Buying a property can be one of the biggest commitments in your life. Therefore, it’s important to find out as much information about the process as possible. And, of course, choosing an agent you can trust.
The process of buying a property in Spain
Buying a property is one of the biggest commitments you will make in your life. Therefore, it’s important to find out as much information about the process as possible and choosing an agent you can trust is the first step.
The transfer of ownership of a property in Spain goes through a Spanish notary. Doing your homework and knowing what to expect when buying a property is the first step to a successful deal. The next step is choosing your agent. It’s important to trust the agent’s ability and expertise to find you the right property. You need to feel that they are the best people to represent you and your interests. Don’t be afraid to ask questions. Ask about their brokerage skills, how the agency works compared to others and how they are going to find you your dream home.
At Serneholt Estate we always offer clear, on-hand communication throughout the time we work with you and our biggest focus is on you, the customer, at all times. It goes without saying that we will keep you informed and updated throughout the whole process. You will find that this is not so common in the Spanish housing market. To make it easier for you as a buyer we have compiled this buyer’s guide. So here is how it works – all the way up to the last meeting with the notary.
Timeline of the Buying Process
1. Preparations
The first steps in the buying process are the preparations. Such as financing, choosing the right legal representation and organising an NIE number.
Financing
What options do you have when investing in a home in Spain? Before actively looking for your dream home, you need to be sure how you’re going to finance it by doing all necessary calculations first. You may then need to apply for a mortgage offer from your home country or a Spanish bank. This will allow you to act fast when the right home comes along. You can usually borrow up to 70% of the property’s market value from a Spanish bank. As part of our service we can help put you in touch with the right people to help with this.
NIE number
To own a property in Spain you will need a Spanish tax ID number, known as an NIE number. You will need this to take over ownership of the property when you register your title. Your lawyer can help you get one when you have found the right home or you can apply for one at a number of different places; the Spanish embassy or at some Spanish police stations.
Finding a property
Once you’ve got everything ready, you can start the process of viewing properties in Spain. As a company, we can make all the difference in making this as stress free as possible. Send us your wish list and we’ll find the best of what the market has to offer for you. We will also plan your viewings so that you get to see the best options during your visit.
2. Viewings
This step of the buying process is all about viewing property in the search for your dream home.
Viewings
A successful viewing comes down to the commitment your agent takes in finding you the right property. As agents, we focus intently on your particular wishes. In this way, you only view the properties that we know definitely ticks all the right boxes. During a viewing it’s paramount that a full inspection of the property is carried out as carefully as possible. This is because all property in Spain is sold in its existing condition and it’s very difficult to dispute any defects once you’ve signed the contract. If this is something you are unfamiliar with it’s recommended to contract a surveyor to conduct a survey. Your lawyer will always conduct the legal enquiries and due diligence on the property.
3. Bidding & Contract
Bidding on and reserving the property you want. Contract and moving into your property.
As a buyer, you don’t have to be present during the purchase. If you are unable to be there during these final stages, we can help put together the necessary documentation so that we can handle the entire process for you.
Auction / Reservation
It’s usual that the property owner will accept the first offer from the buyer who is prepared to pay the asking price. The final price of the property then can often be decided through a negotiation between the buyer and seller. When you have found the right home, we will support you in negotiating the price and terms with the seller. This is when a reservation contract is generally drawn up.
Legal representation
A big difference in Spain is that the buyer – and quite often the seller – is represented by a lawyer. The lawyer will help you through the whole transaction, making sure everything takes place securely and as it should do. Many people choose a lawyer for themselves; however, we can arrange this with one of our trusted partners, if you need help in doing so.
Reservation
A reservation fee (usually 6,000 euro) is also payable at this time either to your lawyer’s client funds account or to our client funds account. When the buyer and the seller have agreed on a price, a reservation contract is drawn up. This means that you, as the buyer, pay a reservation fee to reserve the property so it’s taken off the market. You are then responsible for inspecting the property carefully before the sales contract is signed. This is due to the fact that all property is sold in its existing condition, taking into account its age, price and use.
Contract
The next step in the buying process is to sign a contract of sale, called the “Arras”, or “Option de Compras”. At this point you, as the buyer, normally pay 10% (including the reservation fee already paid) of the total purchase price to the seller. This contract is prepared by the buyer’s legal representative.
