THE BUYING PROCESS
The first thing to realise when buying a property in Spain is that it is not the same as in the UK.
Firstly, establish a budget. Whatever the price of the property you will need to allow around 10% more on the purchase price for all your additional and legal costs. (see below)
Making an offer and appointing a lawyer
Once you know what property you want to buy make an offer verbally through your agent. Once you have come to an agreement appoint a recommended Lawyer (Abogado). The lawyer will start the paperwork and formalize the agreement. Make sure you cover all areas of your negotiations for example, what furniture is included.
The first thing the Lawyer will check is the "Nota Simple" which can be obtained from the property registry. This provides information on who owns the property, information on any embargos or mortgages etc. The lawyer should also obtain from the vendor payment receipts of IBI (impuestos sobre bienes inmuebles) which is the annual real estate tax you will have to pay.
If you are buying a "new build" or "off plan", your lawyer should obtain a copy of the "Declaration de Obra Nueva" and the "Declaration de Alteracion Bienes Naturaleza Urbana"
A holding deposit is usually requested to show your commitment and can be left with your lawyer until he is happy with the paperwork. This is normally about 3.000€. However, this is not binding until the full 10% deposit as been paid and the vendor can still sell the property to another party. The lawyer will also request a retainer for their services.
Securing the property and exchange of contracts
To secure and remove the property from the market, the vendor requires a deposit, usually 10% of the property value. At this stage the deposit is non-refundable.
Completion
On an agreed date, you and the vendor will attend the office of the notary to sign the "Escritura de Compraventa" which is the title deed. The escritura should state the property is free of mortgages, tenants and charges. Once everything is in order, the balance is paid and the buyer takes possession. The title deed will be registered in your name and all your taxes will be paid by your lawyer.
Costs
Transfer Tax
This is currently 7% and added to the declared purchase price. When buying off plan from a developer, you pay 7% IVA (tax) plus 0.5% stamp duty
Lawyers fees
Normally between 1 and 1.5% of the purchase price plus 16% IVA
Notary and Registration fees
Notary fees are fixed by law and range from 300€ to 900€. The registry fees are approx 40% of the notary fee.
NB : The only fees you are liable for are those mentioned above.
You are not liable for estate agent fees - this is the sellers (vendors) responsibility.
The vendor is responsible for his own capital gains tax.
