Buyers guide

Some of us have only ever dreamed of owning a property in the sun, but the reality of owning a Spanish retreat, whether for weekends or a longer term, is a reality for a growing number of people. If you are interested in brand new property click here. Transport within Europe has now become so swift, frequent and relatively inexpensive that it is possible to have a holiday home in a wonderful location (and climate), which is near enough to visit for weekends. There’s no shortage of people willing to make an even more substantial commitment by moving lock, stock and barrel to Spain. Now we have faxes, mobile phones and the internet an increasing number of people are no longer working from a fixed location but are able to relocate their business overseas. If you are thinking of moving to Spain visit our moving away section with useful information on jobs, schools, and a spanish learning section .

Investors Buying property in Southern Spain is a great investment with values driven upwards by a constant demand from new arrivals. This area is an ideal place to invest. In 2001 property prices on the Costa del Sol rose by more than 18.5%, similar to the year before, (Source, SUR in English, 25th January 2002 and Property News, March 02) the Costa del Sol a terrific place to live as well as a great place to make an investment.

Navasol really do take the worry out of buying a property in a foreign country. We have created a “step by step” guide to buying property on the Costa del Sol. Let us handle all the details and guide you through this procedure. The following is a general guide to purchasing new and resale property in Spain. Don’t be daunted by the prospect of buying a property in Spain, it sounds complicated but by placing yourself in the capable hands of an experienced agency like Navasol we will take the worry out of buying. Let us handle all the details and guide you through, “step by step”. Use the menu bellow to click through the steps.

Buyers Guide – Step By Step (1-3)

Step 1 – Choosing Your Property: Careful thought must be given to the type of property you are looking for and its location. Most importantly is “why” you have decided to buy a property. Is it for Personal holiday use? Your main residence? For investment purposes? Future retirement home? Or buying to have rental income? the more you tell us, the better Navasol can help.

Step 2 – Buying Through Navasol: Using a reputable agent like Navasol can only be to your advantage, we charge no fees to the buyer and make purchasing a property a smooth operation. Navasol can show you a range of suitable products, take you round to view and inform you of all the relevant details as well as giving you important local information. If Navasol do not have the property you are looking for, we are “linked” to other reputable agents to offer you their product as well.

Step 3 – Making an Offer: “If you don’t ask, you don’t get”. It is always advisable to make an offer, although it is unusual to get more than 10% off the asking price. Once the price has been agreed, the terms and conditions of the sale must also be detailed. These include payment terms, deposit, who pays what (see below) how much to declare (see below) and completion date.

Buyers Guide – Step By Step (4-6)

Step 4 – Do you need a Lawyer? Strictly speaking you do not need a lawyer buying through Navasol, but if you do not know the language and it is your first purchase in Spain, it is advisable to appoint a lawyer. The lawyer must be conversant in your language and a fee should be agreed beforehand (normally 1% of purchase price + IVA (VAT)). The lawyer will liaise with Navasol regarding checking all the paperwork and property searches.

Step 5 – Leaving a Deposit: It is advisable to leave a holding deposit so that the owner and Navasol can take the property off the market pending the preparation of the private contract, which sets out terms and conditions of the sale. (Approximately 10% of the property price.)

Step 6 – Property Searches:

A. LAND REGISTRY – The seller provides a copy of his “Escritura de Compraventa” (Purchase Deeds) and from this an up-to-date information sheet (Nota Simple) is acquired from the Land Registry which will confirm who are the title holder/s and indicate if there are any mortgages and debts on the property.

B. LOCAL COUNCIL – The seller provides a copy of his IBI payment (council property rates) payable annually, with its relevant identification number. We then check with the council to see if the payments are up-to-date.

C. COMMUNITY – Most apartments, town houses, and villas have a local community charge to take care of the upkeep of communal areas (porters, cleaners, gardeners, pool maintenance, lighting and lifts etc.) This charge varies greatly from community to community. These are charges normally paid monthly or quarterly, so firstly we can check how much is paid, what is included in the charge (often water is included and sometimes electric) and if the owner owes any money. The community must prepare a certificate signed and stamped by the Administrators of the Community and the acting President for presentation at the Notary’s office (continued on next page.)

D. PLUS VALIA – This is the “Council Tax” payable each time a property changes hands. It is based on the difference in value of the property, when purchased to today’s value. Navasol checks the exact amount payable in the town hall.