Ownership title
On the completion date, you and the seller meet with the agent and the legal representatives at the notary’s office. It’s your representative who chooses the notary and who is responsible for booking the appointment. The notary checks both the buyer’s and the seller’s identification to confirm the property’s legal status. And it’s also here that you receive your ownership title, the “Escritura pública de compraventa”.
Payment
The notary receives the payment, and after paying the taxes and fees, he distributes the final balance to the seller. The seller receives 97% of the purchase price. You, as the buyer, pay the remaining 3% to the Spanish tax
office. This acts as a security to ensure that the seller fulfils their tax duties and declares any capital gains from their sale in Spain. When the seller has then met all the official requirements, the 3% will be refunded to them.
Access
You receive the keys from the seller at the meeting with the notary, after which you can move straight into your property. The seller is responsible for leaving the property in the condition (legally and physically) with the installations and licences stated in the sales contract. Remember that the same requirements might not apply in Spain as in your home country, e.g. cleanliness, decoration etc. The property is usually left in its present condition for the new owner, unless otherwise agreed previously between the parties.
Costs
The normal purchase costs of a Spanish property are estimated to be between 10% and 14% of the purchase price and in most cases are slightly higher for new builds than for existing homes.
Costs of buying a property in Spain
Transfer tax – A transfer tax is payable on the sale of existing homes, which amounts to between 7% – 10% of the sale price, although this can vary depending on the region. The tax is often higher for more expensive homes. The transfer tax is payable by the buyer.
Value added tax and stamp duty – Value added tax at 10% is payable on homes being sold for the first time, e.g. new builds. In addition to VAT, stamp duty is payable for the issue of the legal documents. This is normally around 0.5% of the purchase price, but can be 1.5% in certain regions. Both taxes are payable by the buyer.
Notary fee and title registration fee – The Spanish government determines the notary fees, the cost of which depends, among other things, on the property’s value and how many pages the sales contract has. In most cases the cost is between €500 and €800 and is usually paid by the buyer. If you have taken out a bank loan to finance the purchase, you will also need to pay the notary fees for the title registration linked to the loan. Title registration fees amount in most cases to between €300 and €500 and are paid by the buyer.
Legal fees and translation fees – Legal fees vary depending on the services included in the purchase and its complexity. Most lawyers charge around 1% plus VAT of the property’s purchase price, although there is normally a minimum fee. The fee is often negotiable for more expensive properties. Some charge by the hour and others offer a set fee.
Mortgages – If you take out a bank loan in Spain to finance buying your home, this home loan will be subject to stamp duty of between 0.5% and 1%, depending on the area the property is in. The bank granting the loan will also require a property valuation to be done. This costs around €300 to €500. Most banks also charge a startup fee of around 1% of the loan amount.
Service connection charges – When you buy a new home, you have to pay for the electricity, gas and water to be connected and a meter to be installed. This is often taken care of by the building company. However, it’s important to check this.
Homeowner costs – Homes in Spain are subject to a local property tax, which is paid regardless of whether the owner permanently resides in the country or not. The tax is between 0.5% and 1.2% of the taxable value. The average cost of the homeowner tax lies between €200 to €1000 a year, but can be higher for more expensive properties. All owners of Spanish property, including those resident abroad, must submit an annual Spanish tax declaration.
Letting costs – Income from letting a property by owners who are not permanent residents pay a set fee of 24.75% of the rental income. However, some deductions can be made. For property owners resident in Spain, the rental income, after certain deductions, is added to other sources of income and the total amount is then subject to Spanish income tax.
Income tax – Non-permanent residents who do not let their homes are also liable for income tax. This tax is charged regardless of whether the property is let or not or whether the owner has actually received any income from it. The tax is based on a theoretical benefit of owning the property and is calculated as a percentage of the taxable value. The cost is usually relatively small for most homes, often a couple of hundred euros or less per year.
Navigating the journey to buy a property in Spain can be complex, but with the right guidance, it can become an exciting adventure toward securing your dream home. At Serneholt Estate, we’re dedicated to providing you with clear communication, expert advice, and personalized service every step of the way. Trust us to make your buying experience smooth and rewarding.
