Guide to Buying a Property in SpainBuying a property in Spain is actually much simpler than you might expect.
- The sale and purchase of property in Catalonia —as indeed everywhere else in Spain— must be registered at the Registro de la Propiedad —the Land Registry—, which records all details of the sale, along with any charges or encumbrances.
- The sale-purchase itself is carried out before a state approved Notario —a Notary Public— who prepares the Escritura Pública de Compraventa —the Deed of Transfer— in accordance with Spanish Law.
Compared to the UK for example, the Spanish system is quite simple, and has the advantage of being considerably quicker.
Before you start: opening a Spanish bank account and getting an NIE number
1) You must have an account with a Spanish bank
Opening a cuenta corriente —a current account— in Spain is straightforward. You will need your passport and possibly, your NIE number. We can introduce you to a bank with English speaking staff and manager, and help you with mortgages, finance and international money transfer to Spain.
You will generally have to pay for your Spanish property with a cheque bancario de no residente — a bank cheque drawn on a non-residents’ account, so the bank has to be in Spain.
We recommend you use a bank that provides an easy-to-use Internet banking service. Standing orders will need to be set up for water, electricity, rates and community charges, and using the Internet will make it easy to keep track of your account wherever you are.
2) You must have an NIE number - the foreigners’ fiscal ID number*
Getting an NIE number is free, apart from a tax of 9 Euros and 45 cents. You need to:
- fill in a form, available in PDF format from the following site: http://extranjeros.empleo.gob.es/es/ModelosSolicitudes/Mod_solicitudes2/15-Formulario_NIE_y_certificados.pdf
- make an online appointment to present your application at a police station with an Extrangería (foreigners) department. At the moment, the online appointment page is in Spanish only: https://www.citapreviadnie.es/citaPreviaDniExp/
In Tarragona province the police stations that issue NIE numbers are Tarragona, Reus and Tortosa. Which one you use will depend on the address you give on your application and where you are buying your property in Tarragona province.
Note that to apply for a NIE number it is essential to make an appointment beforehand and the waiting time for an appointment is currently around 3-4 weeks.
Given sufficient notice we can prepare your application and accompany you to the police station, but we do make a charge for this.
Once you have submitted your application you will be given a payment form so you can pay the application fee at a bank, which is currently 9 euros and 45 cents. You then take the stamped payment form back to the police station, you can then pick up the NIE document after 1:30 pm (the police stations open at 9:00 am and close at 2:00 pm).
*Buyers from non-EU countries should check what extra documentation they need to buy a property in Spain.
Finding a property
In the case of Spanish country properties and fincas to reform there are many factors to take into account, most importantly:
- Is the building free of possible legal problems and correctly registered?
- Would I get planning permission to extend, reform or rebuild?
- Will I be able to resell later if I need to?
We have considerable experience in dealing with country properties in Spain, planning permissions etc, and have excellent local contacts with town halls and planning departments, helping us to avoid problems and make your dream Spanish property a reality.
Carrying out a survey
Often overlooked when buying property in Spain, structural surveys are not automatically carried out here as a routine part of the purchase process.
While developers of Spanish new-build and off-plan properties are required to have insurance to cover structural problems that may arise, sellers of older or resale properties in Spain are not necessarily liable for all structural defects.
Surveys here are usually conducted by an aparejador (a technical architect/surveyor), who can also provide advice on the scope and price of work needed and planning issues. We work regularly with aparejadores with experience of all types of property in Tarragona province, some can provide reports in English and other languages.
Negotiating the purchase price
While some Spanish sellers are prepared to take an offer, others may still hold out for the full asking price. At the moment of writing (January 2016) offers accepted are usually 90% or more of the asking price.
For many years sellers of Spanish property have declared a lower purchase price in order to pay less tax, and while illegal, the practice remains fairly common. Buyers are often told that they too will benefit from this, as it means they pay less Impuesto sobre Transmisiones Patrimoniales (stamp duty).
However, anyone planning to buy a property in Spain should be aware that money saved in this way may be lost in increased capital gains tax when the property is sold at a later date.
- Notary's fees (Honorarios de notario)
- VAT and Stamp Duty (IVA, Impuesto sobre Transmisiones Patrimoniales)
- Land Registry Fees (Aranceles Registrales)
Notary fees are calculated in accordance with a fixed scale, the higher the purchase price, the lower the percentage rate applied.
VAT and Stamp Duty
Buyers of properties that have been bought and sold once or more pay Impuesto sobre Transmisiones Patrimoniales - Stamp Duty, calculated as a percentage of the declared purchase price. This percentage may vary from one Spanish region to another; if you are buying a property in Catalonia it is 10%.