E. MORTGAGES – If the property being sold has a current mortgage with a bank or building society the buyer must decide whether to keep the mortgage (subrogacion) or cancel the charge.

SUBROGACION – In Spain it is possible to “take over” another person’s mortgage with the permission of that bank. Usually an appointment is made with the seller and the buyer with the bank manager to discuss details and look at the buyer’s status. This is a cheaper option for both parties as bank charges are less for cancellation – payable by seller and set up costs are less – payable by the buyer.

NEW MORTGAGE – Navasol offer a range of mortgages, subject to status for residents and non-residents alike in Euros. Set up costs and commissions are paid up front in Spain so check carefully before signing.

CANCELLING MORTGAGES – If the property has an existing mortgage which you do not want, then cancellation of this charge should be carried out at the same time as you sign the purchase deeds at the Notary’s office. The costs of cancelling the mortgage are paid by the seller but you must make sure that the mortgage balance is not only paid, but also the charge lifted from the Land Registry.

Buyers Guide – Step By Step (7-9)

Step 7 – Declared Price: Once a sales price has been agreed between the parties, it is important to also agree on the price to be officially declared on the property deeds. The “transfer of title tax” is paid to the tax office at a rate (see below) of the total price; this should be payable on “the bricks and mortar”. More often than not, properties are sold fully furnished and equipped, therefore it is common practice to declare only proportion of the sales price on the property deeds, which is advantageous to both the buyer (pays less tax) and seller (pays less Capital Gains Tax).

Step 8 – Buying Through Navasol: This private contract is prepared by Navasol or your lawyer and confirms the terms and conditions of the purchase. The main points are:

1. Details of buyer and seller

2. Details of the property

3. Sale price

4. Payment terms – it is normal practice to leave a 10% deposit and pay balance on completion.

5. Costs – who pays what

6. Inventory

7. Completion date NB: These contracts are known as “Contrato de Arras” (deposit contract) and are covered under the Spanish Civil Code. If the buyer backs out, the 10% deposit is lost and if the seller backs out, he must give you back double the amount left as a deposit. These are legally binding documents recognized by the local courts to avoid people breaking contracts or being “gazumped”. So make sure you are clear before leaving your deposit.

Step 9 – Open a Bank Account: The buyer must open a bank account to set up the payments of running costs of the property.  Community Charges, Council Rates, Electricity, Water, telephone etc. Bank charges vary a lot between banks, so shop around, especially if you are transferring money from abroad. Also certain banks have more English speaking staff than others. Navasol can offer advice depending on individual needs of the customer.

Transfer taxes :-

any amount up to 400,000 euros – 8% transfer tax

any amount between 400,000 to 700,000 euros – 9% transfer tax

any amount in excess of 700,000 euros – 10% transfer tax

Buyers Guide – Step By Step (10-12)

Step 10 – NIE Numbers: Once you become a property owner in Spain, it is imperative that you have a NIE number. This is a fiscal identification number and is needed to pay your property fees and taxes. Your NIE must be applied for at the main police station and takes several weeks to come through. Navasol will arrange everything.

Step 11 – Completion at the Notary: On the date set for completion, both parties or their representatives meet at the Notary’s office to sign the property deeds. The Notary receives a fax from the Land Registry to make sure that the title is still good and to check upon any new charges and/or embargoes. Certificates are provided by Navasol from the community and the council to show payments are up to date. The bank manager should also be present if there is a cancellation of a mortgage to sign (separate document). If the buyer is non-resident then the money used to purchase the property must be justified as entering the country legally and a copy of the bankers draft is attached to the purchase deeds. If the buyer does not speak Spanish then a translator will be required, but Navasol can provide this. Once the documents have been signed the buyer is responsible for paying the relevant fees and taxes within 30 days, so a provision of funds should be left with Navasol or your lawyer.

Step 12 – Break Down of Costs: As a general guide allow 10% on top of the purchase price to cover all costs. There are two fees and two taxes to be paid, plus your lawyer’s fees if using one.

NOTARY FEES – Fixed by law and depend on the price declared and the volume of the document.

TRANSFER OF TITLE TAX – see below for the percentage of the price declared.

LAND REGISTRY FEE – Approximately 40% of Notary Fees

PLUS VALIA – Local council tax based on the official increase in value of the land from the last time the property changed hands. This tax can vary greatly as it is applicable up to a maximum of 20 years

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