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This guide is designed to give you an idea to the process of buying a home in Spain. Our best advice is to secure the services of an independent solicitor (Abogados). Do this yourselves and do not rely on recommendations from your estate agent. If you are new to an area and do not know of any reputable solicitors try one of the many forum sites specific an area and see what others have to say. The whole process of buying a home in Spain can be relatively straightforward and painless if done properly. I hear of nightmare stories from people who did not do their homework and now find themselves with properties built on rural land no title deeds (Escritura). There are a few Spanish common terms with regards to property that you should firstly be aware of.
Escritura - The title deed, showing whom the owner is as well as dimensions & location of the property. The Escritura is signed in the presence of a Notario and is the final part of the purchase process. You need to personally attend this to sign the Escritura or arrange Power of Attorney this can be your solicitor or a trusted friend.
The Name on the Escritura. It is worth considering who is to be named as the purchaser and owner on the escritura as you maybe liable for further fees if the name was changed at a later date (% of price). Inheritance tax is also an issue for property owners here as resident and non resident.
Notario -This is a public official the public official who is present to officially certify that the title deeds have been exchanged and understood by the parties concerned. After the signing, the Notario witnesses the payment, or an acknowledgement that the payment has already been made, and this fact is incorporated in the deeds. They are there to ensure that all the appropriate papers are filed and filed correctly with the relevant passport numbers and details duly checked.
All property sales in Spain need to be done in the presence of a notario and there is a tax to be paid on the declared value of the property. Approximately 1%. Beware of undervaluing your property to avoid paying a higher tax. After the signing of the Escritura, it is taken to the registry for payment of registration fees. The registry then files the new owners be warned this process can take up to several months!
There are a number of things that you or your solicitor needs to check before proceeding with any purchase
The title of the property is checked
Whether there are any charges on the property
Building licences and permissions are in order, where applicable
The terms and conditions stipulated by the seller are checked for fairness
The person selling the home actually owns it
Change over of utilities into your name
Check all details at the local Land Registry
Receipt for paid-up community charges and a copy of the Statutes if you buy within a community.
Investigate if there are any proposed development (Land Grab Laws) or planned new roads or railways.
Costs and fees of purchasing a property here in Spain
Solicitors' fees are a percentage of the property purchase price (normally under 1%) and should include these services:
Advice about the contract
Investigation of title
Planning position of the property
Arranging for completion
Arranging for registration
Other Costs
Notary fee - around £200 - £450
Land Registry fee - around £250
Transfer tax - 7% of purchase price
Tax office registration for foreigners (NIE) - typically £100
VAT (iva) is chargeable on some of the above.
As a guideline, you should allow another 10% of the property price
Mortgages
If you are financing the purchase with a mortgage here in Spain then you should allow for extra fees associated with setting the mortgage up. Set-up fees are anything from 0.5% to 2.5% of the property value, with 1.5% being common. Unlike the UK Spanish banks can be a little more flexible and are prone to offering you a deal to get your business. Most mortgages come with a redemption fee if settled early so check al the small print and do shop around for the best deals, as there are genuine savings to be made. Remember like in the UK a life insurance policy should be taken out on the building and some life insurance that would cover the mortgage in case of death. There seem to be a number of British banks that will loan on property in Spain so that is worth investigating. It is not unusual for a mortgage to be transferred with a property just make sure you are happy with the conditions. Many off plan builds will also have mortgages already arranged on the property, but do not feel obliged to use these. Increasingly there are more companies offering many different mortgage products here in Spain so shop around and check on the companies offering them. Beware of brokers who want to charge you for their services.
Off Plan Property Purchase
Many people buy their holiday or retirement home in Spain Off Plan ie they are not built yet or are under construction. This is very much the norm in Spain and the prices of off plan should in general be 20% lower than resale properties making them very attractive to investors. Buying a new villa or an apartment can be very straightforward but the most important thing here is the contract which you will sign. This contract will set out exactly build size, plot size if you have land, the specifications of the build and the finish of the property what is included. It will also set out dates of completion and any conditions to do with this. And the payment structure, which will normally be an initial deposit and then stage payments. Make sure final payment is not made until you are happy with the project and that it is fully finished and signed off by the local council. Licencia de Primera Occupacion (first license of occupation) is needed for the property before you can move in. In many cases an escritura may not be available until the project is completed and signed off by the town hall. One thing to check is that any new build project has been submitted to the town hall and been approved. An easy way of checking if a property is properly licensed is to see if a bank will offer a mortgage on it. If so you can be fairly sure you are buying a legal property, banks are not likely to lend on anything that is not 100% legal. Having said all this there are plenty of people who find themselves living in illegal new build properties even after taking legal advice. Again get a reliable English speaking solicitor and again don’t rely on the promoters recommendations for this. Always read the small print and check the contract thoroughly.
Properties on Communities
If you buy a property on a community you will be subject to community fees for maintenance and up keep of the community. Swimming pools need to be cleaned, grass need to be cut and general maintenance needs to be planned and paid for. These are known as community fees, which are usually paid monthly as a standing order. Fees are normally calculated on the square metres of the property. As a fee payer you will be allowed to vote at community meetings and elect a president who should run the community for the benefit of all of the people living in the complex. Beware of companies that administer communities as they may not have your best interests at heart and cost a considerable amount. The best run communities are those that are run and administered by the owners themselves.
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