This guide to buying property in Spain is intended to help you understand the process of buying a home in Spain, to explain some of the terminology you will encounter, and to give you an indication of the obligations of overseas home ownership. But please remember that this is only a guide; consult with your legal or fiscal representative for specific questions or queries relating to anything that is written here.

The Importance of Solicitors

The Spanish legal system is different to your home country which makes the buying process a little more troublesome than buying a home in the UK.

Problems can arise when prospective buyers decline the use of solicitors, and later find legal complications  which affect their ownership rights. For this reason, we strongly suggest clients take legal advice before buying. 

Having instructed a solicitor to handle the purchase, you have the reassurance that all the important aspects of your purchase will be covered. 

• The title of the property is checked
• The person selling the home actually owns it
• Whether there are any charges on the property
• Building licences and permissions are in order, where applicable
• The terms and conditions stipulated by the seller are checked for fairness
• Change over of utilities into your name
• Transfer of the title into your name
• Fees and taxes that will need paying
• For the title to be registered with the Government Land Registry

Unfamiliar Terms

Escritura - The title deed, proving who is the owner as well as describing the property in detail. The Escritura is signed once you are satisfied with the preliminary investigations and arrangements for payment have been made. You may either attend the signing in person or appoint someone as Power of Attorney (usually your legal representative) to attend on your behalf. The Escritura is signed in the presence of the Notario.

Notario - the public official who is present to officially certify that the title deeds have been exchanged and understood by the parties concerned. After the signing, the Notario witnesses the payment, or an acknowledgement that the payment has already been made, and this fact is incorporated in the deeds. The Notario is completely impartial and offers no advice. However, they are there to ensure that all the appropriate papers are filed and filed correctly with the relevant passport numbers and details duly checked. Choosing the right solicitor usually has a bearing on the Notario used which can save hours waiting for your turn.

Registering Your Property

After the signing of the Escritura, it is taken to the registry for payment of registration fees. The registry then files the new owners but be warned this process can take several months! Normally your solicitor would do this on your behalf.

The Name on the Deeds

It is worth considering who is to be named as the purchaser and owner on the deeds.

Inheritance tax and change of ownership taxes and fees may be levied if your property changes hands in the future. It is therefore advisable to take this into account at the time of the initial purchase.

All About Money

Financing Your Purchase - Some people buy properties without raising money from a third party. However, you may wish to obtain a mortgage on the property or extend a mortgage on any property you own in Britain. Through our network of companies and banks here in Spain we are able to offer advice and assistance in obtaining finance for your purchase.

Transferring Money to Spain – Often overlooked and a costly mistake if it is! We offer sensible advice and assistance on transferring funds via our Foreign Exchange partners. We can also help with regular payments from your home country to Spain. Remember the experience we have gained in these areas will save you money and following our advice keeps the whole process a smooth and trouble free experience.

A Guide to the Costs

Solicitors' fees are usually less than 1% of the purchase price. This includes:

• Advice about the contract

• Investigation of title

• Planning position of the property

• Reporting on enquiry results

• Remitting any funds to Spain

• Arrangement for the payment of taxes

• Arranging for completion

• Arranging for registration

Other Costs

• Notary fee - around £200 - £450

• Land Registry fee - around £250

• Transfer tax -  7% of purchase price

• Tax office registration for foreigners (NIE) - typically £100

• VAT is chargeable on some of the above.

As a general guideline, the total cost of buying a property in Spain, should be considered 10% of the purchase price.

Mortgages

If you are financing the purchase with a mortgage here in Spain then you should allow for extra fees associated with setting the mortgage up. These do vary from case to case and depend on such factors as the percentage of the mortgage needed, your income, your age etc. If you are low risk then the setup fees will be low. The higher risk the higher the setup fees. This analogy also applies to the mortgage rate and other terms. However, banks are fighting for your business and deals can be made. Unlike the UK where everything seems set in stone, Spanish banks can be a little more flexible and are prone to offering you a deal to get your business. But they will only "deal" if they feel your business is worth dealing for!

Most mortgages tend to be standard repayment mortgages but we have seen more and more companies offering all sorts of schemes including Interest Only. BUT beware! consult with us or your legal advisor before signing anything.

Mortgages range in terms of fees and rates but they will be somewhere within the figures given below:

Setup fees - Anything from 0.5% to 2.5% with 1.5% being common

Rates - These vary highly depending on many factors but you should be able to get between 3% and 3.75%

A typical mortgage of say €100'000 at a rate of 3.25% repayable over 25 years would cost approximately €487 per month.

Check out our mortgage/ loan calculator here

Living and Working in Spain

Should you decide to live or work permanently in Spain you may require a residency permit. You may have to consider importation of cars, furniture and pets, as well as payment of pensions, national insurance and other related matters.

The bureaucracy in Spain seems more complicated and long winded than in your home country. However, this simply is not the case. As a, for example, a British citizen, you are assigned fiscal numbers and associated into the system automatically from birth and as you progress through your life. Much the same for a native Spaniard would be in Spain. But when you move to a different country you are faced with starting that procedure from scratch. New National Insurance numbers, Tax and fiscal reference numbers, driving licences, electoral role etc. etc. All this has to be done in a relatively short period of time thus creating the illusion that there is a lot of "red tape"

With the help of a good solicitor and good advice from professionals this can be fairly stress free. Please do not listen to the neighbour or the man from the pub who tells you to do this or that. These people mean well but 9 times out of 10 do not know you or your circumstances well enough to advice YOU what you need to do!

On Going commitments and obligations

If you spend less than 6 months per year in Spain then you are generally classed as non-resident and you must:

• Name a fiscal representative
• Pay your local rates (Contribution Urbana/UBI)
• Declare all your capital assets in Spain and, where appropriate, pay wealth tax on them
• Pay tax on any income deriving from your activities in Spain, including income you could have derived from letting your home
• Car tax and insurance, where applicable
• Electricity, water and other bills
• If you spend more than six months in Spain you will be deemed to be a permanent resident and expected to pay taxes and social security contributions.

Many of the above points and requirements still apply and income tax will usually be assessed on worldwide income. It is common practice for foreigners living in Spain to employ the service of a Gestoria.

In the event of death

Jointly owned property does not automatically pass in full to the surviving spouse or partner but is dealt with according to any wishes expressed in the will, or under the rules relating to intestacy. It is much cheaper and straightforward to make a Spanish will.

Further recommendation you should consider

• Give an English 'Enduring Power of Attorney' to a member of your family or a solicitor to deal with your affairs should you become incapable of doing it yourself.
• Nominate a 'fiscal representative' to receive your tax and financial correspondence if you are not a permanent resident in Spain
• Insure your property, contents and health.
• Have all service charges transferred to your name and register for taxes. A local 'gestor' (an official form filler) will do these things for you at a very reasonable rate.

The next step

This is just a guide to buying a property in Spain. Though the matters themselves are sometimes more involved than indicated here, the whole process is usually smooth and trouble-free.

So take the 'next step' on your way to owning a home in Spain. Simply contact us to discuss your needs and requirements, and to arrange an inspection visit.