Buying Property in Spain

Once you have found your perfect Spanish property, agreed your purchase price and Worldwide Lawyers has found your English-speaking Spanish lawyer you are ready to move forward with the buying process.

You will need a Spanish tax identification number Número de Identificación de Extranjero or simply “NIE” in order to be able to buy property in Spain. You can obtain this from one of the designated police stations in Spain, at a Spanish consulate. Your Spanish lawyer will also be able to assist with this.

The property buying process in Spain usually starts with an initial contract (often referred to as a Reservation Contract) which documents a formal offer of purchase made by the buyer. Signing this contract and paying a small deposit of around €3000 – €12000 (depending  on the purchase price) ensures that your chosen property will be removed from the market for a specified period while checks in relation to the seller, property title and any building permissions are carried out by your Spanish property lawyer. It is essential that you instruct a reliable independent lawyer to investigate the property title before signing any contract or handing over any deposit. Never sign a contract without the go-ahead of your Spanish lawyer. Estate agents in Spain are not regulated and so ideally this deposit should be held by your lawyer.

A preliminary contract known as a Contrato Privado de Compravento is then signed by the buyer and seller. This is a private contract of sale where the buyer agrees to buy and the seller agrees to sell the property. Usually a deposit of around 10% of the purchase price will be payable by the buyer when signing this contract. This type of contract may take various forms and your lawyer should explain the obligations of each party as a result of entering into this contract.  If the buyer pulls out after signing this contract the deposit will be lost. If the seller pulls out, they must refund the buyer double the deposit amount.

Having entered into the private contract the buyer will then have time to formalise any mortgage that they may require before the parties enter into the Public Contract of sale known as the Escritura de Compravento. This is the conveyance document that transfers the legal ownership of the Spanish property.

The Escritura de Compraventa is prepared by a Spanish notary (the ‘notario’) and must be signed in their presence. The main function of the notario is to certify Spanish documents and agreements ensuring that they fulfil certain legal criteria and to collect the relevant taxes. The notario does not advise or protect the interests of the buyer or seller who should both be individually advised by an experienced and qualified Spanish lawyer.

You can either sign the Spanish title deeds document in person in front of the notario or arrange a Power of Attorney for someone else, usually your lawyer, to sign on your behalf.  If you do sign in person your English speaking lawyer should be present in any event to translate and explain the contents of the deeds to you. The notario will usually read the contents of the deeds aloud in Spanish and may not agree to sign the deeds unless he is happy that either you speak Spanish and understand the contents or your lawyer is present.

Should you require a Power of Attorney, your Spanish lawyer should be able to prepare this for you. You can put the Power of Attorney into effect by signing this in Spain in the presence of a Spanish notary, through the Spanish consulates in the UK, or through a British notary public with a Hague Apostille.

Once the deeds are signed on behalf of the buyer, seller and any mortgage lender, the balance of the purchase price and the taxes will need to be paid and the transfer of the property registered with the Spanish Land Registry, the Registro de la Propiedad.

The Registro de la Propiedad, protects the rights of the owners of a Spanish property by inscribing the title deeds to the property in the local land register.

It is the buyer’s responsibility, to ensure taxes are paid for the property transfer is registered. The notario may offer to register the property transfer for a fee, and may notify the registry office that the sale has taken place.

The next step is to enjoy your new property happy in the knowledge that your independent Spanish lawyer has taken care of all legal formalities for you and your interests have been protected.

Congratulations!

The additional costs of buying a property in Spain is typically around 12-14% of the property purchase price.

The cost will include:

The property purchase price

As agreed between you and the vendor.

Tax

When buying a new build or “off plan” property you have to pay IVA tax (VAT) of 10% to the seller in addition to the purchase price. For the Balearic Islands, you should also expect to pay IVA plus an additional 1% to the town hall. Stamp Duty on New build property in Spain (AJD) is 1.2% of the property price.

For “second hand” or “resale” properties you do not need to pay IVA but will need to pay the transfer tax Impuesto de Transmisiones Patrimoniales (ITP) to the local authority in the region where the property is situated. ITP is calculated on the property purchase price and ranges from 7-10% in most parts of mainland Spain.

If you are obtaining a mortgage then you may also have to pay stamp duty on the value of the mortgage. This tax varies by region (for example, between 0.5% and 1%).

Legal Fees

Lawyer’s fees are usually charged as a percentage of the purchase price- typically 1-2% plus IVA (Spanish VAT).

There may be an additional cost if a Power of Attorney is required. Your lawyer will advise you of their fees for this.

Notary Fees

Normally these total around 0.5%-1% of the purchase price. The Notary fees will be increased if you are funding the purchase by way of a mortgage to account for the work involved in registering the charge.

Land Registry Fees

The fee payable will be dependent on the value of the property and the area it is in but allow 0.5%- 1% of the purchase price.

Estate Agent Fees

The estate agents fees are usually paid by the seller. Estate agents usually charge a percentage of the sale price – typically 3-10%.

Instructing an independent English-speaking Spansih lawyer to provide advice and reassurance that the legalities are checked on your behalf is essential.

You should protect yourself by instructing a Spanish property lawyer as soon as possible and before any formal steps have been taken to purchase a Spanish property or before any mortgage has been formalised. This will allow your lawyer to advise you properly on all aspects of the transaction to ensure your position is fully protected.

Contact us on 01244 470 339 or info@worldwidelawyers.co.uk for free help to find an independent English speaking lawyer to assist you with buying a property in Spain.