Buyers guide

Once you have found your perfect property and decided to proceed with the purchase, the buying process will begin. Before you sign anything or pay any deposit you should take advice from a legal adviser. You can use either a lawyer or an asesoria/gestor.

Asesoria/Gestor (Conveyancer)

The asesoria/gestor is your best friend and he/she will advise and assist you through every stage of the buying process by:

  • Helping you to obtain an NIE number
  • Verifying that the purchase contract is correct and covers your interests
  • Carrying out the necessary searches
  • Payment of deposits
  • Preparing all necessary documentation for the visit to the Notary
  • Accompanying you to the Notary for the signing of the title deed and translating documents for you
  • Registering the new title deed
  • Arranging for utilities to be transferred into your name

Once you have completed the purchase of your new home, he/she will then be available to:

  • Make an annual tax declaration on your behalf
  • Prepare your Spanish wills
  • Transfer car ownership and registration
  • Make an application for residency

You are of course free to use the services of the lawyer or asesoria/gestor of your own choice. However, having worked with a number of legal advisers since 2004, we can recommend to you English speaking lawyers and asesorias/gestors whose services we have used and whom we have found to be efficient, reliable and highly professional. None of these people are connected to our business in any way, so if you do not have your own legal adviser, then we can confidently recommend the services of these people.

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Obtaining your N.I.E. Number (foreigner´s identification number)

In order to purchase a property in Spain, you need an N.I.E. number which is obtained from the local police station (Comisaría de Policia) . You will need this certificate prior to completion of your purchase, so please do leave enough time to obtain it (min 2 weeks and possibly longer during the summer months). Your asesoria/gestor can apply for this for you but you need to accompany him/her to the police station. You will need to take your passport and a copy of it. The N.I.E. number is a very important part of Spanish life and you will be asked for it time and time again.

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Spanish bank account

You will need to open a bank account in Spain and you need both your passport and your N.I.E. number in order to do this. The money you need to complete the purchase will be deposited into this account and withdrawn in the form of a bank certified cheque – the normal method of exchanging money at the Notary's office. Your utility bills will also be paid by direct debit from this account.

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Mortgages

Eligibility

Should you require a mortgage to complete on your purchase, the process is straightforward and similar to that in the UK. A mortgage can be arranged either in Spain or in the UK. Both Spanish and UK banks have the same requirements for lending money on a property in Spain and all require proof of income and regular outgoings. The level of mortgage offered is directly dependent on your financial status and also the declared value of the property you wish to purchase. The property must have had a registered title deed for 2 years or more and no Spanish or UK bank will consider a mortgage if the property does not meet this requirement.

Terms

Spanish banks will generally lend 60% to 70% of the value of the property and will require the mortgage to be fully repaid by the age of 70 normally over a repayment period of 5, 10 or 15 years. Before the bank can make a decision about your application, the property will have to be valued by the bank valuer (tasador) who will use a set ‘value per square metre' neither the market value nor the price you are paying for the property. You just need to be aware of this when you are calculating the level of mortgage you require in order to buy. Sunset Properties will assist you through this process and we will accompany the valuer to the property. We always do our best to help things along and will keep you informed of progress at all times.

Costs

The cost of arranging a mortgage is likely to add about 2% to your overall buying costs. If the sellers of the property you are buying already have a mortgage on the house then it is sometimes possible to transfer the existing mortgage from the seller to the buyer which might reduce the mortgage set up costs.

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Purchase Contract

In Spain the purchase contract is called the Contracto de Compraventa . Usually the purchase contract will be prepared by your legal adviser and must be agreed by both the buyer and the seller. You can seek to include any clauses which you consider to be important or to safeguard your position. You should consider issues such as the results of searches, mortgage applications and any other agreements between the buyer and the seller.

A typical purchase contract will include:

  • Description and address of the property
  • Purchase price
  • Amount of the deposit
  • Form of payment
  • Penalty clauses
  • Any additional requested clauses
  • What is included in the purchase price (e.g. furniture, etc)
  • Completion date
Before you sign this contract, please be absolutely sure that this is the house for you. The contract is binding for both the buyer and the seller and there will be penalty clauses should either party rescind the contract.
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Deposit payment

Holding Deposit

Once the terms of the purchase have been agreed with the sellers, the buyer will normally be required to pay a holding deposit of €3,000 which will remove the property from the market for a fixed period of time and enable the buyer's legal adviser to ensure that the documentation for the property is correct.

10% Deposit

When both parties have agreed the contents of the purchase contract, they sign it and a deposit of 10% of the purchase price (less the €3,000 holding deposit) is then paid by the buyer within a certain agreed time limit. This is a non-refundable payment and will only be reimbursed in the event of a specific clause in the contract not being fulfilled.

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Searches

Before the signing of the title deed in front of the Notary, your asesoria/gestor will carry out searches and obtain a Nota Simple. This document confirms that the seller is the registered owner of the property and that all taxes have been paid. The asesoria/gestor will also check to see whether any debts or charges exist on the property and that clear title can be obtained. Prior to completion, all of the bills relating to the property, such as electricity, water, telephone and council tax, must be proven to have been paid up to date. These paid bills must be made available to the Notary at the time of completion.

