A guide to buying a property in Spain

General Information: How do I buy the property?

Purchasing property in Spain is just as easy as anywhere else in the World, although it might be different to what you are used to in your country.
First of we advise you to use an experienced and professional estate agent.
All reputable agents should be registered and licensed. As of 2001 this was not necessary.
N.B. Do not try to cut corners and you can rest assured that your potential investment is in good hands.

The following is a brief example of a standard property purchase procedure:

  1. Reservation agreement: Normally the purchase is initiated with a signed reservation agreement, which takes the property off the market. The deposit you pay at this stage could be anything from Euros 3,000 up to 10% of the purchase price. Now your Agent will begin to check the registration of the property which will show if there are any charges against it, and the correct ownership of the vendor.
  2. Private contract of purchase and sale: Within a week or two a private agreement is signed between the purchaser and vendor, and at this stage you normally pay 10% directly to the vendor. The purchaser's Agent should determine license of building and that all outstanding debts and rates are paid in full, these could be municipal rates (I.B.I), community fees, electricity and water bills etc.
  3. Bank bonds/Insurance certificates: It is compulsory by law in Spain, that when a property is under construction, that the vendor must provide a bank bond or insurance certificate to all the purchasers as a guarantee of the sums paid during the construction period. In case the property is not finalized or, something happens during the construction, the bank or, insurance company will refund the money paid by the purchaser up to date (plus interest).
  4. Title deeds:
    • New constructions: When a new house etc. is finished, the agent, purchaser and vendor appear before a Public Notary where completion takes place. The Notary issues the Title Deed "escritura" with the new owners and seller's name. If the purchase is financed with a mortgage, the bank representatives are present in order to pay and sign the mortgage. In the case of a cash settlement this is then paid according to agreement. The Title Deed should then be registered by the lawyer in the corresponding Land Registry.
    • Apartments: The Title Deed to an apartment will transfer not only the free hold of the apartment but also the freehold to a prefixed percentage on the common elements of the complex such as staircase, gardens, swimming pool etc. This percentage also governs the owner's contribution to the general maintenance of the property.
    • Used properties: Are very much the same as above.
  5. Additional costs to the purchase price: The law states that the vender should pay what is known as "plusvalia municipal" (which means a municipal tax) every time the property changes owners. It is quite complicated to calculate, but basically depends on the property's tax value, its location and how long it has been owned by the vendor. Typically between 300 and 3000 Euros, all other costs are paid by the purchaser. However, many vendor's expect the purchaser to pay for their plus valia municipal and whether or not this is the case should be established from the outset as this may need to be added to the purchase price. Lawyer's fees for purchases are usually 1% of the purchase price plus VAT. Notary and Registry fees combined (where there is no mortgage involved) are typically 900 Euros on a 150.000 Euros property and 1200 Euros on 300.000 Euros property. First-hand (new) homes pay 7% VAT plus 1% Stamp Duty and second-hand homes pay 7% ITP, Impuesto de Transmisiones Patrimoniales ( Capital Transfer Tax ) plots from the promoter are charged at 16% VAT plus 1% Stamp Duty.
  6. Transfer costs: You should allow an extra 7.5% to 10% of the advertised price to complete your purchase in Spain and up to 20% if purchasing a plot.
  7. Your will: It is very advisable to draw up a Will in Spain regarding assets (such as property) in Spain, in order to avoid any kind of problems arising from the differences between Spanish and the purchaser's home country law (if not a resident)in succession matters and the execution of a Will from one country to another. So it is always sensible to draw up a Will in Spain, in which foreign people state that the applicable law is the law of their country, and they can decide to leave their assets in Spain to whom they would like according to their personal country law.

You will also need to bring with you some documents such as:

Acquiring your NIE number

  1. Consul:
    You can apply to your nearest Spanish Consul in the U.K. and we would advise to approach them as soon as possible as this takes some time.
  2. Internet:
    You can get the application forms from the internet at www.mir.es.
  3. Presentation in Spain:
    With the above filled in application form, a copy of your passport plus a copy of the property purchase contract of the house you wish to purchase you then present this to the nearest police department handling foreign affairs. Once registered you should receive your number in ± 20 days.