Your Guide to Buying a Property in Spain

When you have finished your long hard search and settled on the right Spanish Property for you, please don´t trip up at the final hurdle.

Make sure you are never pushed into making a rash decision on a property until you are perfectly happy with your choice, and that you are sure you want to complete on the sale. There are, sadly, still horror stories of people being ripped off and conned out of small and large amounts of money, but if you go through an established estate agent and arrange suitable legal advice, your buying process should be smooth and trouble free from start to finish.

One thing you will have to accept when buying a property in Spain is that the world of officialdom and paperwork is not quite what it is back home, and some things are done quite differently from the UK. You must try to accept this early on, to avoid more worry than necessary. Hopefully this short guide will give you some useful pointers to guide you through the process as smoothly as possible.

THE PROPERTY SEARCH >>
Always do your research! The increasing use of the internet has proved a significant to both buyers and sellers of property, and is more and more becoming the first place people look for Spanish property. Some websites provide even more useful information such as area guides, property news, and even newsletters. Try and go through as many magazines as possible to get a feel for prices. You can pick some up in the UK in places like WH Smith´s but there are many more to choose from once you have arrived in Spain.

Once you have narrowed down your search, it is time to contact an agent. Don´t be scared, many of them don´t bite! There are many more estate agents in Spain than there are in the UK, mostly because of the recent property boom, so you should try to use a little care when selecting an agent. Ask them if they are part of any recognised professional body, and maybe how many property listings they have on their books, or how long they been established in Spain, for example. The fact is that your feeling is usually the best judge. Other than that, a recommendation from someone who bought from the same company is probably the best way to choose.

DECISION TIME >>
So, you have seen 100´s of properties, your agent´s going grey, you can´t quite decide between property a and property b, it´s all getting a bit much… and then you find it: The property you always imagined! Now the fun begins, as it´s time to make an offer. At this stage the Spanish system is no different to the UK. The buyer makes an offer and the vendor either accepts or rejects that offer. If agreement is reached verbally you should instruct a lawyer immediately to act on your behalf.

INSTRUCTING A LAWYER >>
Choosing the right lawyer is a very important part of the buying process, and bear in mind that you could well be dealing with the same lawyer for some time to come, and they will probably end up acting on your behalf if you should sell the property. As in so many things, the best way to find someone good is a recommendation.

PAYING A HOLDING DEPOSIT >>
Once you have made your decision and your lawyer is happy with the terms and conditions of anything you are asked to sign, it is time to pay a holding deposit. This deposit is usually 3000 Euros on smaller properties, and 6000 on larger properties, and is usually held by the estate agent, in order to take the property off the market until the private contract is signed. These deposits are often paid “subject to mortgage” until a certain date. This means that buyers are given a certain amount of time to arrange the finance, and will not lose their deposit if the finance is not granted.

PRIVATE CONTRACT –
The point of no return. This is the most important stage in the whole process, as if either party pull out afterwards, they must compensate the other party with (typically) 10% of the purchase price. On signing the private contract, the buyer will deposit 10% with the seller´s lawyer, and the other reason why this stage of the process is so important is that it defines a date by which time the parties must complete.

PUBLIC CONTRACT –
The notary public. This is the final stage in buying a Spanish property. Both parties must attend the notary on or before the date stipulated by the private
contract, at which time the balance of the purchase price is paid, and a new title deed is prepared and signed by the notary. Mortgages will also require a separate deed, and outstanding mortgages must also be cancelled at this point. Once the deeds are signed they will be then be submitted to the land registry
for registration.

THE BUYER´S COSTS >>
As a general rule, the costs of buying a property in Spain should be no more than 10% of the purchase price. These costs are as follows:
Transfer tax: the Spanish equivalent of stamp duty, currently 7%.
Lawyer´s fees: most lawyers in Spain charge 1% of the purchase price, depending on what services you ask them to proved. They will probably charge more if you ask them to act as“Power of Attorney”, for example.
Notary and Registration Fees: These should be no more than around 1000 Euros, depending on the price of the property.

The fees may rise if you are taking a large mortgage, for example, as banks and mortgage brokers in Spain charge higher opening fees that UK equivalents. They will be repaid as part of the mortgage total, however, so it is difficult to give an average figure. All other costs should be paid by the seller, including all estate agents fees, capital gains tax, and an incremental land tax called “plus valia”.

As a final piece of advice, the oldest one in the book probably holds more true today than ever before:
Buyers beware, if it sounds too good to be true, it probably is.