BUYERS GUIDE
There is a wide variety of choice when purchasing a property in Spain. Finding the perfect home is only the first step. The formalities of the purchase process in Spain are roughly as follows: reservation deposit, exchange of private contract, final completion / exchange at the Notary, and registration.
LAWYER
You should always be professionally represented during any property transaction in Spain to ensure a legally sound process. Using a lawyer is the best guarantee to avoid unexpected surprises. Your lawyer will make an extensive ¨search¨ of the property to be purchased and will ensure the most advantageous deal possible when negotiating with developers or any other vendors. He will keep you updated on the progress of the purchase and will provide you with full details of the financial aspects of the transaction.
CONTRACT & DEPOSIT
Once you have found the right property, usually through an estate agency, the first step is to make an offer. If accepted, you will have to pay a reservation fee to take the property off the market and freeze the price. The amount usually required is from €3,000 to €6,000 but may be greater depending on the
value of the property.
If your offer is accepted, your lawyer will draw up a private purchase agreement between you and the vendor, in which the terms and conditions of the sale are stated, such as a completion date and the conditions of the transaction. This agreement should ensure the property is sold free of debts, charges, and encumbrances. Please note that properties in Spain are freehold, not lease hold as in the UK.
SPANISH WILLS
We recommend that you make a Spanish Will to dispose of your assets in Spain to avoid expensive and complex legal procedures in their disposition. Spanish laws protect family heirs in that they restrict the testator’s freedom to dispose of their estate to anybody they choose.
COMPLETING THE PURCHASE
Our law firm will prepare the documentation required for the transfer of ownership. On the appointed day, the buyer and seller, and/or their legal representatives will sign the official transfer of Title Deed at the notary’s office. The witnessing of the deed by the notary acts as your legal safeguard that the change of ownership will be recorded in the official registry and completes the process, leaving you secure in the knowledge that your property purchase is official.
All properties in Spain should be registered with the land registry. The registry contains the details of the owner, the size of the property and information about mortgages, debts or judgements against the property. Only the persons or company named on the title deed have the right to sell the property.
Anyone having interests in Spain such as property, a bank account or otherwise, requires an NIE (identification) Number. This number is necessary for all non-residents. Your lawyer will be pleased to assist you with this matter and help with any other query that you may have about purchasing in Spain.
COST OF PURCHASE
Generally speaking, you need to budget approximately 13% on top of your Spanish
property purchase price. This will cover lawyer’s fees (between 1-2%), notary public fees, land registry, stamp duty and VAT. Taxes differ according to whether the property is newly built or second hand. A breakdown of all the costs involved is provided below.
Property Transfer Tax
Which of these two taxes is levied will depend on the type of property you are purchasing. With resale property, there is a transfer tax of 8% of the deed value. In the case of new build property, 10% VAT is payable as well as 1.5% stamp duty. Notary public fee scale is fixed by law and may range from €300 for lower priced properties to €1000 for higher priced properties. As a rule of thumb, the Land Registry fees are approximately 60% of what the notary charges.
WHO PAYS WHAT?
THE BUYER IS RESPONSIBLE FOR:
- • Transfer Tax (or VAT plus stamp duty when buying from a developer)
- • Property Registration Fees
- • Notary Charges
- • Lawyer’s Fees
THE SELLER IS RESPONSIBLE FOR:
- • His own Capital Gains Tax on any increase in deed value
- • Plusvalia Tax
- • Selling Agent Fees
It´s customary for the seller to pay the Plusvalia (a small tax based on the increase of the value of the land since the last sale). However, it may be stipulated that the buyer agrees to pay this tax. This usually occurs after completion.
MORTGAGE
At Anderson Premier Corporate Law, we arrange all types of mortgages and re-mortgages for all nationalities.
The mortgages that we offer are aimed specifically to meet your particular needs, whether you are purchasing one property for your own future residential use or alternatively, if you are building a portfolio of properties we can source the product to meet your needs.
We will ensure that you not only have the right kind of mortgage for your circumstances but also a mortgage at the best rates from the best lender for your situation.
NECESSARY ITEMS FOR A MORTGAGE REQUEST
EMPLOYEES
- 1. Photocopy of Passport
- 2. Filled out application forms
- 3. Last 3 months payslips
- 4. Latest tax declaration (P60 if from the UK)
- 5. Nota simple (+ Copy of Title deed from Property Register)
- 6. Purchase contract (if done already)
- 7. NIE (required before the deeds are done)
- 8. Employers’ reference of Minimum 24 months fixed employment
- 9. Credit Report (ex. Equifax)
- 10. Balance sheets or other certificates of funds for the purchase
SELF-EMPLOYED
- 1. 2 Latest Tax returns
- 2. A breakdown of assets and liabilities, issued and signed by a “chartered accountant” for the last two years
- 3. Filled out application forms
- 4. Photocopy of Passport
- 5. Nota simple (+ Copy of Title deed from Property Register)
- 6. Purchase contract (if done already)
- 7. NIE (required before the deeds are done)
- 8. Accountant’s reference of Minimum three years working as self-employed
- 9. Credit Report (ex. Equifax)
- 10. Balance sheets or other certificates of funds for the purchase
If the applicant has other sources of income such as rental income, pension etc. the certificates should be supplied accordingly. If there are other loans in Spain, 3 latest payment certificates should be provided by the client’s Bank
