Purchasing a Property in Spain

21 September 2015 0 Comments Category: blog, Just Landed

After Spain transitioned to the euro, housing prices soared up to 44% but fell by a third when the bubble burst. Like this article, published recently by The Wall Street Journal, suggests, top cities in Spain show signs of a housing recovery. In other words, property prices are low and falling and it´s a good time to invest in property in Spain whether you´re looking to buy a vacation home or planning a permanent move.

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Recent information, provided by the Spanish Ministry of Development, shows that almost 90 thousand houses in Spain were sold between January and March of last year and nearly 14 thousand were bought by expats. But what you´ll also be excited to learn is that Spain is offering a “golden visa” for prospective owners who invest more than 500,000 euros in property. This means you´ll automatically be eligible for a residency visa (not a work permit).

Due to the amount of foreigners buying properties in Spain, the Land and Mercantile Registrars Association has published an informative dossier to avoid having the process become a nightmare. If you would like to read the full report, you can access it via their website. We read it and did our homework. So for those who want to get a rough idea of what buying a house in Spain entails, here are the basics:

Before buying a house in Spain

Make sure you take your time to research where and what type of property best suits your needs. Visit the property and evaluate the general conditions. Make sure you spend time in the neighborhood (who are your neighbors, levels of noise, road access, parking, public transportation, services, groceries, etc.)

If you need help finding the perfect Spanish city, we encourage you to read this post, published here at Typical Non Spanish.

Compare different possibilities and analyze your favorites in detail, making sure it has all the necessary and legal paper work in order.
This includes:

  • Verifying current lawyers or estate agents’ credentials, attached to the sale.
  • Land registry (Registro de la Propriedad).
  • Making sure it has the appropriate planning permission and there are no outstanding debts.
  • Verifying that the property is as described and structurally sound. You’ll need an architect or surveyor to do this.

All the above can be provided by the land registry and can be requested by email, phone or in person. www.registradores.org (Spanish only).

If the property you´re interested in is not yet built, do not pay anything up front without verifying that it has all the necessary permits and authorizations to build. Also make sure the project has its municipal licenses approved. We recommend hiring a lawyer to help you analyze the contract and avoid abusive clauses.

Real estate agents offer their services to the property owners so their commission must be paid by the current owner, not you. Agents also offer services such as managing the mortgage concession or formalizing the sale at a specific notary but, Be aware – as a buyer, you are not obligated to accept these services. Always remember that you can choose your own notary, lawyer and mortgage provider.

The actual buying process

Once you´ve arranged your mortgage with your provider, you must make an offer to the owner and if accepted, you then sign a contrato privado de compraventa (preliminary contract) and pay a deposit – usually 10% of the purchase price- or an escritura de compraventa (sale contract, usually signed in front of a notary) when the full sale price, taxes and other extra costs are due.

Costs of being an owner

Once you purchase your home, you will be responsible for registering the property and paying the legal fees and taxes, which include a property transfer tax (usually 5 to 10% percent on existing properties) and the IVA (or VAT), which is 10% on new properties. Apart from these costs, there are annual taxes (IBI, property ownership tax) you will have to pay regardless if you live full time in Spain or rent out your new home.

We hope this information has been useful! Remember, if you need home insurance please visit our website to discover the best coverage, adapted to your needs.

Photo Credits: Shutterstock

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