Are you in the wonderful position of being able to afford to buy a holiday home abroad? Or are you simply thinking of moving to a country with a more temperate climate and a more relaxed way of life? Whichever is the case, Spain could be the country of your choice, and if this proves to be the destination of your dreams you will need a little help and guidance along the way. Below I have outlined a few hints and tips that will make the buying process a little easier and hopefully, less stressful. If you follow these guidelines purchasing a property in Spain should be an exciting and pleasurable experience – avoiding some of the more common pitfalls is all that it takes property inspections.
1. Set Your Budget – I think that this is the most important decision that you will make. Look at your finances and decide exactly what spare cash you have available to you. Be honest with yourself and be realistic, emergencies happen and in the future you may need to raise finance for something more important – don’t stretch yourself. Having set your budget stick to it and be very wary of viewing any property that is above your budget – chances are you will fall in love with something you cannot afford and it will be extremely difficult to put that property out of your mind and settle for something more realistic.
2. Choosing the Area – Location, location, location. It is an old cliché but an important one. You may already know the area where you would like to settle, but otherwise visit a few different locations to make yourself aware of the various possibilities. In choosing the location you may also have to consider point one – your budget.
3. Type of Property – A couple of options to start with – new or resale? Many estate agents will try to point you in the direction of new property, mostly because this is the area where they get the least hassle and the most commission. Fine, if you want to purchase a new property, then go ahead, there are many advantages to taking this route but also be aware that there is a huge choice of resale property available in Spain and there are plenty of bargains to be found. Most resale properties are sold fully-furnished and equipped – this can save you a lot of hassle and a lot of money. Most new property is sold off-plan, so you may have to wait up to 2 years before you get your keys. Knowing what is going to be built around you is also important – it can be hard to visualize when you are staring at an empty field! Also that large apartment block may be blocking the sea view of your new villa, be careful!
The next consideration is the property type – house, villa, apartment, bungalow, the choice is endless. This will mostly be determined by personal choice and, of course, once again – budget. You may also at this stage wish to consider if you want to be on an urbanization or have some solitude in the countryside. There are advantages to both, urbanizations can be noisy during the summer months but they are generally safe and child friendly. The countryside can be peaceful but how far is it to the nearest shop? What about when the family visit – is it the type of holiday they would be looking for? Also, you may want some kind of social life, there are lots of things to consider before making your final choice.
4. Choosing Your Property – Now is the exciting time, going out and viewing possible properties. Take your time and look at as many as you can – if you are looking at new properties, don’t be rushed into a decision “this is the last one available” is the selling point of many an estate agent. Don’t be fooled, there are always plenty of properties available. Take lots of photographs and if possible a video, this is very useful when reviewing later, it can get very confusing when you are looking at lots of properties. Make a short list and go back to look again. This is an important decision – take your time.
5. Paying a Deposit – You have made you choice, now is the time to put your money where your mouth is! The usual in Spain is a 3,000 euros deposit to take the property off the market. The next step will vary depending on whether your choice is new or resale. With new property the next step will probably be payment of something in the region of 30% of the final purchasing price, payable within one month. There may also be stage payments during construction though the norm is balance on completion. Different builders have different rules so be aware of these before you decide to put down your 3,000 euros deposit. With resale property the whole process can be completed within 1 month (if this suits both seller and buyer), so normally it is 3,000 euros deposit and the balance on signing at the notary.
6. Appointing a Solicitor – It is important to appoint a Spanish solicitor who is well versed in Spanish property law and with a good grasp of the English language. He (or she) will be your friend and ally throughout the buying process and will make sure that there are no outstanding debts on the property. Also after the signing he will help with such things as changing electricity and water contracts into your name. You can usually also retain him to deal with your future tax returns in Spain.
7. Taxes and Costs – You will need to be aware of the various taxes and costs that will need to be paid both during and after the purchase.
Taxes on purchase , transfer tax (IVA), 6% of the purchase price on new property, 7% on resale. plusvalia tax, calculated on the appreciative value of the land the property is on (normally paid by the purchaser). Land registry charges – around 300 euros to change the property into your name. Notary charges, can vary depending on location but generally around 500 euros.
The guideline for extra taxes and costs is 10% of the purchase price although this can be nearer to 12% if you are obtaining a mortgage to purchase the property.
Taxes after purchase – SUMA, local council tax payable every year. Community fees, if you are on an urbanization there will be fees for the upkeep of common areas such as gardens, swimming pools, lifts etc. This may be payable monthly, quarterly or half-yearly.
8. Signing the Deeds – The property deed is known as the Escritura in Spain and the signing of this and the final payment for the property is done at the notary office (the notary is an official government representative). You may be present along with your solicitor for the signing or your solicitor can do this in your absence if you have previously given him power of attorney (a common practice in Spain). Before you can sign the deeds you will need to obtain an N.I.E number (foreigners identification number), this can be obtained at any national police station but make sure you ask your solicitor about this long before the signing and he will advise you how to obtain one. Also make sure that you have your original passport with you before going to the notary, also the passport of anyone who is to appear on the deeds.
9. Taking Possession of the Property – When the deeds are signed and the final monies paid you will receive the keys to your property. You will then need to make sure that electricity, water and SUMA contracts are changed over into your name. Don’t forget to organize property and contents insurance. If the property is new, you will want to check it through and write a snag list of any problems.
10. Congratulations – You are now the proud owner of a property in Spain, may the sun shine on you and the value of your property rise, that tiny one bedroom apartment may one day turn into a seafront villa! – Relax and enjoy.