If the property you are buying does not already have a registered title deed, this does not necessarily mean that you should not buy it. This is a situation very similar to a first registration in the UK. The property may have been in the same family for many years and now that it is being sold, the registration can be done. Your asesoria/gestor will still carry out searches, but instead of the Nota Simple , he/she will contact the Catastro Office for a certificate relating to the property. Completion of the purchase and obtaining the new title deed will generally take longer as your asesoria/gestor will need to gather all of the documentation relating to the property. If it is found that it is not possible to obtain the new title deed, the purchase cannot continue and your deposit will be refunded.

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Expenses

You must add between 10% and 11% to the purchase price of the property to cover the taxes and expenses that will arise during the purchasing process. The costs involved include:

Notary Expenses

The amount you have to pay will depend on the purchase price declared on the title deed.

Value Added Tax (I.V.A.) for new properties only

If you have bought a new home (with a garage) you must pay to the builder 7% I.V.A. on the price declared on the title deed. If you have bought a business or a garage without a home you must pay to the builder 16% I.V.A.

Stamp Duty

If you have bought a re-sale property or a plot of land you will have to pay 7% tax based on the price that appears in the title deed. If you have bought a newly constructed property and have already paid the I.V.A. you must also pay 1% tax based on the price that appears on the title deed.

Land Registry Fees

The amount you will have to pay depends on the purchase price declared on the title deed.

Land Value Tax (Plus Valía)

This tax is levied by the local town hall and it is paid once the property has been sold. It is calculated on the increase in the value of the land since it was last sold. This tax is usually paid by the seller, but in some areas it is paid by the buyer.

Legal Fees

You will need to pay for the services of your asesoria/gestor who will be happy to tell you in advance how much these costs are likely to be. Typically the standard fee is 1% of the purchase price plus I.V.A.

Mortgage Arrangement Fees

The cost of arranging a mortgage is likely to add about 2% to your overall buying costs which could bring your total costs to around 12% of the value of the property.

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Completion

The completion date is agreed between the buyers and the sellers – 6-8 weeks is normal. However, depending on the outcome of the searches, it can take anywhere between 3 weeks and 3 months between signing the contract and completion.

Completion takes place at the office of the Notary who is an officer of the state whose job it is to ensure that all the legalities are completed correctly. Both the buyer and the seller will be required to appear before the Notary in person and at the same time. If you are unable to attend in person, you must obtain a power of attorney for someone else (often your legal adviser) to sign on your behalf. This is best done in Spain with the help of your asesoria/gestor.

All transactions at the office of the Notary are conducted in Spanish so if your asesoria/gestor does not speak English, then you may want to consider using an interpreter. The final payment will be made in front of the Notary usually by banker's draft or banker's cheque. You will then sign the title deed and be handed the keys to your new home.

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Property registration

Your asesoria/gestor will now send the new title deed to the Land Registry for registration. It should be returned within approx 3 months.

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Insurance

The insurance of the property becomes your responsibility once completion has taken place at the Notary's office. Most Spanish insurance companies offer insurance as a two part policy with the building and contents being assessed separately. The process is similar to that in the UK and to obtain a quote, you will need to have the following information:

  • Your full name and NIE or passport number
  • The full address of the property
  • Estimated cost to re-build the property
  • Value of the contents to be insured
  • Your bank details as the payment will be made via a direct debit

If you do not live in Spain permanently, the insurance company will probably also need to know how many doors and windows the property has and whether they have metal security grills (rejas) or security glass

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Residency

The law states that anyone who spends more than 6 months of the year in Spain must obtain a Certificate of Residency and declare their income tax in Spain. Your asesoria/gestor can obtain this certificate for you and help you with your income tax declaration. It is possible to apply for your residence certificate yourself:

You will need to complete an application form which is available from the local police station ( Comisaría de Policia) and present the original form plus a copy along with 3 passport type photographs, your passport and a copy of your passport at the police station. Other documents may be required depending on your circumstances. A list of these documents can be obtained from the police station or your asesoria/gestor will be able to advise you what is required. Once you have presented all of the documentation, you will be told how long the process is likely to take.

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Our service to you

At Sunset Properties we will:

  • Monitor the progress of the purchase of your property for you
  • Keep you informed at every stage
  • Answer any questions you may have at any stage of the process
  • Liaise regularly with your legal representative
  • Accompany you to the Notary office for the signing of the title deed
  • Be there for you after completion – see after sales service below
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After sales service

At Sunset Properties, our company ethos is all about customer service. We offer a friendly, reliable and professional service where we guide our buyers through the whole process from beginning to end. We never pressurise anyone into buying anything and we never abandon anyone one they have bought a property - once a client always a client.

Our comprehensive after sales service is very important to us. We know how hard it is to deal with the practicalities of setting up a new home in a foreign country where everything seems to be done differently from the systems we are used to. If you have bought a holiday home then you may not be here in Spain for much of the time and you will need a reliable source of advice and practical help. This is something we pride ourselves on and, over the years, we have dealt with all sorts of requests from clients who have bought a property through us weeks, months or even years after completion.

Our after sales service includes:

  • Arranging for the connection of a telephone (where possible)
  • Arranging a broadband internet connection (where possible)
  • Registration with the local town hall - "empadriamento"
  • Assistance with the opening and operating of a bank account
  • Assistance with the opening of a post office box if your house is locaed out of the town
  • Assistance with the transfer of the gas contract or arranging a new one
  • Assistance in finding competitive house insurance
  • Help in finding reliable builders and tradesmen
  • Anything else you can think of!
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This purchase guide is for advice only, please remember to always take expert advice when purchasing a property.