The Spanish Property Buying Process and practical information.
If you are a first time buyer you may be unfamiliar with the property purchase process in Spain. Below is a general guide to your property purchase, which outlines the steps taken and what you are required or advised to do at each stage.
At Open Frontiers we want to make sure you are fully informed of every step of the way. If you are a first time buyer this guide will assure that you know exactly what happens and what is required of you at each stage.
If required, we can recommend lawyers and notaries who can carefully guide you through all the steps of your property purchase, ensuring a smooth and careful transaction is made and that you are kept fully informed throughout the process. A lawyer is no obligation, but it gives the client the extra confidence.
We, at Open Frontiers, will guide you before, during and after the purchase and will assist you with required documents and administration of the property, and the costs involved.
STEP 1: RESERVATION DEPOSIT
Once you have chosen your new home, the first step is to lodge a holding deposit with the Estate Agent or your lawyer (usually €6000) and sign a reservation document.
STEP 2: PRIVATE CONTRACT
The signing of the Private Purchase Contract. The intervention of a lawyer is recommended at this time, in order that the terms and conditions of the offer are correct. The lawyer will carry out a full property conveyance and inform the buyer of the taxes associated with the property. In general, for a resale property, a payment of 10% of the total sale price is required, payable at the signing of the contract. For "Off Plan" developments this percentage may vary from 20% to 40%.
Open Frontiers will also offer our knowledge at this time by checking the status of the house and also the contract; and advise the client about any risks or debts that the property has or could have.
Before signing this contract, your lawyer or Open Frontiers (in case of not using a lawyer), will gather the following documents of the property, this does not involve any costs to the buyer.
“Nota Simple”: this is a document that is given by the registry, it stipulates the property, location, description, the legal owners, and most importantly, the debts that the property carries (if any). If there are other debts that are not mentioned in the Nota Simple, they aren’t part of the property, with exception of the institutes below. This document is VERY IMPORTANT. If you buy a property in Spain and you don’t check the Nota Simple, you could be buying the debts along with the property!
IBI: this is the yearly property tax that needs to be paid by the owner. We request the latest payment receipt of this tax and check if payments are up to date, as well as giving you an idea of the yearly cost involved.
Community fees: we check that the community fees are paid up to date, and we will apply for a certificate from the community by completion (obliged by law).
Energy certificate: this is now obligatory by law in order to sell a property in Spain.
Utility bills: like water, electricity, gas, telephone, ADSL, Alarm system, etc.
STEP 3: COMPLETION
The purchase is formally completed when the Title Deeds are signed before a Public Notary, the agreed balance of the purchase price is paid and the ownership of the property is passed on to the buyer. The Title Deeds always stipulate that the property is sold free from charges and encumbrances.
Open Frontiers will arrange the dates, pass on all the required documents to the notary and will be present as a translator at the time of signing at the notary. No extra costs for this are involved.
COSTS: Allow approximately an additional 11 -15 % of the purchase price for costs and expenses. (The Spanish national average is 13%).
Property transfer tax or VAT: for resales you need to pay a transfer tax of 8% by sales prices up to 430.000 €, 9% between 430.000 and 690.000 €, and 10% once above 690.000 €(In Andalucia). If you buy a new property from a developer you pay 10% VAT. If you buy a plot of land from a developer you pay 21% VAT. (This tax is obligatory and it can vary quickly as it’s regulated by the ‘Junta de Andalucia’).
Stamp duty and notary costs: this is variable but mainly between 1,5% and 2% of the purchase price.
Lawyer fees: If you use a lawyer, the cost is normally 1% of the purchase price, but can be discussed individually with the lawyer.
Mortgage costs: if a mortgage is needed, the bank will charge their additional costs. We do not offer mortgages but can introduce you to some of the local banks.
Agency commission: normally this is included in the purchase price, with the exception of bank repossessions. In this case, a commission of average 2,5% can be charged to the buyer, but this will be discussed and agreed with the buyer before any deposit is paid.
Registration of the property:
Normally carriet out by a lawyer or accountant, but we advise you that the Notary takes care of the registration and any transfer tax payments and stamp duty payments involved. Any notary has direct access to the land registry office and can take care of these payments easily at an extra cost. This mentioned registration and the payment of these taxes needs to be done within 30 days after completion, penalties WILL incur if this 30 day deadline is not met.
Documents needed by the buyer:
Passport or ID.
NIE: national registration number. Given by the national police. Open Frontiers can help you with this administration, our fee is 180€/NIE.
If purchased in the name of a foreign company: a national fiscal number (NIF), this can be applied for by a local accountant or lawyer. The average cost: 1.200 €.
If purchased in the name of a Spanish company: a local accountant can set up the company and the average cost is approx. 2.200 €.
Once the property purchase is completed, there are some important steps that need to be taken care of which Open Frontiers can assist you with. Below is a list of those transactions with our fees for each one:
Connection or change of name on the electricity supply contract: Fee of 90€
Connection or change of name on the contract of water supply: Fee of 90€
Change of name on IBI bills and Basura (rubbish collection) bills: Fee of 90€
Connection for telephone and/or Internet: Fee of 90€
Opening of a Spanish Bank account: Fee of 50€
Follow up of the Snagging list: Fee of 90€
Open Frontiers can also recommend local furniture and decoration shops.
Always at your service,
The Open Frontiers team
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