Often the idea of buying your first foreign home can be quite daunting with so much information available online and so many companies wanting your custom it can even put people off all together. This guide has been specifically designed with you in mind, it will take you through the different stages step by step using our experience in the Spanish property market to try and make things as simple and secure as possible.
Step 1 Research
While in your own country it is usually a good idea to do a little research. Start looking at prices, areas and types of property which you find attractive. We can help you with this if you fill out our Personalized search questionnaire. We ask six simple questions and then perform a personalized search using our knowledge of the local area. If you see any properties online or in magazines that you like the look of send them to us and we will tell you all about them.
Something most people don’t realize is that all estate agents here on the costa del sol sell the same pool of properties. In our experience by contacting several different agencies you will only get confused by all the different information and phone calls you will receive. People who try to use 3 or 4 different agencies often go home without buying anything.
For those who will require a mortgage to help with the purchase this can also be researched before you even visit and you will save valuable time while you are here by doing so. We work with some of the leading banks and financial advisers in the area. Drop us an email or give us a call and we will be pleased to put you in touch with the best professional for you.
Step 2 Inspection visits
Finding the right property usually takes around 3 working days, the first day will consist of viewing pre-selected properties and areas which we have already arranged before your visit. After this both you and we will have a lot better understanding of exactly what it is you are looking for.
On the second day, we will again view properties but this time should be close with everyone we view due to our communication the previous day. We try to listen learn and adapt to your exact requirements through the course of your visit.
The third day is usually best spent with a lawyer in the morning who will explain the buying process in much more detail, they will look at your personal circumstances and advise the best purchase method. Here you can discuss the benefits of buying the property in a company or personal name, having extra family members put on the title deeds, Inheritance and capital gains issues. We work with a broad selection of multilingual law firms and will be happy to advise the best one for your case.
Your chosen lawyer will need a power of attorney signing before a notary to act on your behalf, this takes around an hour (depending on the time of year) and is much easier and cheaper done in Spain while you are here. For this you will need to bring your passports to the lawyers and they will make all the other arrangements.
After you have finished your business with the lawyer we would suggest making second viewings of any properties which were of interest. By now you should be close to making an offer. As your chosen agents, we are here to help get the best deal possible for you and dependent on your chosen property will try to guide you giving you honest advice and market comparisons.
The buying process
Once you have agreed the price with the vendor you will need to make a deposit payment to your lawyer which will remove the property from the market. The sooner you can do this the better for the obvious reason that you have just put all the work in and don’t want to lose your dream property at the last minute by somebody else offering more. The initial deposit is usually €6,000 although some vendors will ask for more on higher value properties. This deposit can be paid by credit card or bank transfer and is completely secure with your lawyers. At this stage, you will also be asked to sign a simple sales agreement outlining your details, the property details, agreed price and timescale. With regards to timescale it is usual for a property transaction to take around 6 weeks from start to finish. Dependent on yours and the vendors circumstances this can vary but is usually agreed at this stage.
Your lawyers will now start carrying out the due diligence on the property, legal searches and drafting of the private purchase contract. They will also send you a detailed list of exactly what money will be needed and when. It is often the case that you will be required to send 10% – €6,000 (deposit) within 2 weeks so that your lawyer can proceed to the private purchase contract. This is a legal document signed before a notary by both the buyers and the vendors, at this stage your 10% will be passed over to the buyers and a final completion date set.
By now your lawyer will have already got you a Spanish identity number and likely opened you a Spanish bank account, they will arrange the completion of the property transaction, set up all your direct debits such as community fees, local taxes, electric and water charges, all making life a lot simpler for you.
Charges and taxes
There are of coarse many other charges and taxes to consider when buying a Spanish property, these will often vary in different areas. Below is a guide of what to expect on the costa del sol where we specialize.
You will have to pay transfer tax (I.T.P.) whether the property is a villa, apartment, land or a commercial space. The only exceptions are if the vendor is a developer, you are buying off plan, or you want to buy and sell properties as a business venture.
The amount of transfer tax you have to pay varies depending on the minimum fiscal value given by the regional government of the property, even If that value is higher than the price you payed. 8%of the agreed price is payable up to 400,000€ (with exceptions being made for stand-alone garages). The percentage to pay then increases to 9% on the amount between 400.000€ and 700.000€, finally 10% for any amount over 700.000€.
For off plan properties and new properties bought direct from the developer IVA is currently 10% and payable instead of ITP.
Other fees will include Legal, Notary and Property Registry Fees. These will amount to approximately 3% of the property value. This figure will vary dependent on price and complexity of the case
As a close guide, you should be looking at total buying costs of around 10.5% for resale properties and around 13% for new properties.
This section was compiled as a guide only, we would always advise consulting a legal professional for more precise information
Off Plan properties
Recently due to the demand for new contemporary properties off plan purchasing has returned as a popular way to buy your new home. This system works differently to resale. In most cases a €6,000 holding deposit is kept by your lawyer to reserve the property. Developers then have differing part payment amounts due at different stages of the build. For example, 30% + iva at private purchase contract followed by 70% + iva on completion. Your lawyer will always check that the project is fully bank guaranteed so your payments are protected. Please contact us for further details on individual developments.
We offer a wide range of after sales services from building work, decorating, kitchen fitting, interior design etc. If there is something you need for your new property just ask your sales person and they will be pleased to advice you.