The Buying Process
In order to make an offer on a property in Spain you have to place a reservation deposit on the property, usually between € 3,000 and € 6,000, this can normally be done by credit card.
The reservation deposit system does THREE things, first in the case of a Re-Sale, it removes the property from the open market until the negotiations with the vendor are completed and a sales price is agreed . Second and this applies to Key Ready properties only, it reserves the unit in your name with the developer until you complete, usually 28 days after deposit. Third it prevents you from being gazumped.
With regards to a Re-Sale property, closure is slightly different; first you need go to Private Purchase Contract (PPC), where you pay 10% of the agreed purchase price within 28 days.
Then you need to set a mutually agreeable completion date for the transaction where the balance of the purchase price has to be paid and the deeds to the property need to signed, though if you wish you can go straight to completion and skip the PPC stage, as in the case of a Key Ready property.
Unlike a Re-Sale you cannot make an offer on a Key Ready property, as they’ve already been heavily discounted by the developer and as a result the prices quoted are cast in stone.
Anyone buying a property in Spain must first obtain a fiscal number for foreigners known as a NIE (Numero de Identificacion de Extranjeros) number. This has to be done in person or by your lawyer with a power of attorney in the local police office.
Before going to Notary your legal representative does all the legal checks on the property. Just to mention a few of the factors that need be checked: the proper inscription of the property into the land registry and making sure that the property has no hidden charges (for example any additional loans or embargos).
On completion, when all the necessary checks have been carried out, both parties sign the escritura (title deeds) in the presence of a notary. The buyer then pays the balance, plus all other fees and taxes. Copies of the deeds are sent to the Land Registry and the tax office.
Fees & Taxes
The purchasing costs of buying a property in Spain usually amount to approx. 10-13 % of the purchase price of the property.
The denomination of the taxes payable depends on whether the property being purchased is new-build or resale. Currently, transfer tax of around 7% is applied on resale’s, which includes stamp duty. For new-build properties, VAT (IVA) of 7% is payable in addition to 1% stamp duty
In addition there are approximately 1 % notary fees, 1 % legal costs and 1 % mortgage fees. If the buyer is purchasing land or commercial property rather than residential, VAT rises to 16%. Stamp duty remains the same.
The agent fees are included in the price in Spain so make sure that the agents do not charge you any extra fees on your purchase. |
