultants and taken to view properties that have been carefully selected to meet your specific requirements. Our visits are very informative and cover far more than just viewing property. Use our experience and knowledge to take a good look at the area, local surroundings and amenities.
Prior to arriving in Spain, you should make sure that you have at your disposal sufficient funds to cover the reservation sum which is around € 6000 but may be greater for higher priced properties.

Finding a lawyer

Ideally, you should find an independent, English-speaking lawyer at the outset of your property search. Finding a competent lawyer at this stage ensures, as with your finances, that when you find your perfect property everything is in place.

We can introduce you to one of several reputable lawyers or you are of course free to use your own lawyer should you have one.

Negotiating the terms

Once you’ve chosen a suitable property, the price and conditions will need to be agreed. It is quite acceptable to make an offer subject to mortgage approval and, for properties that are still being built, you’ll want to agree a schedule of stage payments rather than pay the whole amount up front

Formalizing the offer

Once there is a verbal agreement between parties the next step will be to formalize the offer terms of purchase in writing.

The lawyer will firstly draw up a reservation contract and take a deposit from you to remove the property from the sales market. This contract will be signed by the vendor of the property stating he agrees to reserve the property for a given period of time. This period is usually two working weeks allowing the lawyer to do all legal searches on the property and prepare a binding sales contract.

Please be aware that this reservation deposit is usually non-refundable subject to the vendor’s property paperwork being fully in order.  Should you decide not to proceed for any other reason the money will be kept by the vendor.

The vendor will then supply all the paperwork for the lawyer who will then commence a thorough search on the property.

Exchanging contracts

Upon confirmation from your lawyer that all is as it should be, the next step is to sign a private sales contract (Compra Venta) with the vendor. This will set out the legal description of the property, the price, the payment terms and the obligations of both parties.

Signing usually takes place two weeks after payment of the initial deposit. Do ensure that your mortgage lender has agreed in principal to your mortgage, as you must now pay a deposit of 10% of the agreed property price. If you are buying off-plan this sum could be 30% - 40%.

Should you be unable to proceed with the sale for any reason your money is non refundable. If, however, the vendor fails to complete the sale you should expect to receive double this deposit or in the case of off-plan properties your deposit plus 6% interest.

Power of Attorney

To avoid the expense and time involved in travelling to Spain for the signing of private contracts and completions, it is possible to create a ‘Power of Attorney’, which allows a third party to sign any required paperwork on your behalf. This power is signed in front of a Spanish Notary by yourselves.

Opening a Spanish bank account

If you have not done so already, at this stage you will be required to open a Spanish bank account for the purpose of transferring necessary monies.

Final completion and registering the title deed

In Spain, completion takes place in the Offices of a Notary. The Notary’s role is to guarantee the legality of the sale, to certify the presence of all the papers and people required by law to be present, to ensure that buyers or sellers who do not speak Spanish have a representative with them to translate proceedings, to generally to preside over the signing of the property sales contract and to register the new deeds. Here you will exchange your final payment for keys to your new home.

Transaction Costs

As a general rule, you need to add 10 to 11% to the purchase price of your property in Spain to cover all the fees and taxes payable, excluding the costs in arranging a mortgage.

• Lawyers Fees
  
  Lawyers typically charge 1% plus IVA (VAT) of the property price.
  
  
• Notary Fees
  
  Notary fees are made up of a fixed element and a variable element depending on price of the property and the number of clauses in the deeds. If you use a mortgage there will be notary fees to pay on the mortgage deeds as well.
  
  There will also be a fee payable to the property registry to list your property (and mortgage) on the register. As with notary fees, this amount will depend on the price of the property and mortgage amount, if used.
  
  In general, the combined notary and registry fees are approximately 1% of the property price.
  

• VAT (IVA) or Transfer Tax (ITP)
  
  ITP applies to resale properties and is payable on completion. IVA applies to off plan properties and is payable with each instalment. Both are currently 7%
  
  
• Stamp Duty (AJD)
  
  AJD is only payable on the purchase of off plan properties and is currently 1%. It is payable on completion.
  
  
• Mortgage Costs
  
  Using a Spanish mortgage to buy your property will increase the amount of taxes, notary fees and registry frees, according to the amount you wish to borrow. There will also often be an arrangement fee which is typically 1% of the value of the mortgage.