Direct-
Direct access to Spanish property without an estate agent.
Introduction
Buying a property in Spain in most cases is a simple and straightforward affair. However for things to go smoothly you have to prepare yourself. If you don’t it is easier for things to go wrong and ending up costing more and experiencing less pleasure at the beginning of something that should be a nice experience, buying a home under the sun. In the second home business work a lot of people, most of them reliable but there is always the exception who is just after your money as in any business. This summary guide for instance will help you get a better idea on how to go about it but can in no way be a substitute for advice of for example a good lawyer. That is one thing we wish to emphasize, always use a good, independent lawyer that speaks perfect Spanish and with whom you can also communicate. Doing it the right way and using you common sense it will be straight forward experience.
What kind of a Spanish property do you need.
As always a good preparation includes asking yourself what are you looking for. A romantic country house sounds great but can you stand the loneliness, the maintenance, needing a car for everything. The same goes for a beach front property, sea views are great, no doubt about that, but are you willing to pay the price for those views. Maybe you are mostly on the golf course and at night there isn’t that much more than a black hole to look at. And you probably don’t want to be just over a bar with crowd outside till dawn, exempt when you’re one of the crowd. We are not trying to convince you to do one thing or an other but just take your time to think about what is really important for you at the present but also in the future.
Things to think about.
Will this a holiday home for a couple of weeks a year, an investment property to rent out or a (semi) permanent home. When it is a holiday home you probably just want to get there and relax, so is it low maintenance, how about the garden, etc. If you’re on holiday and the first 3 days you are out there trying to get things fixt you might not relax a lot, maybe it’s fine for the workaholics but for most people it isn’t.
If it is mend to be an investment to rent out, don’t just think about what you like, but what about the potential tenants, is it close to the beach, golf, restaurants and bars, shops, etc. What rents out best, 1 or bedrooms 1 or 2 bathrooms, etc. Of course, capital growth is also important, but don’t get somebody to talk you into buying a one in a life time investment opportunity.
Want a (semi) permanent home than you should also consider healthcare, community, possible language problems, security, accessibility, etc. Do you expect a lot of friends and family to come and visit you, fine but don’t think to much about them, buy a house for yourself, you can probably rent something close by your home. That might be cheaper than buying a (to) big property.
An other important aspect is that you might be buying the house but probably your whole family will use it, is it also a good location for teenage kids. If you are on holiday you don’t want the whole day driving up and down to bring them places.
Never forget how quickly the years pass by. If you are buying a property for the long term then bear in mind how it will suit your needs as they change over time.
About maintenance.
Buying a small apartment in a tourist complex or a country home, get the maintenance
costs clear. Also who does the maintenance of the property and the gardens and for
example pool. If you buy an apartment in a complex those costs are usually included
in the community fees which are set every year at the annual community meeting. If
you buy off-
How big should your property be and what kind?
Don’t buy for others, buy the property for yourself and your own family. How many bedrooms do you really need. Do you want an older style villa, new build, on a complex, terrace size, with or without private garden and or pool.
Where to buy, Spain is a big country?
Where to buy is an other important question. You may like one region over an other because you have family or friends there, or you that area from holidays and just like it. All of them have there good and bad things, what is important, mountains, beach, golf, the urban life and of course money, some regions are more expensive than others. Sometime you can tell exactly why the difference in price exists but there still are gems out there that might surprise you. Also think about accessibility, are there regular flights to an airport not to far away from your home, how about motorways, train connections, etc. One thing to take in mind, most real estate agents operate locally, so don’t get talked into buying into their region if you for whatever reason don’t like it there.
Doing research on the Spanish property market.
As it will probably one of your biggest investments, prepare yourself. Do research
on the internet, there is a lot of property for sale in Spain, know about prices
for different types of homes in then different areas. Search the internet, visit
exhibitions, visit your preferred areas for a couple of days, just drive around.
Buy some books, there are a look of books with useful information. Yes that ill take
some time and money but on the other hand you are about to make a big investment.
