If you want to enjoy the sunshine and good times Spain has to offer, you’ll need somewhere to live. You’re set on your dream Spanish location. You know all about moving to Spain. Now it’s time to time to think about purchasing a home.
In this guide to buying property in Spain, we’ll take you through the Spanish housing market. We’ll go through getting the necessary contracts, documents and fees together. And we’ll give you some advice on finding the right estate agent.
There’s more to moving to Spain than just finding a home. For information on mortgages, the Spanish banking system, healthcare and more, download our comprehensive guide here.DOWNLOAD SPAIN BUYING GUIDE
Lots of the Spanish economy was hit hard during the global financial crises 10 or so years ago. But the property market suffered particularly badly. In some areas, house prices dropped by as much as 30%.
Over the last few years, Spain’s housing market has become far more stable, with house prices seeing a steady rise. In places like Ibiza, house prices have accelerated at a greater pace. This has made buying property in Ibiza a lucrative location for investors. It’s also incredibly popular for expats seeking a second home.
Along with the obvious benefits of buying in Spain – year-round good weather and a relaxed atmosphere – the Spanish property market also entices expats, especially retirees. Lower real estate and living costs than other European cities mean that pensions and savings can go further than can back home.
Estate agents in Spain
When it comes to finding your ideal home in Spain, you are going to need help. And most of that help comes in the form of a good, reliable estate agent. Look for one who is legal, ethical, reputable and has your best interests at heart.
Finding the right estate agent is key to a smooth transaction. As such, it’s a good idea to do your research before you head off to Spain. Search for estate agents who speak English and have experience working with British buyers. You will want someone who has a comprehensive understanding of the market, especially of the area of Spain you want to move to.
Qualifications and memberships
There are a number of professional institutions for Spanish estate agents. If your estate agent is a member of one of these organisations, it means that they have had to go through training to get there, which can offer a level of protection and certainty for you as a buyer.
The two largest organisations to look out for are the ADI (Agentes de la Propiedad Inmobiliaria) and the GIPE (Gestores Intermediario en Promociones de Edificaciones). If you are unsure if an estate agent is a member of one of these, check the organisations’ websites to see if their name appears.
Get you an agent who can do both
At the end of the day, your estate agent will only get their commission once the sale goes through. Therefore, it’s beneficial to both you and the agent that the process goes as smoothly as possible, and everybody’s happy at the end of it.
That’s why good estate agents will help you through all stages of the buying process, not just finding a home. They should help you get your NIE, open a Spanish bank account, find a surveyor, find a notary, and even get you a good builder if you need one.
Even once the sale goes through, an estate agent who wants to build on their reputation will stay in contact and aid you through setting yourself up in Spain. A reputable estate agent may help you find a doctor, recommend schools, or simply introduce you to popular bars and restaurants.
Spanish property contracts
First off, you’ll need to know what you’ll need in terms of funds and certification. We’ll go into them here:
Tax Identification Number (foreign identification number – NIE)
As a non-citizen, you will need a Tax Identification Number (NIE). You won’t be able to buy Spanish real estate without one, nor will you be able to open a bank account or start paying for utilities. This applies to anyone, and you may have a few extra steps as a UK expat moving to Spain after Brexit.
You’ll need to have your NIE before the completion of your purchase. Thereafter, it should be on all tax returns and any communication you have with the tax authorities.
Acquiring your NIE is relatively simple, but it can take anywhere between one day to six weeks. If you’re using an estate agent, they’ll usually help you – after all, their commission relies on the sale going through. The estate agent should take you down to the immigration or tax office and make sure you have the right documents.
You’ve found a property; you’ve agreed to a price. What next? You will be asked by the estate agent to sign a reservation agreement. This is an agreement to take it off the housing market – usually from two weeks to a month. This will cost you a deposit of around €3,000. With some properties, it can go as high as €10,000.
If all doesn’t go to plan, you can get this deposit back, depending on the terms of the agreement. It’s highly recommended that you make the agreement subject to mortgage loan availability, legal checks and building surveys. Doing so will mean you will get your deposit back should anything go awry.
When you are in the period of the reservation agreement – two weeks to a month – you will commit to a deposit contract.
The deposit contract outlines the details of the real estate:
- The price of the property
- Its location
- Who owns it
- What sort of property it is
- The payment method used
- The date the purchase will be made.
Signing it means you are committed to buying the property and the seller is committed to selling the property to you. You may instead be presented with an ‘earnest money agreement’. But don’t fear, this is the same as the deposit contract, just under a different name.
At this point, the buyer will pay a deposit of usually 10%. If you, as the buyer, pull out of the contract, you will not get the deposit back. If the seller pulls out the agreement, not only do they have to pay you the deposit back, but they must double it! This is all required by law.
You’ll be pleased to know that the deposit money doesn’t sit in the seller’s bank account. Instead, it’s kept in a separate account under a lawyer’s supervision. It won’t reach the seller’s account until the final deal goes through.
The Sale Contract (escritura)
Congratulations, you’re at the final stage. The sale contract is the final handover of the property – it completes the sale process. It’s normally signed in the notary’s office, but you can give your lawyer power of attorney if you so wish.
Expats give their lawyers power of attorney so they can sign contracts for them if it’s inconvenient to travel back to Spain every time they need to sign a contract.
Pay the balance and get the keys. You are finished. Time to enjoy Spain.
The Necessary Funds
As you’ll likely know, when it comes to buying real estate, it’s not just the property you need capital for. The price you pay in Spain will depend on a few factors.
Some of the largest ones being:
- Whether the property is a new-build or preowned
- Whether you’re buying it with a mortgage
- The price of the real estate itself
There is also a host of other taxes and fees that you will have to take into consideration. We’ll go into them here:
Transfer tax (ITP):
This is specifically for resale properties, not new builds. It’s the tax you pay for the transfer of a property. Across most of Spain (including the islands), it holds at 8% of the property price. In some areas, it’s 10%.
New build VAT:
If it’s a new build, you’ll have to pay a VAT of 10% of the property costs.
Land registry fess:
This is 1% of your purchase price.
Independent lawyer fees:
This can vary on the lawyer and any complications that come with the property. It’s recommended to expect between €1,500 and €3,000 for this.
These are paid by both the seller and buyer. As the person purchasing the property, you’ll be paying for the issuing of the deeds. This is usually around 0.5% to 1% of the property price.
If you’re planning to use a mortgage, there’s a few more costs you need to keep in mind. Namely, valuation fees (normally around €350), stamp duty (1.5% of the mortgage deeds) and lender’s commission (1%).
Found this information useful? If so, download our comprehensive Spanish buying guide. It takes a detailed look at Spain’s top destinations to move to, buying off-plan property, renting and much more.DOWNLOAD SPAIN BUYING GUIDE