The Buying Process
THE BUYING PROCESS EXPLAINED
SONRISA PROPERTIES are here to make the buying process simple by helping the client through each stage of the process, helping with honest financial and legal information, for some people, the purchase of a Spanish property can seem daunting, the process can be simple and works, if you follow the rules
When buying a property in Spain it is important to remember the additional charges added to the asking price, typically an additional 12%-13% a cash purchase or 15% - 17% if they take a mortgage, see our mortgage section for more on fees
Typical Costs & Fees Include
- Legal Fees – Circa 1000€+ IVA @21%
Property purchase tax (Resale property)
- Currently 10% - Resales in Alicante
- Currently 8% - Resales in Murcia
- IVA (New Build property)
- Currently 10%
- Stamp duty (New Build Property) – 1.5%
- Stamp Duty 2% in Murcia
- Notary Fees – dependant on Notary and value of property (average 1500€)
- Additional costs including utility transfer, SUMA registration, Catastral registration, community registration etc. – average 450€
This is the first document you will sign reservation contract and acting as a signed receipt for any money paid. This document is generally referred to as a 'Formulario Reserva' and confirms your commitment to purchase the property. Always ensure that this document includes the clause 'Subject to Legal checks' as his will ensure that your deposit is refundable if there are any problems, if a mortgage is required make sure that this is a condition of the purchase
Legal Issues when buying a property in Spain
Select an independant lawyer to assist you in all the different steps involved in the transaction. There are many excellent English speaking Lawyers in Spain. Choosing the right Lawyer is your guarantee that Spanish legal requirements are met, that the property is registered in the vendor's name and that it is free of any mortgages, charges, encumbrances, debts or other liabilities. The lawyer will negotiate and discuss the purchase terms with the seller's solicitor, agree the completion dates. If you are having a mortgage you should include these details in the reservation contract. If the buyers decides not to purchase they lose their deposit, if the vendor withdraws, typically contract terms are that they refund twice the original deposit
Public official appointed by the Spanish government to witness the signing of all legal public documents. They put on the public record the fact that the title deed recording the sale/purchase has been signed in their presence and understood by the parties concerned. When the Escritura (Deeds) is signed in front of the notary either the purchase price is handed over to the person selling the house or the seller confirms that the money has already been handed over. The original signed document is retained by the notary who will apply for a formal change in the land registry. The Notary also ensures that the work of both the buyer and seller's lawyer has been carried out correctly prior to the title deed changes.
Urbanisation and Community Fees
Controlled by the committee of owners and covering the running and maintenance costs of shared facilities which can include private roads, drains, lighting, private water supplies, gardens, swimming pools etc. This can be as little as 60 euros per year or as high as 2000 euros, dependent on the facilities within the urbanisation your property is located. There are also properties that do not belong to an urbanisation, in which case the community fees do not exist.
Local Rates – Wealth Tax
All non-residents have to pay wealth tax, 'Patrimonia', based on the amount on the Escritura Publica or the Valor Catastral, which ever is the highest value. Vary. 0.2% is typical.
Property Taxes in Spain
The local town hall charge IBI on owned Property (tax Impuesto sobre Bienes Inmuebles), which is an annual real estate tax. This local tax varies and is based on the Catastral value of the property.To avoid late payment fines is is best to setup a standing order with your bank for payments, ofetn fines for late payment can be more than the fees.
Building insurance is compulsory by law when taking out a mortgage. Comprehensive household insurance is available to protect your home and contents. Life insurance can be taken out to guarantee payment of the loan in the case of death. For apartments buildings insurance is often included as part of the community insurance
Water, Electricity, Telephone and Internet
Payment of most utility charges are required by bank direct debit and if you fail to pay disconnection can be quick, reconnection charges are expensive, so it is vital to ensure that you have sufficent funds in your bank account
Numero de Identificacion Extrajenero (NIE)
Foreigner's Identification Number. All non-residents require a NIE in order to buy a property or car. You can obtain this in person at the foreigner’s department at the National Police headquarters or leave a Power of Attorney, POA, with the lawyers who can deal with this on your behalf
Registration on The Padron
You might have heard people referring to the padrón or empadronisation. This is the process whereby you register with your town hall as an elector. This is beneficial for them as money from central government is allocated according to the number on the padrón. It is also necessary for enrolling a child in school and obtaining state health care.
Your first visit to obtain the padrón is your longest. You will need to take the usual documentation plus copies (NIE, passport, residencia) but also your mortage (escritura) or rental contract. You need to have proof of where you are living. The initial certificate you are issued with expires after three months. However, you are still on the padrón and do not need to renew it unless you require another certificate as proof that you are registered.