What to think about before, during and after buying a property in Spain?

Before buying a property

Financing

Before actively looking for your dream property, it’s worth considering how you’re going to finance it by doing some calculations. You may then need to apply for a mortgage offer from your existing bank or optionally a Spanish bank. This will allow you to act fast when the right property comes along. You can usually borrow up to 75% of the property’s market value from a Spanish bank.

We collaborate with MyBankFriend which specializes in helping non-Spanish clients to find the best loans in Spanish banks. They collaborate with 15 different Spanish banks and can provide a proposal within 24 hours. You can read more about MyBankFriend at www.mybankfriend.com and make an application at about here. 

Legal representation

A big difference in Spain compared to many other countries, is that the buyer – and quite often the seller – is represented by a lawyer. The lawyer will help you through the whole transaction, making sure everything takes place securely and as it should do. You can choose a lawyer yourself to help you through the process or we can put you in touch with one of our partners. 

NIE number

To own a property in Spain you will need a Spanish tax ID number, known as an NIE number. You will need this to take over ownership of the property when you register your title. Your lawyer can help you get one when you have found the right property.

Choose an agent

It is important to look into the agent’s ability to find just the right property for you. Look at the agent’s expertise and commitment in representing the client’s interests. Ask about their brokerage skills, how the agent performs their role in finding your dream property etc. At Serneholt Estate we always offer clear, on-hand communication throughout the time we work with you and our biggest focus is on you, the customer, at all times. It goes without saying that we will keep you informed and updated throughout the whole process. You will find that this is not so common in the Spanish housing market.

During the process

Finding your property 

Once you have got all preparations ready, you can start looking for the property and head off to Spain for some viewings. As a company, we can make a big difference for you. Send us a wish list and we’ll find the best of what the market has to offer. We’ll also plan your viewings so that you get to see the best options during your visit.

Viewing properties

A successful viewing is the result of commitment and sensitivity on the part of the agent. As agents, we focus intently on your particular wishes. In this way, you only get to view the properties that we know definitely meet your wishes. During viewings it’s a good idea to inspect the property as carefully as possible, since all property in Spain is sold in its existing condition and it’s very difficult to claim for any defects once you’ve signed the contract. If you don’t know how to go about inspecting the property you can always contract a surveyor to conduct a survey. Your lawyer will always conduct the legal enquiries and searches on the property.

Auction / Reservation

Auction is not as common in Spain as in other countries. Instead, the seller normally goes with the buyer who’s prepared to pay the asking price. The final price of the property is also often decided through a negotiation between the buyer and seller. When you have found the right property, we’ll help you negotiate the price and terms with the seller, after which a reservation contract is generally drawn up. A reservation fee (usually 6,000 euro) is also payable at this time either to your lawyer’s client funds account or to our client funds account. Around 2-3 weeks later, the private sales contract is drawn up, which is prepared by your lawyer after the legal checks have been done. A deposit of 10% of the purchase price, less the reservation fee, is usually paid at this time.

Payment

The notary receives the payment, and after paying the taxes and fees, he distributes the final balance to the seller. The seller receives 97% of the purchase price. You, as the buyer, pay the remaining 3% to the Spanish tax office. This acts as a security to ensure that the seller fulfils their tax duties and declares any capital gains from their sale in Spain. When the seller has then met all the official requirements, the 3% will be refunded to them.

Last but not least, after completing the buy

Access to the property

You will receive the keys from the seller at the meeting with the notary, after which you can move straight into your new property. The seller is responsible for leaving the property in the condition (legally and physically) and with the installations and licences stated in the sales contract. Remember, that the same requirements might not apply in Spain as in your country, e.g. thoroughly cleaning the property, and the property is usually left in its present condition for the new owner, unless otherwise agreed between the parties. 

The actual costs when buying a property

The normal purchase costs of a Spanish property are estimated at between 10% and 14% of the purchase price and in most cases are slightly higher for new developments than for existing properties. We have summarised the costs linked with buying your home below:

Transfer tax
A transfer tax is payable on the sale of existing properties, which amounts to between 8% and 10% of the sale price, although this can vary depending on the region. The tax is often higher for more expensive properties. The transfer tax is payable by the buyer

Value added tax and stamp duty
Value added tax at 10% is payable on properties being sold for the first time, e.g. new builds. In addition to VAT, stamp duty is payable for the issue of the legal documents. This is normally around 0.5% of the purchase price, but can be 1.5% in certain regions. Both taxes are payable by the buyer.

Notary fee and title registration fee
The Spanish government determines the notary fees, the cost of which depends, among other things, on the property’s value and how many pages the sales contract has. In most cases the cost is between €500 and €800 and is usually paid by the buyer.

Service connection charges
When you buy a new development, you have to pay for the electricity, gas and water to be connected and a meter to be installed. This is often taken care of by the building company. This costs around €300.

Borrowing costs
If you take out a bank loan in Spain to finance buying a
property, this loan will be subject to stamp duty of between 0.5% and 1%, depending on the area the property is in. The bank granting the loan will also require a property valuation to be done. This costs around €300 to €500. Most banks also charge a startup fee of around 1% of the loan amount.

Homeowner costs
Properties in Spain are subject to a local property tax, which is paid regardless of whether the owner permanently resides in the country or not. The tax is between 0.5% and 1.2% of the taxable value. The average cost of the homeowner tax lies between €200 to €1000 a year, but can be higher for more expensive properties. All owners of Spanish properties, including those resident abroad, must submit an annual Spanish tax declaration.

Legal fees and translation fees
Legal fees vary depending on the services included in the purchase and its complexity. Most lawyers charge around 1% plus VAT of the property’s purchase price, although there is normally a minimum fee. The fee is often negotiable for more expensive properties. Some charge by the hour and others offer a set fee.

Income tax
The tax is based on a theoretical benefit of owning the property and is calculated as a percentage of the taxable value. The cost is usually relatively small for most properties, often a couple of hundred euro or less per year.

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