Buyer's Guide To Spain
Buying property in Spain is now more popular than ever, with increasing numbers of people following their dream in purchasing a holiday home, buying property to rent out or moving lock, stock to the sun. The British love the pleasant, healthy climate and in recent years the Spanish local authorities have made great efforts to increase the number of foreign tourists and residents.
Now is a good time to buy property in Spain as European interest rates are low and there is a wide selection of property options available, from developed plots, farmhouses and village locations, through to villas, townhouses and new apartment developments.
Buying a property abroad is an exciting experience. However, you must go looking for your home with an open mind. You'll soon realise that it is virtually impossible to find exactly what you want, so you may need to compromise on some issues. Using qualified professionals will protect your interests, making the purchase of your home in Spain a risk free and stress free experience.
1. Settle on a region - Spain is a big place. Consider the location first and foremost. Decide on a particular town, village, development or hillside where you'll want to spend a lot of your time, or even live permanently. This involves a whole series of individual choices. Research the area to find out what it is like in different seasons, what facilitates are available and the travel times to different places. And ask yourself, would you be happy living there? Look at estate agents in the region and find out the prices that you would expect to pay.
2. Think about the kind of property you are looking for - The area, size, number of rooms. But keep an open mind. It could be worth looking at different types of properties in different residential areas. By looking at a variety of homes you'll build up your knowledge of the present market values in the area you are looking.
3. Speak to estate agents - Only negotiate with those that are officially registered and hold a licence. Make sure you feel comfortable with the agent and start looking at as many properties as you can. What you'll need the house for will change your considerations. If you're moving to Spain you may want somewhere quieter, but if you plan to rent out the house you may want somewhere more commercial etc. A good agent will help you through the whole purchasing procedure. Remember, if you feel the agent isn't right, look for an alternative who will give you the service you expect. .
4. Research all legal issues and costs involved. Find a Solicitor (abogado) to advise and assist you - Before you have decided on a property in Spain it is important to be fully aware of the legal process and costs involved in your property purchase. Obtain professional. advice and check your finances take account of these additional costs . Whatever housing option you choose, your experienced solicitor should anticipate all contingencies.
5. Organise your administration - There are administrational factors that need to be considered prior to your house purchase
6. Making an offer - Make your offer in writing if possible (of course, subject to contract), and include not only the price, but also the amount of deposit, when you are prepared to pay it, when you are prepared to complete, what you consider to be included in the price (for example furniture and fittings if applicable) and, an often neglected point, that all machinery equipment and installations should be in normal working order.
7. When an offer is accepted - The solicitor takes the legal responsibility for checking the land registry and if all is well will then prepare a private contract which will bind both parties to the deal (you may be asked to lodge a deposit on the property, to take the property off the market). The solicitor will next prepare the public deeds (Escritura de Compraventa) for signature in front of a Spanish Notary. When the balance of the purchase price is paid and vacant possession of the unencumbered property is granted, the sale is completed.
8. Immediately after completion - The notary will fax details of the title deed to the local land register to inform them of the identity of the new owner. This will prevent the property from being sold twice. The notary and the land register act together to protect and guarantee your interests. Your solicitor can also arrange for the transfer to your name of utilities and services such as water and electricity and organise their payment through a local bank.
Buying off-plan/new build
These properties have yet to be built. Buyers purchase on the basis of only seeing a show home or development plan. Advantages - you can choose the perfect location and pick from a number of styles and designs (both exterior and interior) to construct the villa/house that you would like to live in. It's a more affordable option as payments for new builds are made in instalments, with final payment after the finished building is delivered. Disadvantages - because payments are in instalments a substantial initial deposit is required. This option can also take some time as you wait for the house to be completed. Check future plans for the area. Remember, further builds may ruin the views you have purchased.
These are older houses that are up for sale. Advantages - you actually see the finished product. The moving in process could be as easy as buying furniture and arriving with your luggage. A significant number of resale properties are sold with their furniture so it could be even easier. Disadvantages - you may have to compromise in other areas. If the property requires a lot of work consider the maintenance or replacement costs. Call local handymen, local English papers in the Spanish region should have adverts. Plan realistically the cost of 'doing up' a whole property.
