Buying a property in Spain is a complicated process and in order to ensure a smooth road, you need to be aware of how it all works, the stages and processes to follow and the pitfalls to avoid. That’s why we’ve produced this article, with the 10 key steps to follow when buying a property in Spain.
If you need any support with buying a property in Manilva, Sabinillas, Duquesa or Casares, C2C Properties are here to help you every step of the way. Please get in touch for advice or to arrange a viewing trip.
- Obtaining the NIE
If you are a foreigner, you will first need to obtain the NIE (Tax Identification Number) in order to purchase the property. The NIE will also be necessary to open a bank account. It is advisable to apply for it in good time, as it is difficult to get an appointment and can cause delays.
- Open a bank account
It is not compulsory, but it is recommended in order to make it easier to purchase the property and pay the corresponding taxes. To do this, we recommend checking with different banks which operate in your chosen area to find out the bank account options and fees and find out if they speak your language. Once you’ve done your research, choose the one that best suits your needs.
- Solvency study
If you need a mortgage to purchase your property in Spain, the solvency study and defining your budget is one of the most important steps.
It is important to note that Spanish banks only finance up to 80% of the value of the property (excluding the costs involved in the purchase) for residents, or up to 60% for non-residents. Therefore, it is advisable to ask your bank or mortgage broker for a simulation to see what you can afford and also what bank offers the best conditions.
It is also possible to apply for a loan in your country of origin if you can leave guarantees (for example, your main residence) and obtain a better deal. However, some banks do not offer the possibility of investing abroad. A mortgage broker is best placed to help you choose the right option for you.
- Finding the property
Once you are clear that you have the finance in place and know what your maximum budget is, we can start looking for properties.
Although there are lots of properties for sale listed online, it can be hard to know where to start without local knowledge. We recommend that you start by choosing an accredited and registered real estate agent, so that they can advise you and show you the properties, either in person or virtually.
Having expert help on the ground will prevent you from falling into certain traps (overvalued properties, poor general condition of the property, hidden refurbishment work that needs to be done). It will also prevent you from having to make several trips if you are not yet living in Spain.
C2C Properties SL are here to help if you’re looking for property in Duquesa, Manilva and the surrounding areas. C2C Properties was established in 1997 and moved to our current location in San Luis de Sabinillas, Manilva in 2002. We have lived and worked in this area for over 20 years and are passionate about the incredible lifestyle it can offer, whether you’re here year-round, or just want to rent or buy a holiday home in the sun. Contact us if you’re interested in buying property in this area, we’d be delighted to help you.
- Reserving the property
A reservation contract is drawn up initially to give both parties time to prepare for the purchase & sale process, while ensuring it doesn’t get sold to another buyer. Signing this contract gives the buyer time to verify that all the documents of the property are in order and that there are no hidden defects or problems. Please note, this is more than a reservation of the property, it is called an option to buy. It should not be confused with the deposit contract, which is usually signed afterwards (about 15 days after the reservation).
A deposit of between 3000 and 6000 euros is required at this stage and the contract is valid for a defined period of time (usually coinciding with the signing of the deposit contract), enough time to verify the legal status of the property and the approval of the loan.
In the reservation contract the buyer shows his intention to buy the property, it is important that it is drawn up and that all the conditions and obligations of the parties are established so that no problems arise later, including the return of the amounts paid and the conditions of repayment.
- Check charges
Before signing the purchase contract, the buyer must know the following things about the property:
- whether it is encumbered by a mortgage or other encumbrance that could be detrimental to the buyer.
- town planning authorisations (L.P.O., certificate of habitability, etc.).
- whether it has been seized by any public or private entity or by third party creditors
- municipal charges (possible debts for non-payment of municipal taxes such as IBI)
- energy certificate (EEC)
- payment of community fees
- tenancy or usufruct issues (the property must be handed over free of occupants and tenants).
To do this, it is necessary to obtain a Nota Simple from the Land Registry and verify the charges of the property, as well as going to the official public bodies and the Administrator of the Community of Owners where the property is located to verify the lack of outstanding debts.
- Obtaining financing
If you have already carried out the financial study and you need a mortgage, it will be necessary to go to the bank so that they can approve the loan and proceed with the purchase of the property.
- Deposit contract
The deposit contract (contrato de arras) is a private contract between the buyer and the seller. Normally the buyer must pay between 7% and 15% of the sale price.
There are three types of deposit contracts: confirmatory, penal and penitential. In contracts for the sale of real estate, penitential deposit contracts are most commonly used.
But what does the deposit contract guarantee? It protects the buyers and sellers against the other party pulling out of the purchase. If the buyer pulls out, he will lose his deposit, however, if it is the seller who pulls out, he will have to pay the buyer double his deposit.
The contract must contain as a minimum:
- The personal information of the seller and the buyer
- The description and identification of the property
- The selling price of the property
- The method of payment
- The amount to be paid (to be subtracted from the total amount)
- The deadline for finalising the sale
- The distribution of the notary's fees
- Penalties in the event of withdrawal by either party
- The signature of the seller and the buyer
This is not an exhaustive list, so it is important to detail all the clauses that you want to include so that you are legally protected. This is why it is important to seek advice from a lawyer or qualified real estate law expert (API).
At C2C Properties, our in-house lawyer Domenico di Giorgio can take care of all of this for you. He has been a lawyer since 2002 and has operated on the Costa del Sol since 2012, specialising in the real estate sector and residency. Please contact us to talk to Domenico.
- Purchase and sale and public deed
The purchase and sale of the property is concluded at the notary with the signing of the mortgage, if there is one, followed by the signing of the title deed of the property. The bank representative, if a mortgage is signed, the notary, the buyer, the seller and the real estate professional or lawyers, if any, are all present at this time.
The notary will verify that payment has been made to the seller.
The deed must then be presented to the Land Registry to notify the change of ownership. This is not obligatory, but we recommend it to ensure the owner is legally protected against any third party.
- Payment of taxes derived from the purchase of the property
Once the property has been bought and sold, it is necessary to pay a series of taxes, depending on whether the property is new or second-hand. These are as follows -
A- Newly built properties
- VAT - 10% of the deeded amount.
- Stamp duty (Impuesto de actos jurídicos documentados) - This is a tax which is calculated on the deed made public before a notary and which is applied to the legalisation of all types of notarial documents. It is paid by the buyer and is 1.5% of the value of the property in Andalusia.
B – Second hand property
- Transfer Tax (Impuesto de Transmisiones Patrimoniales) - The General tax in the Community of Andalusia is currently 7% of the value of the property and 4% of the value of the furniture, in case it is sold separately to the property.
We hope this article has helped you to see that buying a property in Spain is a simple process if you know the key steps.
It is essential to surround yourself with trustworthy people who can advise you and accompany you throughout the whole buying process. At C2C Properties, we offer you comprehensive assistance throughout the process of buying your property in Spain: from obtaining the NIE to signing at the notary and paying the taxes.
Our aim is to make your journey of buying a property on the Costa del Sol as simple and stress-free as possible. Our passion, experience and local insiders’ knowledge really helps our clients to find the perfect property. That’s why we only sell properties in Manilva, Sabinillas, Casares and Duquesa, a radius of under 5 kilometres from our office.
We are committed to excellence and know our clients need to put their trust in us. This is why we are licenced with the API and members of the Association of International Property Professionals (AIPP). As members of the AIPP, we have been vetted and approved, and we have voluntarily committed ourselves to industry regulation.