Buying in SpainBuying a property in Spain can seem rather daunting at first, however it is quite straight forward although a little different from the process in the UK. As a general rule, the buying process can be separated into 6 steps and below we have noted approximate costs next to each step. On average, you should add between 10-13% to the purchase price of the property to cover all charges and taxes related to the purchase. These break down, approximately, as follows;
Formal Offer / Deposit (Reserva)
deposit required of 3000€
Once you have found a property you wish to purchase, you will, as in the UK, agree a price with the vendor via your agent. When your offer is accepted, it is usual to pay a reserve deposit of approximately 3000€ as a sign of the buyer's intention to purchase and to ensure the property is not sold to someone else by the vendor.
Lawyer (Nota Simple)
professional fee of 1% of purchase price, plus VAT (at 21%)
At this stage you should appoint a lawyer to ensure that all Spanish legal requirements are met, that the property is indeed registered by the vendor and that it is free of any outstanding debts and charges. A 'Nota Simple' showing this information is requested from the Land Registry. Quite often the estate agent will do this for you. If it is a private sale however you will need to do it.
Private Purchase Contract (Contrato Privado de Compraventa)
deposit required of 10% of the purchase price
Within usually 2 weeks the private purchase contract is signed by buyer and seller. This contract sets out the agreed terms and conditions of the sale, usually including the agreed purchase price and a date for final completion at the public notary. On signing this contract, a deposit of usually 10% is paid by the purchaser to the vendor. This deposit is non-refundable - if the purchaser defaults he loses his deposit, if the vendor defaults he must pay twice this amount back to the purchaser.
Completion (Firma de Escritura)
Notary Fees - charged according to a fixed scale, minimum 300 euros.
The purchase is completed when the public title deeds are signed at the Notary's office, the final agreed payment is made to the vendor and the purchaser takes possession of the house. Non-resident purchasers must present a certificate from their Spanish bank stating that the funds have been transferred from a foreign bank - this will be attached to the escritura. The original title deed will be kept at the Notary's office and an authorised copy given to the purchaser.
Land Registry (Registro de la Propiedad)
Land Registry Fees - usually approx 40% of the Notary fees
Transfer Tax (ITP) - 10% for second hand or re-sale property or
VAT of 8% plus 0.5% Stamp Duty on new property or
VAT of 18% on plots of land, commercial premises or warehouse space
After completion, the deed is taken to the Land Registry where the new owner of the property will be formally registered. This takes anything from 2 weeks to 3 months - once the deeds have been registered and are ready for collection, Land Registry fees
Generally, the vendor pays Plusvalia - a local council tax, calculated by taking the catastral value, surface area of the land and the age of the original title deed. By law, the vendor usually pays this tax, although in Spain everything is negotiable and the vendor may stipulate that the purchaser pays this tax too.
In general, banks will arrange a mortgage up to a maximum of 75- 80% of the property valuation, most European Banks lend on the basis that your total monthly repayments (capital and interest) should not exceed 35% of your net monthly disposable income. How long does it take? Each individual case is different however, you should allow between one and four weeks from mortgage application to the funds being available.
What supporting documents are required for a Spanish Mortgage? As a basic guideline the following documents are required to verify your income:
A copy of your last annual taxes
Copies of your last 3 payslips
If you are self-employed you will need:
Copies of the last three years' annual accounts
Copies of the last three years' Income Tax Calculations
Copies of the last three months bank statements