Buying a home in Spain.

Buying a Spanish property.

buying in france >>

Spain is still one of Europe’s top tourist destinations and thousands of Brits now own a Spanish home. The process for buying a property Spain is relatively straightforward and foreign nationals have the right to buy without restrictions.

Making an offer.
When you have found a property the next step is to make a verbal offer through your agent. As in the UK, it is very common i for the price the asking price to be  negotiable, so set your budget and be prepared to haggle. If you need finance you'll now need to apply for a mortgage. You may have already sought an agreement in principal from a lender but if not it's good to seek advice from a specialist overseas mortgage broker.

Instructing a solicitor.
Once a price is agreed you should appoint an English speaking solicitor to formalise the agreement. Your solicitor will obtain from the property registry documents which identify the registered owner and provide details of outstanding finance or embargos on the property and whether all the correct titles deeds are in place.

If the property is located in a gated community, ask your solicitor to obtain details of community charges and if possible ask the president for copies of notes from recent meetings to help identify any serious problems.

Exchange of contracts.
The exchange of contracts would normally take place a couple of weeks after the formal acceptance of an offer. The contract would set out all the agreed terms and set a date for completion. The buyer now pays a 10% deposit through the solicitor.

Completion.
The balance of the purchase price will be payable when the vendor & purchaser sign the definitive property contract equivalent to the Deeds of the property. Your Solicitor will need confirmation of any mortgage offer or finance agreement needed for the purchase and will now arrange payment of property taxes and fees. On completion your solicitor should register your title deed at the property registry.

Most of us will need to raise some finance to complete the purchase of our Spanish home. Nowadays both international lenders and local banks are willing to consider mortgage applications from foreign nationals hoping to buy a home in Spain.

Lending criteria.
Spanish Mortgages are normally available for up to 80 percent of the purchase price. This generally means you’ll need to find a 20 percent deposit and be able to prove your income. Self certification mortgages in Spain are not normally available.

As with UK mortgages, borrowing limits are typically based on your gross income and ability to repay the loan once regular outgoings are taken into account. Lending criteria & rates vary between mortgage companies so its prudent seek advice from a specialist  overseas mortgage broker for advice.


Mortgage term.
Mortgages are available over 5-40 years and lenders will not normally take into account rental income when calculating an applicants level of borrowing.

Compared to other countries, property transaction costs in Spain are moderate. You should set aside around 12-14% on top of the property price for fees.

Legal costs for buying property in Spain.
The Notary fees are fixed by law and are based on a sliding scale. A registry fee is also payable on completion. If you decide to use a solicitor, these fees will be in addition to the Notary fee.

Property tax in Spain.
For new properties VAT of 7% and stamp duty of 0.5% is payable on completion. For second hand properties a transfer tax of 6 – 7% (Impuesto de Transmisiones Patrimoniales or ITP) is payable on completion along with a municipal tax called "Plusvalía municipal".

Spanish estate agent’s fees.
The buyer does not have to pay separate estate agent fees but It is worth noting that the agent is paid from commission once the property has been sold. The commission is normally included in the price of the property and some agents can demand over 10% of the property’s value in fees. It’s worth asking how much of the advertised price is being swallowed up by commission, if it’s very high you could try negotiating a reduced figure.

If you sell a property in Spain the agent’s commission is normally deducted from the sale figure on completion.