Terrain: High plateaus, lowland areas such as narrow coastal plains, and
Climate: Temperate. Summers are hot in the
interior and more moderate and cloudy along the coast; winters are cold in the
interior and partly cloudy and cool along the coast.
Government: Type: Constitutional monarchy (Juan Carlos I proclaimed King
November 22, 1975).
Spain and the EU including links to Spanish government sites and Tourist
a foreign country with a different language, laws, rules, and currency can be
quite daunting and is not for the faint hearted.
Foreigners buying property in
Spain has become very
popular. The country has a pleasant, healthy climate and in recent years the
local authorities have made great efforts to increase the number foreign
tourists and residents. Spain now derives more of its foreign income from
tourists than any other country in Europe. Due to low European interest rates
and the present financial crisis, now is a good time to buy property in
There is a very wide selection of standards, from farmhouses (fincas) and plots
through to villas, townhouses and new apartment developments.
The property buying
market in Spain is currently undergoing hard times, however there has hardly
been a better time to buy property in
Spain. If you have the cash it's a buyers
market. Wherever you look in Spain there are bargain properties to be found. The
exchange rate for Sterling is at an all time low, however, even with this taken
into account, you can still find cheap Spanish property.
Make sure when you buy
property in Spain that you take suitable legal advice. Make sure your lawyer
speaks your language, is registered and works from an office. Make sure your
Spanish property agent is not simply a name behind a website.
Once you have decided on a property
you need to appoint an
to prepare conveyance documentation
(Copia Simple), for conveyance and accompany you to the Notary where the
proceedings will be in Spanish.
Abogado will recommend which Notary to use to finalise the
They can also arrange a Spanish will for you which are a necessity if you have
property in Spain otherwise your estate will be subject to very high capital
gains taxes if inherited by non-residents.
The lawyer will prepare a
between the seller and the buyer there has to be a contract in place until the
public deed of purchase is ready. It's usually a simple document in which the
seller expresses their intent to transfer the property to the buyer, and the
buyer expresses their intent to buy at the price and conditions agreed upon. At
this time, the buyer also gives to the seller a percentage of the agreed-upon
price. The typical agreement in Spain (called
is if the buyer backs out of the contract, they lose the deposit; if the seller
backs out, they have to pay double. Of course, the buyer and seller may choose
another type of agreement if they prefer.
The lawyer will usually provide an
interpretation Service, Instruct valuations and obtain*NIE Numbers and arrange
the opening of a Spanish bank account.
*National Identity Card for Foreigners (Nacional Identidad Extranjeros). You can
not buy property or vehicles or open a Bank Account without one. If
you already hold a Spanish NIE number from a previous transaction, then a new
application is not required.
Once your Spanish bank account has been opened, you will be able to transfer the
funds for your purchase into that account where it will be held under your
control until needed to complete the purchase. By law these costs have to be
provided up front. If you get a higher valuation all well and good, but the
costs must be found first.
The above will be subject to disbursements such as valuation fees, Legal fees,
Notary fees, taxes and IVA (VAT) etc.
You are advised to allow a maximum 12% to cover transfer tax, mortgage tax,
legal, translation and lenders fees including the Notary. Some disbursements may
be liable to IVA (VAT).
Once you have decided on the property that you want to buy, the
process is this. You need a document called “Nota simple informative”.
With this document from the Property Registry (Registro de la Propiedad),
you'll find out if the property is free of debt, if it really belongs to the
seller, and if the description of the property matches what the buyer has been
told (to avoid surprises about missing square meters).
Once you have reserved a property you need to arrange the finance
and discuss the mortgage options in full and to obtain a DIP at the best and
most advantageous rates for you.
Normal Loan to Value (LTV) rate for non
residents in Spain of urban property is 70% to 75% LTV, and for Rustic (green
belt) property it is only 50%LTV but these can vary due to the ongoing credit
crunch. This is subject to an arrangement fee of 450 euros; however there will
be no arrangement fee if you are able to accept 70% LTV which will also lower
the mortgage repayments. It is also possible to take out a capital plus
repayment mortgage. Due to the ongoing credit crisis these figures can vary at
The documents typically required by a bank to get a mortgage are:
- Your DNI/NIE
- Your work contract
- Your last 3 pay check stubs
- Your latest income tax return
- Your pre-agreement with the seller
- Proof that the property tax (IBI) on the house
is paid up.
- Other mortgages or loans that you may have
- All property titles, both in
Spain and overseas
- Certificate from work authorities (vida laboral),
showing your past work history
- Records of your assets (bank/mutual fund statements,
- Prenuptial agreements, if any
- Non residents: A certificate of non residency (form
available from the bank)
- If self-employed: Local tax on economic activities (IAE)
- If self-employed: VAT tax you paid for the last
trimester and last year
Comparables and Valuation:
There is no central Land Registry list of sold prices available in
The market value price for properties displayed on this website have been
checked wherever possible against the current going rate for similar properties
in the local vicinity by our resident local staff and based at our office in
The valuation method is vastly different to what we are used to in the UK.
Official property valuations are carried out by the banks and only once a
request for a mortgage has been received. They will not normally accept
valuations from any other source and will only give a true valuation to the
The leading banks will usually provide pre-valuations based on a square meter
basis for similar properties. The valuation given tends to be higher once the
surveyor has visited the property as he then takes into account quality,
location, sea views etc.
If you get a mortgage, you
will become acquainted with an appraiser (tasador). The bank requires an
appraiser to ensure that their loan to you is safe. You will need to pay for the
appraiser's work, usually between 300-500 euros. Note that the tasador by
law is a licensed architect, so even if you don't need a mortgage, but have
doubts about the structural integrity of the house, you might want to hire an
The property transfer must be certified by a notary. The
deed of purchase will be given to the buyer after the notary reads it and the
parties present agree to the contents of the deed. The following must then be
presented: proof of identity (or power of attorney) of both parties, the
seller's title of property (a form that reports the investment to the Central
Register), and the buyer's payment. The buyer and seller sign the contract;
beneath their signature, the notary signs using his
and the deed is ready for taxes.
These are in two parts as follows.
For the buyer:
Transfer tax (impuesto de transmisiones patrimoniales) and stamp tax (impuesto
de actos jurídicos documentados).
If the seller is an
individual, the buyer pays a tax of 6% (7% in some regions) of the price
specified in the deed. If the seller is a real estate developer and the building
or land to be built on represents a first-time transfer, then the buyer pays VAT
tax instead, meaning 7% for housing, 16% otherwise. If for housing, you have to
add a stamp tax, in this case reduced to 0.5%, depending on the region (for
Madrid it's 1.5%). Some special conditions apply for the Canary Islands.
For the seller:
A local tax called the
With a copy of the deed in
hand, the seller must go to the Ayuntamiento (or wherever local taxes are
paid). After filling out the form, the seller will receive in the mail a notice
of how much they have to pay. This amount is calculated based on the number of
years the property was held, and on the property's
valor catastral. Be aware that
each town has a different procedure regarding payment of this
plusvalia. It's best to ask at the
notary's office about this payment.
If you want to be sure that
your rights to the property are fully protected, you must ensure that your
lawyer registers your title at the local office. (Some small towns don't have an
office, some big cities have many. The lawyer must check the original deed of
the seller to find out which office corresponds to you). You will be charged a
standard fee (about .4% of the first 6010 euros, going down to .02% for over
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