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| Buyers guide |
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| Asesoria/Gestor - your best friend! | Purchase Contract | Deposit payment
| Spanish bank account | Searches
| Expenses | Mortgages
| Obtaining your N.I.E. Number | Making
final payment and signing the title deed | Property
registration | Residency | List
of Spanish terms |
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| Once you have found your perfect property and you have decided to proceed
with its purchase the buying process will begin. But before you sign anything
or pay any deposit you should take the advice of a legal advisor. You can
use either a lawyer or an Asesoria/Gestor. From personal experience I have
found that in many cases using a lawyer can be more costly and more complicated
than using an Asesoria/Gestor. |
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| Asesoria/Gestor
- your best friend! |
| The Asesoria/Gestor truly is your best friend - he/she will advise and
assist you in the buying process regarding purchase contracts, searches,
signing the title deed in front of the Notary, helping you to obtain an
N.I.E. Number, registration
of the new title deed and transfer of utility services. Once you have completed
on the purchase of your new home he/she will then be available to make a
yearly tax declaration on your behalf, prepare your wills, transfer car
registrations and ownerships and make an application for residency. |
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| Purchase
Contract |
Spain the purchase contract is called a Contracto de
Compraventa. Usually the purchase contract will be drawn up by your legal
advisor and must be agreed by both the buyer and the seller. You can seek
to include any clauses which you may 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 seller.
The typical contract will include the following components:-
• description and address of the property
• purchase price
• amount of the deposit
• form of payment
• penalty clauses
• any extra requested clauses
• what is included in the purchase price (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.
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| Deposit
payment |
| When both parties agree to the contents of the contract they sign it and
the deposit is paid by the buyer. This is usually 10% of the purchase price.
This is a non-refundable payment and will only become refundable in the
event of a specific clause in the contract not being fulfilled. |
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| Spanish
bank account |
| You will need to open a bank account in Spain. You do not need an N.I.E.
number to be able to do this, your passport is usually sufficient. The money
you need to complete the purchase will be deposited into this account and
withdrawn in the form of a Bank Certified Cheque. This is the normal method
of exchanging money at the Notary office. Your utility bills will also be
paid by direct debit from this account. |
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| Searches |
Before signing the title deeds in front of the Notary your Asesoria/Gestor
will carry out searches and obtain a Nota
simple. This document confirms that the vendor or seller
is the registered owner and that all taxes have been paid. The Asesoria/Gestor
will also check to see if 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, telephone, water and council rates
must be proven to have been paid up to date. These paid bills must be made
available to the Notary on 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 Note Simple he will contact the Catastro
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 you will be refunded your deposit.
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| Expenses |
You must add between 10% and 11% to the price of the property
in order to cover the taxes and expenses that will arise during the purchasing
process. We have prepared an in-depth look at the costs involved.
• 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 garage) you must pay to the builder
7% I.V.A. of 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. It will show in the title deed that you have
paid this amount to the builder.
• Stamp Duty
Resales and plots of land – if you have bought a resale property or a
plot of land you will have to pay 7% tax based on the price that appears
on the title deed.
New buildings – if you have bought a newly constructed property and you
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 have to pay will depend on the purchase price declared
on the title deed.
• Land Value Tax (Plusvalía)
This is a town hall tax which is paid once the property has been sold.
It is calculated on the increase of the value of the property since it
was last sold. Strictly speaking, the vendor should pay this tax but,
in Andalucia, the buyer usually pays it.
• Asesoria/Gestor Fees
Don't forget you will need to pay for the services of your Asesoria/Gestor,
who will be happy to tell you in advance how much the costs will be. Typically
the standard fee is 1% of the purchase price plus I.V.A. (V.A.T.).
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| Mortgages |
Should you require a mortgage to complete on your purchase the process
is straight forward, as in the UK . A mortgage can be arranged in Spain
or in the UK. Both Spanish and UK banks have the same requirements for lending
money on a property in Spain. All mortgages require proof of income and
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.
All mortgages should be fully repaid by the age of 70. Repayment periods
are 5, 10 or 15 years as standard.
A property must have had a registered (at the land registry) title deed
or escritura for 2 years or more. No Spanish or UK bank will consider a
mortgage if the property does not meet this requirement. Spanish banks will
generally lend 70% of the value of the property. The property will be valued
by the bank valuer (tasador), who will use a “value per square meter” not
the market value, nor the price you are paying for the property. So beware
that the valuer does not undervalue the house and make it impossible for
you to complete on the purchase. |
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| Obtaining
your N.I.E. Number (foreigner´s identification number) |
Your Asesoria/Gestor will be able to apply for your N.I.E. number, but
you will need to attend the local police station (Comisaría de Policia)
with him/her. You will need your passport and a copy. You do not necessarily
need this number to complete on the purchase, but you will need to obtain
it soon afterwards. The NIE is a very important part of Spanish life and
you will be asked for it time and time again.
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| Making
final payment and signing the title deed |
This will take place in the office of the Notary, who is an officer of
the state whose job is to ensure that all the legalities are completed correctly.
Although you will have to pay for this service, the notary is not working
for you – only the state. Both the vendor and the purchaser have to appear
before the notary in person and at the same time. If this is not possible,
powers of attorney will have to be made. This is best done in Spain with
the help of your Asesoria/Gestor.
All transactions are carried out in Spanish. You may want to consider using
an interpreter, although the asesoria we recommend speaks excellent English
and will ensure that you fully understand all documentation. The final payment
will be made in front of the Notary usually by banker´s draft or a
banker´s cheque. You will then sign the title deed and be handed the
keys of 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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| Residency |
The law states that anyone who spends more than 6 months in Spain must
obtain a Residence Certificate. Some categories of people are currently exempted
from obtaining residency, but it is recommend everyone should apply.
Your Asesoria/Gestor will be able to obtain the card for you or you can
do it yourself.
You will need to complete an application form (available from the police
station – Comisaría de Policia) and present the original form plus
a copy along with 3 passport type photographs, your passport and a copy
and also a number of other documents depending on your circumstances. A
list of these document can be obtained from the police station. Once you
have presented all of the documentation they will tell you how long the
process will take. At certain times of the year it can take up to 3 or 4
months.
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This purchase guide is
for advice only,
please remember to always take expert advice when purchasing a property. |
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