The Buying Process

The purchase of property in Spain is, as you would imagine, very different to buying in the UK although in most cases it is much simpler and quicker. However you are always recommended to appoint the services of a local English speaking lawyer (known as Abogado) who will carry out all the necessary legal checks ensuring title to the property and that there are no debts against it, and for a new property that the developer has all the correct building permissions.

Once you have decided on a property, whether it be a resale or a plot and build, the first step is normally to pay a ‘Reservation Deposit’. For a resale property this is usually 10% whereas for a plot and build this can vary from one developer to another but is typically from €3,000 - €10,000. These deposits should be paid via your lawyer who will have firstly conducted the required checks. If at this stage you change your mind the deposits are usually non-refundable, in the case of a resale if the vendor changes their mind then your 10% deposit is returned to you and also the vendor is legally obliged to pay you a further 10% in recompense.

Following the payment of deposits a Purchase Contract is drawn up, in both Spanish and English, with details of the purchaser and vendor, the property with plans of the villa and plot if it is new, the completion date and the terms of payment.

For a new build, within 1 or 2 months of reserving, you will usually be expected to make a stage payment of approximately 30% with a further stage payment at roof level and finally the balance upon completion of the property.

You need to be aware of the various fees and expenses that you will incur on the purchase of your property in Spain. Firstly there are your lawyers fees, then there are Notary and Land Registry fees – both based on a sliding scale of charges according to the purchase price, but by far and away the largest fee to take into account is the 7% transfer tax on resale property and 7% IVA (VAT) on new property. In all you are advised to allow around 10% in total for fees and legal expenses. All property prices shown on this website are nett of any tax or IVA.

The Notary is a public official acting quite independently of either the purchaser or vendor, their role is to witness the signing of the Escritura (title deed) and ensure that certain legal requirements have been met. The signed Escritura is then forwarded to the Land Registry for recording in the purchaser’s name, a copy of which is subsequently made available to the purchaser. Be prepared for the fact that timescales for completion on resale property can be as short as 4 – 6 weeks, generally much quicker than the UK, although a longer period can be agreed by prior arrangement with the vendor. At this point you are now the proud owner of a piece of real estate in Spain.

Should you at any stage of the buying process be unavailable in person to sign any of the documentation then it is possible for you to arrange a Power of Attorney. This gives your lawyer authorisation to act on your behalf in certain specified matters.

One of the services that the lawyer will usually carry out for you is to obtain the NIE, an identification number for foreigners, required for everyone buying a property in Spain. The purchase is registered against this number along with future fiscal/financial matters.

Generally if you are purchasing property in Spain you will be required to open a Spanish bank account. This will have been done at a fairly early stage of the buying process in order to arrange payment of deposits and any other associated expenses. Opening a bank account is a fairly straightforward process, all that you will require is your passport, a small amount of Euros to open the account with and time to complete the paperwork.

More and more clients are considering mortgages to assist with the purchase of Spanish property. These are widely available to nonresidents, the banks applying similar criteria as in the UK. For employed clients they will need to see payslips or your last P60, and for self-employed clients, audited accounts. Most banks will allow you to borrow upto 70% of the property’s value over a repayment period of 5 – 20 years depending upon your age.

Lastly, you should also be aware that it is advisable to discuss with your lawyer the making of a Spanish will if you are buying property. The inheritancy laws in Spain are quite different to the UK and therefore you need to ensure that your property and assets are adequately protected.

Hopefully this section has touched on most areas of the buying process, however should you have any further questions we will endeavour to answer them.