Define property and budget
There are some questions you need to consider before you start looking for a house.
What type of property are you looking for and what will it be used for?
- Holiday Home
- Investment for reselling
- Investment for letting
- Permanent residence
- For retirement
Other considerations
- Do you need a mortgage or will you pay cash
- Which area
- Should it be in the city or country side
- In a gated community or by itself
- Size, bedrooms, bathrooms etc.
- Private or community pool and garden
- New construction or resale
Our experience is that you do not always know exactly what you are looking for and once you have seen a few properties you get a better sense of what you like. But try to define as many of these things as you can.
Finance and budgeting
The price of the property is not the final cost of buying the property. There are several other costs added to the price. You should add at least 10% to the price of the property to get the final price and some times up to 13%.
Taxes
There is a transfer tax or VAT of 8-10% that needs to be paid depending on the type of property and the price. Stamp duty for new-build.
Lawyer and notary public
The standard price for the lawyer is 1% and for the notary public can be a fixed fee or can also be a percentage of the price of the property.
Exchange rates
If your own currency is not Euros, then you have to taken the exchange rate into consideration which. This is an important aspect and it can save a lot of money talking to different banks and negotiate a good price.
Other costs
Land registry fee, getting a NIE number and power of attorney
Running costs
When calculating the budget for the house, apart from the costs of buying the house it is also important to include the running costs
Community fees
In gated communities or apartment buildings there are monthly fees that pays for maintenance of the common areas. The price depends on how big the common areas are, if there is a swimming pool, gardens etc.
Insurance
The price of course vary a lot depending on coverage and value of the house.
Utility services
Electricity, water, internet etc.
Maintenance
There will always be maintenance costs on a property. Depending on the age of the property these can be higher. New construction will usually not require much maintenance in the beginning.
Property Tax
Annual property tax called the IBI. The tax is based on the public value of the house which cannot be higher than 50% of the market value of the house.
Real estate agent
Once you want to start looking is to find the right real estate agent. Someone who knows the area and is willing to spend the time it takes to find you the right property and also help you past just buying the property. Finding a builder, opening bank accounts and other things that are necessary for starting a life in Spain.
On the Costa del Sol there are many real estate agents that work together, so if you have an agent he can usually show you most properties even though they are not listed with him.
Legal advice
When buying a property in Spain you need a lawyer specialized in Spanish law who can guide and advise you and make sure the house is completely legal (quite a few illegal houses have been built in Spain) and investigate if there is any debt, fines etc. The lawyer should also help you if you plan to make any modifications to the house, because in some cases remodeling of the house is not allowed. Make sure this is all taken care of before you buy the house.
The lawyer can also help you with a will so the new property is covered.
A notary public is also going to be involved in the signing of the contracts. The notary represents everybody and nobody. He should see that the property purchase process is carried out correctly.
You are free to choose your own lawyer and notary public. We can recommend some that we trust and know do good and independent work. If you choose your own make sure they are registered with the Colegio de Abogados (Spanish bar association) Remember at good lawyer will make things a lot easier for you and make sure you do not have any legal problems with the house in the future.
Found property you want to buy
NIE
To buy a property in Spain it is necessary to get a NIE number. This is a Spanish identification/tax number. You can make an application through a local police station or have your attorney do it. They will need a power of attorney to do it. You can do this at a later time, but you might as well get it done so it is out of the way.
Open bank account
Once you have your NIE number you can open a bank account which you need for paying water, electricity etc.
Reservation contract to take the property of the market
Make a reservation or holding agreement. This expresses your intent to buy the property and the seller will take the property of the market. Here you usually pay a deposit of €3000-€6000.
Private purchase contract with get out clauses
A purchase contract is made and 10% of the purchase price is paid to the lawyer. The deposit for the reservation contract is deducted.
Legal searches
The lawyer will do legal searches to check if there is any debt in the house, illegal constructions etc.
Finalize purchase with notary
The remainder of the purchase price is paid at the Notary.
Other things to consider
In Spain properties are bought as you see it. If the owner has to make any repairs then this must be included in the contract. If it is bought furnised then a list of furniture must be included in the contract.
Insurance is mandatory.