The more you know the less change there is that somebody can sell you something you
don’t want or need. As always ignorance can be expensive.
Also when on the net don’t just look at homes that you might like, also look for information on what not to do, what to watch out for when buying. There are a huge amount of websites with area information, from things to do, like are there movie theatres where they show original versions or only Spanish spoken, how about the social life in that area, shopping facilities. Almost everything is out there for you to find it.
Doing much research is not only to prepare yourself better, it is also very important to make sure you have real expectations of what to expect making sure you don’t waste your time looking for the impossible.
Arranging your finances
If you really want to buy something make sure that after an extensive search you are able to pay for your dream house. If you don’t have the money in the form of cash and need to get a loan go out there and look into your possibilities. Can you take money out of your home you already own or do you need to take on a mortgage on your property in Spain. If the latest make sure you know how much money you can borrow on your income. Nothing more frustrating than finding your perfect home and the bank turning you down.
Besides that it does take a minimum of weeks to arrange a mortgage. If you have your mortgage in place and it just depends on the value of the property you are able to act quicker than most people giving you a head start if you do stumble on that opportunity. Also the more time you have the better you can judge different mortgage offers and loan conditions from different banks.
Finding an Independent, English-
When buying a property in Spain a good lawyer is essential. He/she must be independent and speak your language. You don’t want to be left alone when signing the reservation contract, private contract, signing the deeds at the notary, etc. Remember you will be buying in Spain and the only language legally binding is Spanish. Even when translated into English, the Spanish version is binding.
Some people prefer using a so called gestor, an administrative agent carrying out a wide range of bureaucratic and administrative tasks. However they are normally not trained laywers and from the point of saving some money, a gestor normally is bit cheaper than a lawyer, it can cost you dearly if not every legal aspect is handled accordingly.
If buying a new development make sure that you still use an independent lawyer and
not an in-
Due to the fact that many foreigners have been buying property in Spain for years makes it relatively easy to find an independent lawyer by recommendation or other source you can thrust.
House hunting property visits to Spain
Watch out for the sponsored inspection trips, nobody is going to pay for your trip,
set you up in a nice hotel, pay for almost everything and not expect anything in
return. Very likely you will be shown the properties with the biggest commissions
for the selling agent, in a large group of potential buyers. Usually there will be
a few disguised so-
Spend a bit of money yourself and have a look at what is for sale on our website and drive around. In that case you will see a lot more of the environment and what you can do out there. In first instance it looks like a good deal to go on a sponsored inspection visit but remember there is no free lunch.
Making a decision
If you are looking for an existing property make a list of things that the property needs to have and would be nice to have. The perfect property doesn’t exist, unless you will be a plot and start from scratch. So look for the best property for your needs within your budget.
As soon as you have found your property, let the seller know that you are serious and can complete, you are not a time waister, this will give you an edge when it comes to negotiating over price and other conditions.
When you have come to an agreement then as a buyer don’t make any down payments untill you (hopefully your lawyer) has done due diligence.
Due diligence
Checking the legal status of the property you want is very important to do, and you
want to do it before signing contracts or making non refundable payments. You need
to make sure that the person who is selling actually is the owner and is able to
sell the property. Furthermore, tax obligations, mortgages, etc are ascribed not
to a person but the property itself. Also things like community fees, urban development
plans, etc. are worth checking out. A lot of information can already be foud in the
so-
Planning Permission
When you are looking to buy a new development always check the necessary planning permissions. If the license of first occupancy is obtained it is reasonable to presume that all licences are in place.
Even for resales it is best to check all building licences, etc. Although the main house may be built legally during the years extensions to the property may be illegal. If you want to go through with such a property always legalize the extensions before going ahead with the sale.
Taxes
When buying make sure the latest local taxes (IBI) have been paid, have your lawyer look into this. After the purchase you as new owner will be liable for paying.
The other tax you need to check when buying is the local capital gains tax (plusvalia). This is normally paid by the seller, negotiating you might end up on agreeing that the buyer will pay for it. In that case know how you have to pay.
