Purchasing a property in Spain is significantly different to buying a property in the UK and therefore it is essential from the outset to receive sound and impartial advice.

Arden Estates ensure that you receive proper legal advice from the outset to ensure that prior to committing yourself, you understand exactly what is involved and what will be expected of you throughout the transaction. Further, we will ensure that the protections afforded to a purchaser under Spanish law are properly explained and understood as well as ensuring they are applied to your particular purchase.

Step1: Finding a Property

Arden Estates with all our experience and market knowledge on the coast will ensure we provide you with the best properties on offer to match your needs and requirements, if you are unfamiliar with the area we will take the time to educate you to make sure you are purchasing a property and choosing a location that best meets your desires.

Step 2: Formal Offer/ Reservation:

We will take the time to explain and discuss with you the terms of your offer. If the seller agrees to your offer a binding agreement is formed In Spain it is customary to pay a Reservation Fee at this stage to confirm your serious interest in the property you have chosen. Reservation fees are generally between 3,000 and 10,000 Euros (approximately £ 2,000 and £ 6,000 GBP respectively). A word of caution, where a reservation deposit is placed on a property, it may be forfeit if a Purchaser simply decides not to progress the transaction where that reason has not been agreed between the parties from the outset. However, where there is a defect in the property, no such forfeit will arise.

Step 3: Property Searches:

Arden Estates will then introduce you to a professional Lawyer to undertake the property searches on your chosen property, much the same as in the UK. The aim of the property searches is to ensure that the Seller has the right to sell the property free of any debts, charges, rights and to identify any other problems that may affect the property. The searches and checks are comprehensive and will allow us to advise you with regard to, for example, the details of any planning consents, bank guarantees, building licences and a whole range of other issues. This will enable us to advise you as to the next stage of the purchase process.

Step 4: Exchange of Purchase Contracts:

Once all the legal searches have been completed and we are happy for you to proceed, the Private Purchase contract will be drafted which will include all the terms and conditions for the sale and set the completion date for the transfer. It is usual for a deposit of 10% to be paid at this point to the Vendor or the vendors Lawyers.

Step 5: Completion:

The purchase is formally concluded when the Public Title Deeds of the purchase are signed before a Notary Public and the balance of the agreed purchase price is paid to the Seller. Should the Seller fail to complete penalties are payable to the Purchaser (usually this is the amount paid plus 100%). It is at this stage that you will receive the keys.

Step 6: Post Completion:

Approximately five days after completion, once all documents are formally stamped the deeds are collected from the Notary’s office. It is at this stage the process of registering the property begins as well as paying all local charges taxes and disbursements. Once your Lawyers have completed the registration process and all taxes and disbursements have been paid they will send you your final account. The Lawyers will also assist in the setting up the utility contracts such as water, electricity and telephone. Formal registration of the property takes approximately three months however; this is in the hands of the Land Registry Office and therefore on occasions can take longer.

FEES AND TAXES PAYABLE ON PURCHASE

In general, purchasers should budget between 10% an 11% of the total purchase price to cover all incidental taxes and charges. Details of these charges are set out below.

Lawyers fees:
Are typically 1% of the purchase price

Transfer Tax (ITP):

Where the property is resale or older property (i.e. not bought directly from a developer) ITP of 7% is payable. The tax is calculated against the purchase price of the property. Where ITP is the applicable tax, it is paid on completion following the signing of the public deed at the Notary Public. 8% for properties over € 400.000

Stamp Duty:

Stamp Duty of 1% is payable on the property where the Seller is a Developer, Promoter or a person acting as a Trader of such properties. This tax is payable at completion.

Plus Valia Tax:

This is a municipal tax, which is calculated on the official increase of the property since it was last transferred. The exact amount will vary depending upon the area in which your property is located and the level of tax applied in that area. Under Spanish law the Seller is liable to pay the Plus Valia tax but this situation can be changed by negotiation.

Notary Fees:

Notary fees vary on the complexity of the purchase and the value of the property. Your Lawyer will advise you of the likely amount at the commencement of the transaction, however an average fee would be approximately 800 Euros.

Land Registry Fees:

Land Registry fees are payable in order to register your legal title to the property in Spain. As a guide you should budget for fees at approximately 70% of the rate charged by the Notary Public.

ANCILLARY MATTERS:

Power of Attorney:

It may be necessary to arrange a Power of Attorney for your Lawyer to act on your behalf if you are not going to be in Spain during the purchase process. They can arrange the Power of Attorney in Spain or in the UK. The preparation of the Power of Attorney is included in your Lawyers fee although you will incur a charge from the Notary Public (approximately €80-100 in Spain and £150 in the UK).

NIE Number:

You will be required to obtain a NIE number when purchasing property in Spain. We do not have an equivalent in the UK although it can be considered to be a cross between your social security number and a tax code. The NIE number is used on official documents and in order for your Lawyer to pay taxes on your behalf.

Bank Account:

You may wish to open your own account here in Spain. We can assist you with this although the choice is yours.

Mortgages and Mortgage Costs:

Mortgages in Spain for non-residents will generally be available for between 60-70% of the property value or purchase price which ever is lower. Banks will charge a set up fee of approximately 1% of the value of the loan. There are additional costs such as taxes and administrative charges such as stamp duty, Notary & Land Registry fees that will also apply to a mortgage loan, and therefore it is important when agreeing your level of borrowing to remember that the figure you are advanced is the NET figure(less all cost and taxes), we will of course be able to advise you in this regard prior to completion.

Spanish Wills:

We recommend that when making the decision to purchase a property in Spain that you also make Spanish will. Whilst not entirely essential, failure to have one may result in lengthy delays in the Courts in both Spain and the UK as well as hefty legal bills for the deceased‘s estate.

Property Owners Annual Taxes (Non Resident):

Non Resident property owners in Spain are required to pay taxes following the purchase of their chosen property. These have been summarised below for the sake of completeness. We will be happy to discuss these matters with you in more detail as well as arranging and assisting with the payment of these taxes on a yearly basis.

IBI Tax:

The IBI tax is a municipal real estate tax all property owners in Spain must pay on a yearly basis. The tax is calculated according to municipal criteria which will include the size and type of your property. We will be happy to advise you with regard to the likely level of this tax as well as arranging for this to be paid on a yearly basis.

Wealth Tax:

All non resident owners of property are liable to a tax on the capital assets they own in Spain; which includes real estate. The tax is calculated against the purchase price of the asset i.e. the price of the house or dwelling

Property Owners Imputed income Tax:

This tax is calculated as a percentage of the official value of the property (set by the tax authorities) which is then treated as an income in Spain.