Guide to Property Purchase
Before you have decided on a property in Spain it is important to be fully aware of the legal process and costs involved in your property purchase. The following is intended as a guide only and is in no way a substitute for professional advice.
Appointing a Fiscal representative, solicitor
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. You are free to appoint a solicitor of your choice, or if you prefer we can recommend one.
NIE number (Numero de Identificacion de Extranjeros).
An N.I.E. number is essential for any major purchase in Spain, i.e. House, Car etc. We can help you to complete a short form and go with you to the Police Station with your passports plus copies. This may take 7-10 days to come through but we can collect on your behalf if you have returned to the UK. It is recommended that you apply for your N.I.E. at the early stages of arrival.
Applying for a Bank Accounts
It is necessary to have a Spanish Bank Account and we can help you with this simple process.
Applying for a Mortgage
You can choose to apply for a mortgage in Spain or from the UK.
Applying for a mortgage in Spain is a straight forward process, as in the UK. You will need to prove that you have an income or sufficient funds to pay the mortgage. The level of mortgage offered is directly dependent on your financial status and the value of the property estimated by the Lenders.
There are generally 2 levels of mortgage offered, one for residents and one for non-residents. For non-residents the mortgage offered is generally around 60% of the declared value, for residents it is usually around 80% of the declared value of the property.
Purchasing a Property
Once you have decided on the property you wish to purchase and the terms and conditions have been negotiated with the vendor then a deposit of aprox.10% of the purchase price is required to secure the property The remaining 90% is payable on the signing of the title deeds before the Notary.
If you are purchasing a new construction then the constructor will ask for stage payments to be made on the property. Your appointed solicitor will then carry out all necessary searches on the property; to ensure that it is owned by the vendor, there are no outstanding debts or charges on the property and other legal encumbrances. Once the searches on the property are satisfactorily completed and the deposit has been paid in accordance with the terms and conditions of the contract then the title deeds are signed by both the buyer and the seller before the Notary.
The Notary (Notaria)
This is a solicitor appointed by the Spanish government to witness the signing of all legal public documents. In this case the title deeds (escritura) of the property. He represents both the buyer and the seller. The Notary fees must be paid at the time of the signing of the deeds. The Original signed document is retained by the Notary who will apply for a formal change in the land registry. The purchaser will receive an initial legal copy of the title deed which is signed and stamped by the Notary. The official title deed can take a while to be processed and until then this is your official proof of ownership.
We recommend that you allow a sum of around 11% of the price of the property to cover payment of purchasing fees e.g. land registry fees, notary fees, legal fees and taxes.
Transfer Tax or IVA (vat)
8% for resale property or 10% IVA for a new property.
Property Registration Fees
These are charged by the local Land Registry Office to register the property in your name. Average costs are between £120 – £300, depending on the purchase price.
These are calculated on a sliding scale.
Plus Valia (land/capital gains tax)
This is the municipal tax (rates) which is calculated by the local town hall on the official increased value of the property since the previous property transfer value was established. The calculation is based on the ratable value of the property and is a ‘one-off’ payment.
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.
If you purchase a property in an apartment block or urbanisation you will automatically become a member of the “Community of Property Owners” and are obliged to pay the annual fees. The services will vary in each community but generally the fees go towards the up-keep & maintenance of the building, gardens, pool and communal areas. As a member you have the right to voice your opinions and vote at the AGM’s.
Charges are both metered, so you only pay for what you consume.
The standard charge for a telephone line installation from Telefonica 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 and your Lawyer 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 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 him prior to the signing of the deeds, this will complete the purchase and allow you to sign at a later date.
-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 1 week and 3 weeks.
-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.
-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.