Guide to Buying a Property in Spain
ANALYSIS OF COSTS AND LEGAL REQUIREMENTS
Buying a property in Spain can be as simple or as difficult as you, the buyer, wishes to make it. When you buy with The Experience Group we will ensure that your venture into the Spanish property market is secure and hassle free. If you are not buying with us you need to understand the rules and see that your representative acts correctly on your behalf.
OUR FIRST ADVICE TO YOU IS: DON’T JUST LEAVE THEM TO IT; MONITOR THE WHOLE PROCESS FROM START TO FINISH YOURSELF.
In our experience in Spain over the last 40 years, it has become obvious to us that those clients, who seek out good, sound advice initially, ensure that the rules are being adhered to and who are ready to follow certain guidelines, are the ones who inevitably find the road to that secure and happy investment.
Full information on costs and procedures as included in this document are considered by this company and its experienced principals as essential for our many clients.
AN EXAMPLE OF AN ANALYSIS TO BUY PROPERTY, AND RUNNING COSTS
To purchase a property in Spain access to the following documents is essential and will not only ensure you the buyer a secure title, they are also legally essential in the preparation of the new deed and in after-sale alterations to Electricity and Water standing orders etc.:
- The old title deed (escritura)
- A Community certificate where applicable signed by the President of the community
- Up-to-date copy of search from the registry (Nota Simple)
- Receipt for Town Hall charges & rubbish collection (IBI) & copy of Catastral for the current year
- 1st Licence of Occupation or if not available Certificate of No Urban Infracciones
- CEE Energy Certificate
- Electricity Receipt
- Water receipt where applicable.
When a client has found the property of their choice, a reservation fee is usually paid to take the property off the market, with a 14 day cooling off and checking of paperwork before the balance of up to 10% deposit will normally be required.
Having collated and authenticated the legal status of the above documents, our conveyance department, or your representative, is then in a position to prepare for you the purchaser, a private contract of sale. On payment of the deposit to secure the property the contract of sale should always include: Details of Buyer and Seller, Registration details and Description of the property, Sale price, Completion date, and clauses to protect both buyer and seller in the event that either back out of the deal or if you are unable to complete due to problems with the legal status of the property. Be sure to have a translation of the private contract into your own language.
Now is the time for you the buyer to consider whether you need a mortgage or not. If you do, contact a bank or a professional mortgage broker and start the process immediately. To do that you will require a copy of your new contract, and your personal income details. The bank may ask for other information depending on which bank you are dealing with. We offer a mortgage service which can offer you up to 70% of the valuation price over 10 – 30 years at good interest rates. Ask us for details.
IT IS NOW A LEGAL REQUIREMENT THAT NON-RESIDENT BUYERS REGISTER WITH THE LOCAL NATIONAL POLICE TO APPLY FOR AN N.I.E NUMBER. (Identification number for foreigners). This will be required for the property to be registered in your name and for all future fiscal transactions in Spain.
If you are a non-resident purchasing property here in Spain, it is a legal requirement for your bank to produce a bankers certificate to confirm where the funds have been received from, including any deposit paid, and this must be produced at the time of signing the title deed in front of the notary. If both parties are non-resident then proof of payment overseas is required from the country of origin.
A new title deed of purchase (escritura de compra/venta) will now be prepared in the notary office for signing on completion. Remember if you do not fully understand the language you will need a translator. We can assist with translations if required.
Once a deed has been prepared and the purchasers have arranged the balance of their funding, the purchaser under our supervision, or their legal representative, will be required to attend a Notary Office to sign the new deed. At that time the deed will be signed, the vendor will hand over the keys to the purchaser on receipt of final payment and you should then receive a copy of the Deed of Purchase (Escritura).
The signed document (escritura) will then be registered in the name(s) of the purchasers. This is carried out on your behalf by experienced staff from our in-house conveyance department, by your representative, or by the Notary. THIS IS VERY IMPORTANT - MAKE SURE IT IS DONE.
Some 1 to 2 months later you should receive your deed back from the registry duly stamped and entered in the archives in your name.
Summary of the Costs of the transaction.
(i) Notary fee. (ii) Registration fees. (iii) Presentation costs. (iv) Deed transfer tax or V.A.T. (8% of declared value pm properties under 400,000€ and 9% plus over that figure).
Total of above costs = approx 10% Approx. of declared value.
The taxes are based on the sales price in the escritura (title deed) at the point of purchase but there is a possibility that the tax office may request a revised additional “deed transfer tax” if the fiscal value (calculated on a coefficient of the rateable value) is greater.
Throughout the whole of the above procedures and after the purchase including the transfer of standing orders for electricity and water, opening of bank account, and for at least one year after buying your property, we will be here at your service as we have been for the last 40 years. Or you will be represented by your own agent.
In the case of purchases through our group of companies ALL property transactions are dealt with at point of signing by our chairman Alan James or by one of our qualified staff who have many years of experience in these matters.
New Laws relating to Foreign Purchasers of Property in Spain
- Fiscal representative. You may need someone to present your tax returns etc., and we recommend you appoint us to handle this for you for a small fee. If you use someone else, please be aware that this fee should be minimal.
- Offshore companies used as vehicles to purchase property in Spain are taxed annually at 3% of rateable value. We do not recommend the use of such companies other than under very special circumstances or for larger properties. We can discuss this with you on request.
- Capital gains Tax on sale of property. All vendors, both Spanish and foreign are required to pay capital gains tax where applicable on the sale of property. In the case of Non-residents selling, the purchaser is required by law to ensure that 3% of the declared sale price is passed to the Tax Offices as a payment on account of any accountable capital gains tax. If you own a property bought before Dec 1986 Capital Gains does not apply. For residents different rules apply. We can handle this for you through our fiscal department.
- For added protection to purchasers, notary public offices are required by law to check for clear title, Community & Local rates payments and all outstanding taxes. This is confirmed to you in deed of purchase.
SPECIAL NOTE FOR PURCHASERS IN RURAL AREAS.
Due to the possibility of lack of diligence having occurred in segregation and construction of country property and unless you are dealing with "the experience group of companies" we recommend that country property purchasers apply for a mortgage on purchase from a bank or a professional mortgage broker. Our reason is that this offers you added security on your purchase. Remember, a bank will only loan you money for a mortgage on property that is correctly registered.
Over the last 40 years this Company has built or sold over 6,000 properties in Spain.
This document is prepared as advice only to potential clients, and does not form part of any contractual relationship with other parties.