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Buying Property in Spain

Choosing a property in Spain

Location is an important factor to take in mind when buying a property in Spain. The Costa del Sol offers more than 300 days a year of sunshine, lush green vegetation, miles of sandy beaches and clear blue waters. It can be reached by plane with two and half hours flying time from most European destinations. With exchange controls removed, a strong economy and an excellent exchange rate the Costa del Sol provides one of the most attractive investment propositions for the purchase of second home plus a golfer's paradise with more than 20 clubs to choose from along the coast.

Choosing an Estate Agent in Spain

Choosing a reputable Spanish Estate Agent will help you to build your knowledge of the area and of comparable values of properties in Spain with similar characteristics in different locations. He will help you locate the right Spanish property sharing with you his experience and knowledge in the property field. He will help to explain the contrast and variety between the different areas and properties in Spain, interpret your requirements and inform you of those Spanish properties which he is of the opinion may match what you are looking for. He will be able to guide you through the negotiations with the seller.

Ongoing expenses

Once you have selected a property in Spain that may be a possible purchase, enquire as to the ongoing expenses. In particular ask how much is the Annual Real Estate Tax Rates ( IBI for short), the community fees, the charges for rubbish collection, the water rates, the electricity charges and the Property Income and Wealth Tax in respect of the particular Spanish property in which you are interested.

Deciding to Buy

You may find that having looked at three properties in Spain you liked, one may have a certain feature which is quite attractive, another a different feature and so on but none has singly all three of the features. There may be differences of opinion between you and your spouse over the choice of Spanish property. A perfect property in Spain in reality seldom exists whether you build from new or not. The decision to buy therefore may be one of compromise. Many buyers find once they have added their own personal touches to the property it becomes a home and matches their expectations.

Negotiating the Purchase

Once you have chosen a Spanish property, the next step is to negotiate the purchase terms with the seller. The terms should not be limited solely to price but should cover in detail all your requirements. You may wish to make that offer subject to mortgage or lawyers approval, or that the seller pays the Plusvalía, or vary final completion dates, or the method of payment. You may wish to have included the furniture or not. The salesman who found the property in Spain for you may not be as good at negotiating the terms of sale with the owner. Ask to speak with the senior sales person or sales manager in the company and discuss with him the formation of a team to negotiate and carry through the terms of your purchase of a property in Spain. The sales person may at this stage feel it of benefit to bring into team a recommended lawyer to assist in the conveyancing of the property and presentation of the escritura ( the deed).

Choosing a Lawyer in Spain

A lawyer will provide the legal guarantees for the purchase of your Spanish property ensuring that legal requirements are met and that your property in Spainis bought free of encumbrances, charges, liens or debt and up to date in all its payments of local contributions and community charges, etc. The lawyer may also assist the sales team in difficult and complex negotiations with the owner. Using a lawyer from your home country may double your bill and will most certainly hold up the sales process. There are many excellent local lawyers who may be fluent in your language. Ask your Spanish estate agent or broker to recommend one. However, the latter parties are just as responsible.

Formalising an Offer

Once the sales team together with the lawyer has discussed terms of purchase with the owner and there is a verbal accord the next step will be to formalise those offer terms of purchase by setting them out in writing. Show the seller that you really do intend to purchase by lodging funds in a local bank account or with your lawyer, broker or agent. It is normal practice in Spain to include with the Offer a sum of money to reserve the property for you until such time as you are in a position to exchange private contracts.

Exchange of Private Contracts

Upon acceptance of your offer by the owner the next step in the sale process is to exchange private contracts of sale or to sign an option to purchase. Your lawyer, broker or agent will have completed his searches and investigation of the property and will have arranged with the owner the procedure for the cancellation of any outstanding debts. The private contract of sale or option will reflect all the agreed terms of the offer and sale and set out the date for final completion at the Notary. It is normal practice to pay 10% of the purchase price of the property in Spain at this stage which is normally non-refundable in the case of where you the purchaser not fulfilling the contract.

Final Completion and Exchange at the Notary

A sale is formally completed in Spain when the public deeds of purchase are signed before a Notary, the agreed payment of the price paid and possession given to the buyer. Once signed, the notary will fax a note of the title deed to the local land registry. Your Lawyer, broker or agent may also pay on your behalf all the relevant transfer taxes associated with the purchase and will handle the formalities of registration of your title deeds. Similarly, your Lawyer may arrange for the transfer of account with the local suppliers of utility services such as water and electricity and organise their payment through a local bank.

Cost involved in purchasing a property in Spain

There are basically three fees and two taxes to pay when purchasing property in Spain.

The fees are as follows:

Legal Fees: normally charged at 1% of the purchase value plus 16 % VAT

Notary Fees: The scale is fixed by law and may range from 300 € ptas. for lower priced properties to 900 € for higher priced properties.

Property Registry: As a rule of thumb, 40% of what the Notary charges.

The taxes are as follows:

Transfer Tax: At 6% (ITP) when buying a re-sale property.

IVA (VAT): At 7% plus Stamp Duty at 0.5% when buying a new property.

Plusvalia: Normally payable by the vendor but it may be stipulated that the buyer pays. This tax may range from a few thousand pesetas on larger properties with a lot of land. Who pays this will be discussed in the negotiations and in consultation with your Lawyer.


As a rule of thumb, if you budget for 10% of the purchase price you will not be far wrong.