It is highly recommended that you appoint a lawyer, you then must decide if you wish to grant them Power of Attorney (Poder Notarial), this will enable them to represent you during the purchase process and in your absence. A Power of Attorney must be signed and witnessed by a notary either here in Spain or in your home country. Granting a power of attorney to a lawyer is the most common way to purchase and also means you do not need to be here in Spain during the process or at the notary on completion day.
Once you have chosen a property you’re keen to purchase a deposit of typically 10% is required.
This is often done in two stages. The first stage is to sign a Reservation Agreement, this details the property, the price and estimated completion date. At this stage, a reservation payment typically between €5000 to €10,000 is paid. The property is then withdrawn from the market for period of 15–30 days for due diligence and to draft the Purchase Contract. Once the Purchase Contract has been agreed by both parties the balance of the 10% is paid on signing.
If you are non-resident in Spain you must now obtain an NIE; a fiscal identification number and open a local bank account. All persons to be included on the deeds must have an NIE number. This is included in our legal services.
Buying a new property during construction however, often requires additional staged payments, normally between 40-50% of the purchase price during the construction process.
On completion day, the deeds must be signed before a notary. The seller and buyer must both be physically present at the notary or represented by counsel with power of attorney. The meeting with the notary can take anything from an hour to several hours. While we highly recommend you are represented by a lawyer it is possible to represent yourself, you must know Spanish or take an interpreter with you. The final balance must now be paid either by bank cheque or bank transfer.
Once you have taken ownership we recommend that you seek advice from a lawyer regarding inheritance planning and make a Spanish Will.
It is important to understand the purchase process and the additional purchase costs in Spain as it is different than in the UK and can vary a little from one region to another. In general, it is necessary to budget 13% - 14% of the purchase price for these additional costs.
Transfer Tax (ITP)This is applied only to the sale of resale property and is 10% of the purchase price in the Valencia region and 8% in the Murcia region.
VAT (IVA) and Stamp Duty (AJD)This is applied to the sale of new build property. VAT is payable at 10% of the purchase price and stamp duty is also payable at 1.5% of the purchase price in the Valencia region and 2% in the Murcia region. It is worth noting that for commercial property, land & plots, garage & parking VAT (IVA) is applied at 21% of the purchase price.
A Notary is a legal representative of the Spanish Government. They will witness the signing of the title deeds (Escritura) and ensure all payments and taxes have been paid. Their fee is usually between €600 and €1300, often less than 0.5% but could be up to 1% of the purchase price. The fees are higher if you are buying with a mortgage.
The Land Registry fee is around half the cost of the Notary fee, normally between €400 and €600.
It is strongly advisable to appoint a lawyer to represent you. They will draft and review contracts and will explain all the legal issues in addition to carrying out all necessary due diligence and conveyancing. These fees can vary but are generally between 1% and 1.5% of the purchase price depending on the type of property you are buying. If you are on a rustic plot the fees may be higher than on an urban plot for example, and if you are buying with a mortgage.
Spania Legal legal fees include: establishing a power of attorney, NIE applications, opening a bank account, conveyancing and all other aspects relates to the purchase, attending the notary on completion day, establishing service contracts (water, electric, gas), registering with SUMA/IBI and setting up standing orders for all of these payments. We can also arrange insurance for the property if you require.
It is possible for non-resident buyers to obtain a mortgage in Spain up to 70% of the property value. If you have residency in Spain it may be possible to obtain a mortgage up to 80% of the property value.
There are additional fees that need to be accounted for when buying with a mortgage; the property will be subject to a bank valuation normally between €400 - €600. Stamp duty (AJD) of 1.5% of the capital loaned and a lenders commission around 1% of the capital loaned. This will also increase the Notary and Land Registry fees.
Ongoing Taxes and Fees
As a homeowner in Spain, you will also need to account for the local council tax called IBI, and a rubbish collection tax. If you are part of a community or urbanisation there will also be community fees to consider in addition to electricity and water.