The Buying Process
Thinking of purchasing a property in Spain? Superb! Finding the right property is one exciting step and understanding the buying progress is another important step. Here we give you an overview of the buying procedure. When you find your dream home and you are ready to make an offer it is normal practice to sign a reservation agreement (contrato de reservación) and accompany your offer with a deposit of 6000€. The deposit shows the vendor that you are committed and with this first step of the negotiations the vendor should be prepared to take the property off the market once the offer is accepted and can be made to either your real estate agent or your lawyer.
The next step is to instruct a lawyer, it is good practice to meet with a lawyer during the property search as your lawyer can answer any legal queries you may have and assist you in acquiring a NIE. NIE is your national identity number, and is required by law for any person who wishes to purchase a property in Spain. The next step is to set up a bank account in one of Spain’s national banks. Don’t leave these crucial details to the last minute . Be prepared and organize in advance with your Spanish lawyer.
Your lawyer will check the legal paperwork’s of the property you wish to purchase, this is important to be sure there are no outstanding debts on the property and that your property has all the correct licenses in place. The next step the signing private purchase contract (Compromiso of compraventa o Opcion de compra) where a payment of 10% of the purchase cost is made. The final stage is the completion, the signing of the deeds (Escritura de Compra Venta). This stage you pay the remaining balance plus the applicable taxes and with this the purchase is registered at the Land Registry and you are officially the new owners. In some cases you may go directly from offer to completion, depending on the transaction timescale.
Taxes vary according to the type of property you buy, a resale property or a new build. For resale property the buyer must pay a transfer tax, notary fees and registration of the property, legal fees and other small taxes. Transfer tax is 8% for properties up to 400.000€, 9% for properties from 400.001 to 700.000€ and 10% for properties above 700.001€. For new build properties the buyer pays a VAT tax (instead of transfer TAX), notary fees, and registration of the property, his own legal fees and other small taxes. The total amount is 12% to 13% of the purchase price.
As a property owner there are ongoing running costs including the property tax (Impuestos sobre Bienes Inmuebles), Basura (garbage collection) and the wealth tax (property tax for non-residents). Properties within an urbanization have monthly community fees (gastos de comunidad). Aside from these you have utilities, electricity, gas, phone, internet etc.
If you require finance for part of the property purchase, your agent can refer mortgage brokers to compare lending conditions from your bank. Foreign exchange bureaus can help save on currency exchange when required, your agent will be happy to advise independent specialized companies. If you require a property survey this can be done prior to the purchase of a property in Spain. Ask your agent for a local property surveyor.