The decision to purchase a house in Spain involves making some big decisions. It is important to be well informed on this subject and therefore we stress that you should employ the services of a good solicitor who speaks English, with whom you can communicate clearly and concisely on your behalf.

Buying land to build is just as complicated as buying a house in Spain. Spanish land laws are complex, and it is very important to choose the right plot of land in order to avoid future problems such as finding out that the land you have bought has no planning permission and so you can't build on it, as many horror stories bear witness.

Please note.

The advice contained below is merely a guide and does not replace the services of a solicitor or financial advisor.

Spanish solicitors

There are many Spanish solicitors who speak excellent English, and regularly deal with British clients wishing to purchase property in Spain or British residents in Spain. We recommend that you source a Spanish or good English solicitor in the area you are considering buying property. We will be pleased to recommend you one that many of our clients have used if you require.

Buying process

Exchange of private purchase contracts

Once you have found your property and the purchase price has been agreed by the seller, a private purchase contract is drawn up. This will normally include a deposit of approximately 10% of the purchase price to reserve the property.

This documents sets out the agreed terms and conditions of the transaction, details of all parties and sets out the date for final completion before the Notary Public, and that the purchase is subject to the property being fully legal, with no outstanding mortgages, or debts.

These debts will have to  be cancelled prior to completion. If not, the buyer will be entitled to either withdraw from the proposed deal and claim damages or deduct the amount of the debt together with the cancellation costs, if any.

After the private purchase contract has been drawn up the solicitor will complete the legal searches and investigations of the property.

Completion

The purchase is formally completed when the public title deeds of purchase-sale are signed before a Notary Public. Here the balance of payments due is made to the seller.

The public deed always stipulates that the property is sold free from charges and encumbrances, up to date in all the different payments and free from tenants and occupants. You will then be given by the Public Notary a copia simple The solicitor will need a couple of copies in order to complete all the legal formalities. 

With the original deed, all the relevant transfer taxes are paid in the different tax offices and the deed is taken to the Land Registry in order to formally register your the title to the property.  This should be handled by your solicitor.

Similarly, the solicitor will arrange for the transfer of accounts with the local suppliers of utility services and organise a direct debit from your bank in Spain.

Depending on the Land Registry of the area, registration may take from 15 days to 3 months, and  the Land Registry will inform your solicitor that the registration has been completed and the deeds are available for collection. Land Registry fees are paid then

Costs associated with the purchase

 If you estimate an additional 10% of your purchase price, this will normally cover all your additional costs in purchasing your house.

Notary fees

The Notary fees are set by the Spanish government and are on a fee schedule according to the value of the property purchased. The Notario, or Notary, is an official of the State who makes sure that contracts are legal. He keeps the original document in his files in case any question arises later.

The Notario is a public official, not a private lawyer. His duty is to certify that the contract has been signed, the money paid and that the purchaser and seller have been advised of their tax obligations.

 He does not verify or guarantee the accuracy of the statements made in the contract. He only certifies that the parties have signed it properly. A lot of people who buy property in Spain believe that the Notaries assure them that all statements made in the contract are true. This is not the case.

Taxes

Before a title deed can be registered into a new owner's name, or a deed issued for a newly constructed building, transfer tax has to be paid by the buyer.

Resale purchase tax

 House purchasers of resale property are required to pay the Impuesto de Transferencia de Propiedad  (ITP) of 7%

New Properties purchase tax

House buyers of brand new houses in Spain are liable to paying 7% IVA (VAT) if the house is finished or is being built at the time of the purchase, plus an extra 0.5% stamp duty.

Land Tax

 Buying land in Spain or commercial property, IVA (VAT) rises to 16%

Land Registry fee.

The fee scale is also fixed by law and is approximately 30% lower than the Notary fees.

Solicitors Fees

Solicitors  normally charge approximately 1% of the declared purchase price plus 16% IVA (VAT) for a straightforward purchase, but in many rural areas this is less.

 Escritura Publica

The Escritura Publica is the registered title deed of the property. It is inscribed in the Registro de la Propiedad, the Property Registry and it is the only guarantee of title in Spain. In the Escritura Publica, you will find a description of the property and the details of the owner. Also if any mortgages or debts exist against the property, they will be noted on the Escritura.

Escritura de Compraventa

The final document is the Escritura de Compraventa and it must be signed by you and the seller in the presence of a Spanish Notario in order to make it legally binding. You can make a poder – a power of attorney - allowing your solicitor or another person to sign for you, if you are unable to be present.

Bank Loans and Mortgages

With the introduction of the Euro, both residents and nonresidents may now obtain loans and mortgages against their Spanish property in any currency from any bank in the world. Although, obviously, you will still have to provide personal information on earnings, Spanish bank mortgages are now being offered at rates below those available in the UK and Europe