Our Rough Guide to Buying Property in Spain
The buying process in Spain
Buying a property in Spain can seem rather daunting at first, however it is in fact quite straight forward, although a little different from the process in the UK or US.
As a general rule, the buying process can be separated into six steps, and below we have noted approximate costs next to each step.
On average, you should add between 10–11% to the purchase price of the property to cover all charges and taxes related to the purchase.
The steps break down approximately as follows:
1. Formal offer
Once you have found a property you wish to purchase, you will, as in the UK, agree a price with the vendor via your agent.
When your offer is accepted, it is usual to pay a reserve deposit of approximately 600 euros as a sign of the buyer’s intention to purchase, and to ensure the property is not sold to someone else by the vendor.
At this stage you should appoint a solicitor to ensure that all Spanish legal requirements are met, that the property is indeed registered by the vendor, and that it is free of any outstanding debts and charges. We work with and can recommend very reliable local solicitors if required.
A ‘Nota Simple’ showing this information is requested from the Property Registry by your solicitor.
Local solicitors normally charge a professional fee of approximately 1- 1.5% of purchase price, plus IVA (VAT) at 21%.
3. Private purchase contract
(Contrato Privado de Compraventa)
This contract (usually just called the Compra Venta or Sales Contract) sets out the agreed terms and conditions of the sale including the agreed purchase price and a date for final completion at a Public Notary.
On signing this contract, a deposit of 10% is paid by the purchaser to the vendor. This deposit is non-refundable: if the purchaser defaults, he loses his deposit, if the vendor defaults, he must pay twice this amount back to the purchaser.
4. Signing the purchase deed at a Notary
(firma de escritura)
The purchase is completed when the public sale / purchase deeds are signed by the buyer and seller at a Notary’s office, the final agreed payment is made to the vendor, and the purchaser takes possession of the house.
Non-resident purchasers must present a certificate from their Spanish bank stating that the funds have been transferred from a foreign bank – this will be attached to the escritura.
The original title deed will be kept at the Notary’s office, and an authorised copy given to the purchaser.
5. Payment of taxes and fees
Purchase taxes – From January 1st 2012
Transfer Tax (ATP) – for re-sale properties (payable upon completion)
- A. 8% on properties up to 400,000 Euros
- B. 9% on properties between 401,000 Euros and 700,000 Euros
- C. 10% on properties over 701,000 Euros
4% IVA (VAT) – for off-plan / new build properties (payable with each instalment)
8% IVA (VAT) – for land purchases only
Stamp duty (AJD)
1% – only applies to off-plan / new build properties (payable upon completion)
1 – 1.5% approximately (it’s always best to clarify fees in advance)
On a scale fixed by law (expect between 300 – 1,200 Euros)
Property Registry fees
Approximately 20% less than notary fees.
6. Registration in the Property Registry
After completion, the purchase deed (escritura) is taken to the relevant Property Registry Office (Registro de La Propiedad), where the new owner of the property will be formally registered. It takes anything from 2 weeks to 3 months for the deeds to be registered and be ready for collection.
Other sales costs
Generally, the vendor pays Plusvalia – a local council tax, calculated by taking the catastral value, surface area of the land and the age of the original title deed. By law, the vendor usually pays this tax, although in Spain everything is negotiable, and the vendor may stipulate that the purchaser pays this tax too.
Essentials when buying
Two essentials when buying any property in Spain are:
First, a Spanish bank account, simple to open and necessary for paying charges related to the property, such as utility bills, community fees, IBI (Council Tax) and so on.
Second, a NIE (similar to a UK National Insurance number), which must be obtained prior to purchase – this is straightforward but can be time-consuming so don’t leave it until the last moment.