Buying Property in Spain
Spain led the way in developing mass British overseas tourism in the final third of the last century so there’s no surprise that it has led the way in property buying abroad as well. In many parts of Spain the climate is agreeable all year round and the lure of the holiday home and the retirement villa have recently been added to by the golfing complexes being built to satisfy the demand of Northern European buyers.
Wide Range of Homes AvailableFor the holiday home buyer there is a wide range of property available. The classic Costas holiday apartments and villas represent a Spain that many Brits never venture far from, but there are beautiful villages and towns further inland that have been attracting the more adventurous overseas buyers for many years now.
Coastal properties command higher rents but are more expensive to buy than rural properties, so it is important to know why you are buying. Is this more for investment, which means you must maximise the return, or a lifestyle choice for you and your family. If it's the latter, you can allow for some leeway in the financial calculations.
Retirement ChoicesIf you are planning to retire, although that remote ‘finca’ may look gorgeous, will you be able to live there as you get older and less mobile? Look at where the services are, perhaps a property in a large village or small town will be less of a burden as time goes by. Or perhaps a golfing complex, with all the services on site, will be a better choice, particularly if you are a golf fan!
The Buying ProcessOnce you’ve found your property, the steps to complete the purchase are simple and often happen faster than in the UK. It is essential to use a lawyer when buying in Spain, preferably one who speaks English and Spanish. There are often complications discovering the true owner(s) of properties, particularly in older rural areas, and it is very important to ensure, with a lawyers help, that any contracts are signed by the person whose name appears on the title deed.
PitfallsUnscrupulous tenants have sometime sold the properties they are renting to foreign buyers who did not take the necessary precautions. It is also important to check that planning permission is all in order, although that hasn’t helped many buyers who are now discovering that their planning permission was obtained fraudulently. However, the UK government is aware of the problem and pressurising Spain to resolve these issues without penalising the innocent buyers, and an EU commission on the problem has recommended the setting up of independent tribunals to deal with each case.
ContractsOnce an offer has been accepted, a deposit of around €3,000 will secure the property while contracts are drawn up. Cheques can take a long time to clear so credit cards or cash are recommended for this deposit.
A ‘Contrato privado de compraventa’, or private contract, details the price and exactly what is and what is not included in the sale. This will normally be drawn up and exchanged within a fortnight of the deposit being paid, and your lawyer will then investigate the property to make sure all is in order, for example that there are no debts secured on the property. The results of this investigation are put together in a document known as a ‘nota simple’ and at this point a 10% deposit becomes payable.
Final StagesThe process ends with a formal signing of the title deeds in front of a notary, when the full amount of the property is paid. For properties that are in the process of being built you should negotiate step when part of the money becomes due, as each stage of the build is completed.
The lawyer will then take you through the payment of transfer taxes and other formalities. A useful figure to allow for these is 10 or 11% of the purchase price, depending on whether the property is new or previously owned. This is because Spanish VAT, or IVA, is 7% on new homes and 6% otherwise. Stamp duty is 0.5%, and there are a number of other smaller charges which normally amount to around 1% all in: a property registration fee, a fee for the ‘escritura publica’ (an ownership certificate), and connections to the public services. The lawyer will help with sorting out the utility connections and setting up of accounts.