Simply means housing estates. Beach-frontage for urbanizaciones is now at a premium. If you decide to forgo a beach frontage, you should expect a lot more inside and outside space for the same money. Advantages - convenience, both in the process of house purchasing and responsibilities of property maintenance. Facilities, ready-made social contacts, greater security, lower taxes and the possibility of owning a home in a location where fully detached properties are hugely expensive. Disadvantages - high community charges, inflexible and restrictive community rules, difficult neighbours, lack of space and privacy and lack of control over the future of the development.
Detached, purpose-built holiday villas usually found on the Costas. You'll pay more for a detached villa than for a house of equivalent size and comfort on an urbanizacion.
Usually built as holiday homes on the Costas. Advantages - these are usually the cheapest places to buy on the coast. Disadvantages - offer limited comfort plus the flats are often so reasonably priced because they're in the middle of resort towns where noise could be a problem.
Town and village houses -
Small inland towns and villages have a lot of properties but limited outside space as groups of properties tend to be clustered together. Advantages - the size of these properties can be quite deceptive and tend to follow the traditional Spanish decoration. Disadvantages - older houses may require checking and new work with regard to wiring and plumbing.
A plot of land or an estate outside of or in-between towns and villages. Properties advertised as fincas can run from tumbledown farmhouses to lavish modern villas. Advantages - They are often on their own land in the countryside. Fincas generally come with a substantial amount of land, which may include olive groves and fruit orchards. Disadvantages - you won't be on the coast front, and to find cheap land or run down properties you'll probably have to look further inland.
The solicitor will take care and assist you in all the different steps involved in the transaction. There are many excellent English-speaking solicitors in Spain. Choosing the right solicitor is your guarantee that Spanish legal requirements are met, the property is registered in the vendor's name and that it is free of any mortgages, charges, encumbrances, debts or other liabilities. Clear everything with your solicitor. Do not sign any contract or agreements with an agent, get them sent to your solicitor. They will negotiate and discuss the purchase terms with the seller's solicitor. The terms should not be limited solely to price but should cover in detail all your requirements like the completion date, the form of payment, etc.
Typically around 10%
EITHER - I.V.A. (VAT) on new construction - 7% of the contract price (16% on land)
OR - Transfer Tax (Stamp Duty) on resales - 7% of the declared value
PLUS - Legal Fees - 1% approximately, Notary and Land Registry Fees - 1% approximately, Title Deed Tax - 0.5% of the declared value, Plus Valia tax on any increase in land value - Varies, and may not even apply
- Do you prefer the town or country?
- Do you want to be inland or on the coast?
- Do you want to be isolated or in the thick of it? (Most people prefer to be within about an hour's travel time of a town)
- How much outside space do you want?
- Private house or urbanisation?
- How close do you want to be to your neighbours?
- How close do you want to be to shops, bars and restaurants?
- Where's the nearest public transport, how often does it run, what time does it end?
- How far is the beach?
- How far is it to sports facilities, golf, tennis, swimming etc?
- How good are the local health & social services?
- Arts and entertainment, what's available in the area?
- Neighbours, what are they like and how much do you want to see them?
The Estate Agent
Once you have chosen the right estate agent with the necessary experience and knowledge of the property market, they will help you find a suitable property. The agent will advise as to the best areas to invest in, comparing prices and qualities.
You should ask for details of the out-goings payable every year to maintain the property:
- Annual Real Estate Tax (1131)
- Community fees
- Charges for rubbish collection
- Water rates
- Electricity charges
- Property Income and Wealth Tax
Making an Offer
Consult your solicitor, if they are happy, get your agents help and you can make an offer, confirm the details in writing, covering all the following points:
- The price
- Declared price on the escritura (title deeds)
- Payment method and currency
- Fixtures and fittings
- Furniture (with inventory)
- Who pays which taxes
- This way you only have to negotiate once and there should be no hold ups. The skill of the agent comes into play carefully bringing the vendor and buyer into an agreement.
Having funds available at this time will convince the vendor you are serious and not just fishing.