Guide to buying Spanish Property

Spanish Properties SiteMap | Direct Estates

When you have finished your long hard search and settled on the right Spanish property, whether that consists of an apartment, villa, townhouse or country property, please do not trip up on the last mile.

Make sure you are never pushed into making a rash decision on a property, until you are perfectly happy with your choice, and that you are sure you want to complete on the sale. There are, sadly, still horror stories of people being ripped off and conned out of small and large amounts of money, but if you go through an established estate agent and arrange suitable legal advice, your buying process should be smooth and trouble free from start to finish.

One thing you will have to accept when buying a property in Spain is that the world of officialdom and paperwork is not quite what it is in the UK. You must try to accept this early on, to avoid more worry than necessary. Hopefully this short guide will give you some useful pointers to guide you through the process as smoothly as possible.

The Property Search
Always do your research! The increasing use of the internet has proved a significant to both buyers and sellers of property, and is more and more becoming the first place people look for Spanish property. Some websites provide even more useful information such as area guide, property news, and even newsletters. Try to go through as many magazines as possible to get a feel for the prices. Once you have narrowed down your search, it is time to contact the agent. Ask how many listings they have and how long they have been established in Spain, a recommendation from somebody who bought through the agent always helps.

Decision Time
So, you have seen a few properties, your agent's going grey, you can't quite decide between property a and property b, it's all getting a bit much.........and then you find it. The propety you always imagined! Now the fun begins, as it's time to make an offer. At this stage the Spanish system is no different to the UK. The buyer makes an offer and the vendor either accepts or rejects that offer. If agreement is reached verbally you should instruct a lawyer immediately to act on your behalf.

Instructing a lawyer
Choosing the right lawyer is a very important part of the buying process, and bear in mind that you could well be dealing with the same lawyer for some time to come, and they will probably end up acting on your behalf if you should sell the property. As in so many things, the best way to find someone good is a recommendation.

Paying a holding deposit
Once you have made your decision and your lawyer is happy with the terms and conditions of anything you are asked to sign, it is time to pay a holding deposit. This deposit is usually €3000 on smaller properties and €6000 on larger properties, and is usually held by the estate agent, in order for you to take the property off the market until the private contract is signed. These deposits are often paid "subject to mortgage" until a certain date. This means that buyers are given a certain amount of time to arrange the finance, and will not lose their deposit if the finance is not granted.

Private Contract
The point of no return. This is the most important stage in the whole process, as if either party pulls out afterwards, they must compensate the other party with (typically) 10% of the purchase price. On signing the private contract, the buyer will deposit 10% with the seller's lawyer, and the other reason why this stage of the process is so important is that it defines a date by which time the parties must complete.

Public Contract
The notary public. This is the final stage in buying a Spanish property. Both parties must attend the notary on or before the date stipulated by the private contract, at which time the balance of the purchase price is paid, and a new title deed is prepared and signed by the notary. Mortgages will also require a separate deed, and outstanding mortgages must also be cancelled at this point. Once the deeds are signed they will be then submitted to the land registry for registration.

The buyer's costs
As a general rule, the costs of buying a property in Spain should be no more than 10% of the purchase price. These costs are as follows:

• Transfer Tax: the Spanish equivalent of stamp duty, currently 7%
• Lawyer's Fees: most lawyers in Spain charge 1% of the purchase price, depending on what services you ask them for.
• Notary and Registration Fees: these should be no more than a &€;1000, depending on the price of the property. The fees may rise if you are taking a large mortgage, for example, as banks and mortgage brokers in Spain charge higher opening fees that UK equivalents. They will be repaid as part of the mortgage total, however, so it is difficult to give an average figure.
• All other costs should be paid by the seller, including all estate agents fees, capital gains tax and an incremental land tax called "plus valia".