Purchasing Process Print E-mail

See generic Purchasing Process in addition to this section.

Buying a property in Spain is a fairly straightforward process, but there are some aspects  that differ from, the UK.

There will be a slight variation depending on whether it is an off-plan or resale property purchase.  Technically, when purchasing an off-plan property, it is a contract from a developer that is being purchased, which commits to delivering a building on a certain site, in a described style, by a certain date.  If the plan is to sell on this contract, prior to completion of build, then there must be a clause in the contract, allowing this to happen.

In each case the completion of the sale will take place before a Notary (a notary public is an officer who officially records documents before they can have legal effect), at which time all final monies will be paid – you do not have to be present for this as Power of Attorney can be given to a solicitor.

For an off-plan property, a deposit (sometimes called a reservation fee) will be paid to take the property off the market at an agreed price.  After anything up to 60 days (depending on the terms of the developer) another 30% will be required to be paid and then on completion, the final balance will be paid, minus the initial deposit.  In some cases the payments may be staged to four as some developers ask for a lump sum at a certain stage, for example, when the roof goes on.  This means the payment plan can be a little easier as it is four smaller payments, sometimes over a marginally longer period of time.

In the case of a resale, a deposit will also be required to take the property off the market at an agreed price and then a further 30% in 30 days.  In this instance though, the completion will be much sooner – sometimes only one month or 6 weeks later. The completion process will also be before the Notary, when the remainder of the outstanding price needs to be paid, less the original deposit.

Financing your Spanish property

There are a number of ways to finance the purchase of a Spanish property, just as you probably did when you first purchased a house in your own country. Mortgages of 20 and 30 year terms, along with mortgages of up to 100% (interest only and subject to status) or 70% of the value of the property (for non-residents) 80% (for residents), are now available in Spain.

Bank Loans and Mortgages

With the introduction of the euro (€) and the lifting of almost all exchange controls, both residents and non-residents may now obtain loans and mortgages against their Spanish property, in any currency from any bank in the world - if they can find a bank willing to lend against property in another country. Even very long-term endowment mortgages are beginning to appear, offered by Spanish branches of UK lending institutions.  The good news is the inflation and interest rates are at an all-time low in Spain. Spanish bank mortgages are now being offered at extremely competitive rates - some of the lowest in Europe.

The bank will usually ask for:

  • P60
  • Last 3 payslips
  • Last 3 bank statements
  • Bank reference

If you are self-employed, then they will ask for:

  • Last 3 years accounts from your chartered accountant
  • Copy of your last tax return
  • Last 3 bank statements
  • Bank reference

Purchase Costs

In addition to the purchase price of the property, an extra 10% of the purchase price ought to be budgeted for, to cover taxes and fees:

New/off plan:

  • 7% IVA of the purchase price (equivalent to VAT paid in UK, not including stamp duty)
  • 1% Stamp Duty of the purchase price paid to the Government
  • Notary fees & Land Registry fees – usually around 1% of purchase price
  • Solicitors fees – usually 1% of purchase price + IVA

Resale:

  • 0% IVA
  • 7% Transfer Tax of purchase price (including stamp duty), if the buyer is under 35 and the property will be the main residence (ie: the buyer is a resident of Spain) then the transfer tax drops to 3.5%
  • Notary & Land Registry fees
  • Solicitors fees – usually 1% of purchase price + IVA 

Glossary:
Abogado - Lawyer, solicitor
Administrador de Fincas - Licensed professional administrator
API - Agente de la Propiedad Inmobiliaria - Real estate agent, member of long established association.
Arbitrio sobre el incremento del valor de los terrenos - Municipal tax on property sales, see plus valia.
Boletin Oficial- Official State gazette, where laws are published.
Catastro- Land Office, Concerned with measurements and physical description.
Certificado Catastral- Catastral certificate describing land and buildings
Comunidad de Propietarios- Community of Property Owners
Declaracion de Obra Nueva - Declaration of new construction
Escritura de Compraventa - Sales contract
Escritura Publica - Registered title deed
Expendiente de Dominio - Ownership Proceeding, to establish title
Finca - Any plot of land or property
Gestor - Licensed administrative expert in Spanish procedures
GIPE - Gestor y Intermediario de Propiedades y Edificios, title awarded by association of estate agents and property administrators.
Hipoteca - Mortgage
Impuesto sobre Bienes Inmuebles (IBI) - Annual real estate tax
Impuesto de Transmisiones Patrimoniales (ITP) - Property transfer tax
Jurado de Expropiaciones - Special tribunal for expropriations
Justiprecio - Doctrine of fair price by the State in forcible purchase
Ley de Costas - Shores Act, protecting coastline
Ley de Tasas - Law of public fees
Ministerio de Obras Publicas y Transportes (MOPT) - Ministry of Public Works and Transport
Nota Simple - Certificate of registration from Property Registry

Notary -  A notary public is an officer who can administer oaths and statutory declarations, witness and authenticate documents and perform certain other acts. Generally speaking, for the purposes of authentication, most countries require commercial or personal documents which originate from or are signed in another country to be notarized before they can be used or officially recorded, or before they can have any legal effect. In some countries, notaries are required to undergo specific training in the performance of their duties. In the United Kingdom, for example, a notary public can perform any task a solicitor or other lawyer can perform, as part of their notary public duties, with the sole exception of representing others before the courts, unless they are also licensed as a barrister.
Oficina Liquidadora - Tax office that assigns values on sales
Plan General de Ordenacion Urbana (PGOU) - Town development plan
Plan Parcial - Plan of building plots on urbanisation
Plus Valia - Municipal tax on property sale
Proder- Power of attorney
Registro de la Propiedad - Property Registry
Reja- Iron grillwork protecting windows and doors
Reposesion - Repossessed property
Subasta - Auction
Subasteros - Professional auction buyers
Topografo - Property surveyor
Urbanismo - Town planning department
Valor Catastral - Assessed value of property for tax purposes