Below are some questions that we get asked from people looking to buy a property in Spain. If you have any specific questions not covered below, please free to e mail me direct at email@example.com
What additional costs should I budget for?
If you allow an additional 12% of the purchase price, all you buying costs will be covered. These costs include the following: -
Purchase tax or transfer tax – this is the tax charged when an existing property is purchased (new builds are different). The tax applied varies depending on the region in Spain but on the Costa del Sol it is currently 8% of the purchase price up to €400,000, 9% on a purchase price between €400,000 and €700,000 and 10% on anything costing more than €700,000.
Please note, on a purchase price of say, €900,000 the first €400,000 is charged at 8%, then 9% on the €400,000 to €700,000 and 10% on the final €200,000.
Notary charges – the notary office is an official government office where all property transactions are documented. This is the office where the final completion takes place and an independent government officer will oversee the transaction and make sure everything is documented correctly and the property ownership is transferred to the buyer. The cost will vary depending on the purchase price and the complexity of the documents but will normally be between €500 and €1800.
Land registry fee’s – ultimately the purchase is registered at the land registry and the cost is, again, dependent on the purchase price and complexity of documentation but is usually about half the Notary fee.
Lawyers costs – we strongly advise any buyer to use a qualified lawyer based in Spain. Most reputable lawyers will charge 1% of the purchase price although can be negotiated down on large purchases. This charge is subject to VAT which is currently 21%.
Costs when buying a new property from a developer
These costs are exactly the same except instead of paying the transfer tax you would pay VAT at a set rate of 10%.
Ongoing costs after purchase
Community fee’s – Most properties, including stand alone villas will have some sort of monthly community charge. In the case of apartments or townhouses this charge will cover the costs running of the community. These costs include maintenance of the communal pool, gardens, lifts, security, lighting, roads within the complex and the outside painting of the apartments.
The costs of an independent villa will largely fall on the owner but often the villa will be on a piece of land purchased for the building of villas and the costs of maintaining the roads and lighting etc within that area is the responsibility of the Community.
Costs vary greatly depending on the facilities available and the size of the property (the total costs incurred by the community is split between all properties depending on their size). A small apartment in a town centre block with no pool could be as low as €50 per month whilst a large apartment on a luxury complex with heated pool, gym, landscaped gardens, 24 hour security etc could be as high as €2,000 per month.
On a typical 2 bed apartment on a decent complex, monthly charges should be in the region of €120 to €200 per month.
IBI fee’s - These are fee’s paid on an annual basis to the local town hall. They are calculated based on the “cadastral value” of the property which often has no relation to the actual purchase price or value of the property (usually lower). On a typical 2 bed apartment costing €250,000 the fee would be approximately €1000 per year.
Basura tax - This is a fee paid to the town hall for rubbish collection. Again, its based on the Cadastral value but it is not high. On the above example expect to pay €170 per year.
Non Resident Income tax – If you are not a resident of Spain the authorities will assume you receive a rental income even if the property is never rented out. This is calculated by taking 1.1% of the Cadastral value and then charging 19% on this. On the above example expect to pay €300-€400 per year.
Tax on properties rented out is covered below.
Should I use a Spanish Lawyer?
There is only one answer to this question. Yes. Most definitely.
Your lawyer is the most important person in the transaction and by using a qualified Lawyer based in Spain you should have no problems.
Your lawyer will ensure that the property is legal, has all the appropriate licences, is not subject to any charges or loans, has not had any illegal extra building and finally is transferred to you correctly. The lawyer can also arrange for all utility and other bills to be transferred into your name and paid by direct debit from your bank account.
What is the buying procedure and timescale?
When you have found a property that you like it is normal to make a formal offer. This is usually done by signing an offer document (provided by your estate agent) and paying a reservation fee of €6000. This fee can be paid to your estate agent or (what we advise) to your lawyer. It is a sign of good faith on the buyer’s part and shows the seller that your offer is a serious one. It takes the property off the market whilst you negotiate on price and whilst your lawyer carries out the due diligence. The deposit is fully refundable in the event that a price is not agreed or there are found to be any legal issues with the property. If you simply change your mind the deposit is not refundable.
This fee is optional, but it is a good way of showing that you are a serious buyer and it gives you the advantage of knowing that the property is taken off the market for a reasonable period. It avoids the seller selling to another person with a higher offer which is can be very frustrating if you have returned to your home country and started the legal process.
When the price is agreed your lawyer will commence the due diligence which normally takes about 7 days.
When your lawyer is happy with everything, a private purchase contract is drawn up and a further 10% of the purchase price paid (less the €6,000 already paid). In this contract will be an agreed completion date. This is usually within 30 days but any date that is mutually acceptable to buyer and seller can be agreed.
Completion will take place at a Notary office and the final payment made.
The normal timescale from having an offer accepted to completion is normally 1 month but can be extended or shortened if both parties agree.
10% of the purchase price needs to be paid on signing the contract which is usually 7 days after the offer is accepted and the final completion funds need to be with your lawyer for completion. Banks will charge for transferring money abroad and their exchange rates are y not usually very good. We recommend you use the services of a money exchange broker.
How do I choose an estate agent to work with?
Most good estate agents in Spain work together and share their properties. A good agent will subscribe to the multi listing systems which will give them access to every property on the market. Therefore, it is not necessary to contact a lot of different agents. In fact, this can be time consuming and confusing as you will find that you are explaining what you are looking for to several different people.
The best way to find a property is to work with a good agent who can get to understand exactly what you like and don’t like and narrow down a selection of properties for you to view. On viewing, if your criteria changes, that agent will know what is on the market and suitable for you and be able to arrange a viewings regardless of what agent actually has the properties for sale.
The agent should be working for you the buyer and not the seller.
It’s difficult to advise on how to find a good agent but we would suggest – somebody that is subscribed to the multi listing systems (ask the agent), somebody that has been in business for some time and somebody that you feel comfortable with. Does the agent sound like they know the area, did they deal with your initial enquiry efficiently, have they supplied the information you have asked for etc etc.
Any further questions please feel free to e mail me direct at firstname.lastname@example.org