Buyers of new residential properties in Spain (i.e. bought or sold for the very first time) pay VAT (IVA) at 10%, and an additional 1.5% tax: the Impuesto sobre los Actos Jurídicos Documentados (AJD).
If you take out a mortgage in Spain you will have to pay the 1.5% Impuesto sobre los Actos Jurídicos Documentados on the amount borrowed.
Buyers of certain types of commercial property in Spain pay VAT at a higher rate of 21%, along with buyers that purchase garage spaces independently from an apartment.
Land Registry Fees
The Registro de la Propiedad —Land Registry— registers the Escritura —Deed of Transfer— and all details of the sale.
Charges are calculated case-by-case, but the Notary should be able to tell you how much it will cost to within +/- 50 euros.
The reservation contract — Contrato de reserva
Non-refundable deposit contract sometimes used to hold a property for a few days until a formal contrato de arras can be signed and a 10% deposit paid. The amount paid is typically 500 to 2000 euros, depending on the value of the property.
The private contract — Contrato privado, Contrato de Arras
When you have found your Spanish property and have agreed a price, it is usual —although not essential— to sign a formal, private contract with the seller — usually the contrato de arras, which specifies:
- The property to be sold, with the corresponding land registry description
- The purchase price and form of payment
- The completion date (usually 2 or 3 months from signing the arras contract)
- The deposit paid (usually 10%)
- Any special conditions that have been negotiated
With a contrato de arras the 10% deposit is not refundable if the buyer pulls out. However if the seller pulls out or otherwise fails to meet the conditions detailed in the contract, he/she must refund the buyer double the deposit paid.
This arrangement protects both parties, affords peace of mind, and greatly reduces any risk of ‘gazumping’.
Note that a contrato de arras is not always signed. Where an early date is agreed, it is possible to go straight to completion, sometimes in a matter of days.
Completion: signing the Deed of Transfer — Escritura Pública de Compraventa
This is signed at the office of a Spanish Notary Public —the Notario, who ensures that the sale-purchase is carried out in accordance with Spanish law.
The Notary acts primarily in the interests of the State, and strictly speaking represents neither buyer nor seller. We have generally found Spanish notaries to be very helpful, providing detailed information and advice to both buyer and seller.
Before preparing the Escritura, the Notary will have checked that the property is registered at the Land Registry in the seller’s name, and if there are mortgages or other charges that must be cleared before completing the sale.
- Payment is via a bank cheque drawn on a non-residents’ account, given to the seller in the presence of the Notary. Any keys are then handed over, and ownership of the property is transferred to the buyer.
- Where possible we always use an notary that speaks the client's own language.
- If you are unable to travel to Spain we can help organise Power of Attorney, enabling someone else to act on your behalf.
Once buyer, seller and Notary have signed the Deed of Transfer and the seller has received payment, the buyer has to pay taxes (see ‘Negotiating the Purchase Price’ above).
The Notary usually carries out the entire tax payment and registration process. If you are using an independent solicitor, he or she will handle it. Either way, you will be asked to make a payment to cover estimated costs.
The Transfer Deed is then taken to the Land Registry to be recorded and the property put in the new owner’s name. This typically takes around six weeks, and is the last step in the sale-purchase process.
2-3 months later the formal Escritura document will be ready for the buyer to collect at the Notary’s office.
Do I need an independent lawyer (abogado)?
The sale-purchase process for selling or buying a property in Spain is comparatively simple. Notaries ensure that transactions comply with the Spanish law, and the Land Registries record them.
Private sellers rarely use a lawyer, and Spanish buyers usually get their bank to oversee a purchase rather than employ one.
But problems can occur: ownership may be complicated, a property may be adversely affected by development plans or rights of way, or buyers may find themselves liable for unpaid non-residents’ capital gains tax, to name just a few. In particular, planning permission for Spanish country properties is an increasingly complex issue.
As a consequence, most of our non-Spanish clients choose to use a lawyer. As a buyer, you should choose an independent lawyer (i.e. not your estate agent’s lawyer!), but our clients speak particularly well of the following English/English speaking lawyers in Tarragona:
- Jonathan Eshkeri at Eshkeri and Grau solicitors, email firstname.lastname@example.org, web www.solicitorsinspain.com
- Ton Batlle at AGL associats, email email@example.com, web www.agl.es/pages/en_home
Naturally we are happy to work with any lawyer our buyers instruct, English speaking or otherwise. We can also put you in touch with lawyers that speak French, German, Dutch, Russian and other languages.
Non-Spanish clients who own property in Spain should definitely consider making a Spanish will.
If you don't, the consequences for your descendants can be costly in terms of both time and money. Moreover, under some circumstances the Spanish tax authorities may actually decide who inherits your property in Spain!
Either of the lawyers mentioned above will be happy to help you with making a Spanish will and to advise you on related tax issues.
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