Buying Process in Spain
Unlike other countries, real estate agents in Spain work primarily dependent on one another, only a few work completely independently. It is therefore important to note that most agencies have access to the same properties. This simply means that you as a buyer, should find yourself an agent with whom you have a good connection.
The first contact with your real estate agent will usually be a general conversation about your requirements. This is done to create a buyer profile by gathering the information needed to clearly understand what needs, criteria and wishes you might have. This can be done by phone, email, video call and/or of course, face to face.
Once the profile is created, your real estate agent will search through the available properties and contact you again with options for you to browse. If you find something of interest, viewings are arranged of the selected homes. Viewings can be done in person or via a video tour, should you not be available in person.
1. Which area do you prefer?
First and foremost, it is important to find out which area you prefer.
The Costa del Sol is big and there are many wonderful and exotic areas. Spend a few days exploring the various coastal cities and areas. It may also be a good idea to visit the areas again outside the high/summer season. As seasons change, so will the atmosphere and there will be fewer people and tourists; which means less life in the street and a more ordinary everyday life rather than a holiday atmosphere.
2. What type of property do you prefer?
Off Plan – this option has become very popular with the Scandinavians. Nowadays there are almost only top modern minimalist and nordic style constructions being built. It involves high quality product and design, large windows for natural light, relatively large rooms and good sized terraces.
They also include modern kitchens and appliances, as well as bathrooms as seen in 5* hotels. The common outdoor green areas with refreshing pools and private parking are some of the must-haves of a new development.
If you prefer this option, you must of course remember that you have to buy furniture etc. This could include, both indoor and outdoor furniture as well as getting internet.
Resale – this option is also quite popular with those who want to put their own touch on the property. Here you can expect a more Andalusian charm, with more soul in the homes than what you might experience in new developments. Here you should consider that there may be something in the home that needs to be renovated. Maybe it needs repainting or there may be fixtures etc. that need to be replaced or upgraded.
First and foremost, you will be asked to provide contact details of the real estate agent or seller as well as the property’s location, size, purchase price, acquisition date and other details agreed with the seller or the real estate agent.
In case of a property purchase with inventory; an inventory list is made and sometimes photographs are taken so support the list. The inventory list will be signed by both buyer and seller, so as to best guarantee unnecessary surprises upon acquisition. If possible, make sure the property is checked the day before or the same day as deed signing.
Then a reservation and a purchase contract will be drafted. In order to prepare a purchase contract and a power of attorney, the following information must be provided: full name, address, position, marital status and whether you have joint or separate ownership and a copy of Passport, and for married couples each person’s first names (this must be used for the NIE number application).
To be able to purchase a property in Spain, it is necessary to have a NIE number (identification number). All persons signing the deed must have a NIE number. You can apply for this at your Spanish Embassy, or we can help you apply for it in Spain with a power of attorney from you.
The NIE number must be registered with Agencia Tributaria (the Spanish Tax Office. This must be done in person or by power of attorney).
With the above information, a reservation contract is drawn up on the property, which means that it is becomes reserved on the market. Here you will usually have to pay between 3,000 – 6,000 euros, depending on the price of the property, etc. The lawyer then reviews the property’s documentation to ensure ownership, outstandings, resident permit and owner’s association in the property, etc.
The cost statement of the price and costs regarding the purchase is usually sent as soon as all relevant documents in the case have been received and reviewed. You can then draw up a purchase contract where approx. 10% of the purchase price is paid, minus the reservation amount paid. This is usually signed within 10 – 15 days of the reservation contract.
The purchase contract specifies the last day of the deed signing, the possibly attached inventory list, and other agreement details that may need to be completed prior to the deed signing.
The remaining sum according to the cost statement, should normally be in the lawyer’s client account at least 5 working days before the actual signing of the deed. This is done as there must be time for the bank to issue a certificate, stating that the money has come to the country legally, and to prepare various bank checks for actual deed signing.
At the final notary meeting, the deed is signed. The outstanding sum is paid to the seller and the buyer receives the keys to the property.
Thereafter, the property must be registered and taxes paid, etc. It can usually take up to 3-4 months before the property is registered.
In addition to this, there will made be a transfer of utility contracts and change of ownership with the authorities etc. For this purpose, a Spanish bank account must be used for payment of the various utility contracts.
If you already have a Spanish bank account, you need to provide the bank’s name and account number, otherwise the lawyer can help you open a Spanish bank account.
If you want to take out a loan in the property, it is important that the bank or credit union is informed as soon as possible, to start the process, such as submitting documents on the property, assessing the property, etc.
Please note that if you take out a loan with a bank or credit union, you are usually required to take out both life insurance and property insurance.
Regarding insurance you should yourself take out a home owners insurance on the property.
In Spain, properties are bought as seen. Possible improvements or modifications must be made prior to acquisition or included in the purchase contract. It can be very difficult to reclaim after the acquisition. As an option you can get a condition report made. The cost is at the buyer’s expense.
Please note that when you receive keys to the property there may be multiple sets of keys in circulation. Therefore, it is recommended to replace all locks.
By transferring the utility contracts regarding older homes; electricity, water and possibly the gas companies can require the installations to be updated in accordance with current legislation. This means that a “Boletin” must be made before the transfer can take place, the cost of this is usually paid by the buyer.
In new construction it can take up to 15 days before you can expect water and electricity connected to the property.
Spanish property tax also called IBI (when buying new construction) sometimes has to be collected at the municipality and paid once a year. To claim it you should bring a copy of your deed, as well as the passport and NIE number.
In case of Spanish Property Taxes (IBIs) in older homes, the lawyer typically applies for a change of ownership and that it is paid using the payment service in the bank.
However, it is IMPORTANT that you keep an eye on whether it is automatically paid.
Non-resident tax, also called model 210, is a tax you are required to pay in Spain as a nonresident. It is a type of tax return that you must present each year, usually the lawyer can offer to prepare this annually.
The Andalusian government has approved a reduction in the Property Transfer Tax (ITP). The three rates, currently set at 8, 9 and 10%, will be replaced by a rate of 7% until the 31st of December 2021.
COSTS in addition to the actual price of the property, as a rule of thumb, approx. 11 – 13% of the price should be calculated for payment of transfer tax ITP, which fluctuates between 8-10% depending on where in Spain you buy and at what price, notary costs, registration fees, attorney’s fees etc.