Outstanding utility bills
When buying a resale property always check if the utility bills are up to date and make sure to specify it in the contracts.
The community of owners
In most cases when buying property it is part of a community of owners (Comunidad de Propietarios). Make sure to get a copy of the bylaws and the financial status of the community. Usually you can get a copy from the president or secretary of the community.
Insurance if buying from a developer
When buying a property within a new development be sure that the developer has bank
guarantees to protect the payments you have already made in case the developer goes
bankrupt, this is required by law. If the developer can’t provide this bank guarantee
than look for another development.
Also is it obligatory for the developer to have an insurance policy that during a
period of 10 years guarantees fundamental building elements, such as retaining walls,
ground work,, reinforcement bars, etc.
Licence of First Occupancy
This license is sort of a guarantee that all prior licences are in order. With this license it is possible to get connected to utilities such as electricity, water. Without it the utility companies simple will not connect you, so make sure before completing on the property that the license has been granted by the town hall.
Property Survey
Before completing on the property you should have a chartered surveyor
to check out the property. Not only on resales but especially with new developments
it is important that the property is built and delivered as agreed upon. There is
always the option of having a chartered surveyor check a property before you buy.
This is advisable if there are any doubts as to the condition of the property. A
survey can also be carried out on new build property to confirm that it is delivered
in the condition promised.
Reservation contract – Documento de reserve
With this contract you reserve, normally
during 30 days, the property in exchange of a sum of money, usually € 3.000 or €
6.000. If you as buyer wish not to continue with the purchase you will loose that
money. The seller ahs to take the property off the market and can not sell it to
anybody else. Even if the amount of money is relatively small considering the total
price of a property always use a lawyer before singing this contract.
Deposit Agreement -
This contract is more expensive for both sides if one off them back out after signing.
The deposit usually is 10% of the final purchase price, if the buyer does not go
through he will loose the money, on the other hand if the seller doesn’t go ahead
he will have to pay the buyer double the amount. This contract is usually used whem
buying a resale from a private owner.
Option To Buy Agreement -
Private Sales Contract -
Ownership structure
Most people buy it in the most simple way possible, as a private person, on their own name. However you might think about setting up another structure to avoid inheritance taxes. It is possible to set up for example a Spanish ltd. and let that buy the property. This calls for extensive planning and looking into your specific situation. No generic advise can be given, except get a good advisor that knows of the laws in Spain.
Completing on a Spanish property
When going to the notary and paying the seller in full you will become the official
owner of the property after I is also registered in the property register.
At the
notary you will sign the so-
For buying a property in Spain you will need a valid identification document such
as a passport and the so-
The notary will check the identity of everyone involved and read the deeds in Spanish. Your lawyer should make sure that there are no last minutes changes made without your consent. In this fase you can not do without a lawyer, don’t rely on the notary to protect your interests, he is there to look after the interest of Spain and that all laws are obeyed and all taxes paid.
After the signing at the notary you should inscribe your title deeds within 30 days (the sooner the better) in the land registry. Your lawyer will do this for you.
Spanish property transaction costs
Besides the price of the property there are other costs involved when buying a property. As a rule of thumb, transaction costs average 10% of the price of the property, but can be as low as 8%, and as high as 14%. The various transaction costs are as follows.
Taxes
When buying a resale you will pay a transfer tax (ITP), when buying a new development there is no transfer tax VAT, taxes can vary by autonomous region but are usually 7 or 8%.
Notary and registry fees
Notary fees and registry fees combined usually mount up to 1% of the vale of the property, but have a variable element. This is amongst others based on the price of the property, the number of clauses used in the deeds and using a mortgage or not.
Legal fees
Lawyers usually charge 1% plus 16% VAT of the rpoeprty price for their services. When hiring a lawyer make sure that you both agree upon the services included. If paying 1% plus 16% VAT he should give full service from the initial reservation contract till connecting all utilities.
Mortgage costs
If you take up a mortgage in Spain you will pay an arrangement fee of about 1% of the amount of the mortgage and some extra notary and registry fees.
A brief guide on how to buy property in Spain.