Purchasing a resale property
STEP 1: Choose a reliable local contact
Do not believe the first person you meet and keep your wits about you!
Andalucia Vastgoed acts as an independent property advisor-estate agent-architect: this means that we do not act as a commercial agent but rather as your partner in your search for a suitable property.
There is no better place to start the house hunting process than with us, as we provide full access to the Spanish property market! In order to use our specific services without any added costs, it is important that we register you with our partners as our customer. If we don’t do this, we lose our right to commission and we will need to charge you separately for our services.
We offer complete transparency. Every homeowner who puts his property up for sale, signs a commission agreement with the estate agent. The commission fees are usually shared 50/50 with their partners. The partners we work with are familiar with the way we work and know that we like to carry out our own checks and investigations. We have used this way of working since we established our business in 2005 as our customers told us that they could not see the wood for the trees.
Perhaps you have already started negotiations but would like to use our services to make sure that you know what you are buying. Feel free to contact us because we could still help you, against a fee, and put you in touch with the right people.
STEP 2: Reservation contract
Once we have found a suitable property, it is important that it is taken off the market as soon as possible. This is when we use a reservation or deposit contract. The 2 most important things in this contract are the final purchase price and the reservation period for the property.
The deposit sum is €5000. This deposit is into Andalucia Real Estate clients’s account. The property is considered to be reserved only once this amount has been deposited into the account and both buyer and seller have signed the document.
The reservation period is usually 1 month (can be extended if the checks or obtaining the right documentation takes more time).
If specified in the reservation contract, when the lawyer gives you a negative advice after his legal searches or you are unable to get a mortgage, the reservation will be terminated and the deposit returned.
Step 3: Get a good, reliable lawyer, somebody who knows his job!
Experience has shown that it is better and more efficient to use a local Spanish lawyer rather than choosing a foreign lawyer just beacause he speaks the same language as you do. The language should not be a problem. Most lawyers speak English and, if necessary, we are always there to advise you.
The lawyer will carry out the necessary checks, he will also check whether the property is in the Land Registry (registro de la propiedad) and the cadastral register (el catastro), and will also make sure there are no property related debts.
It is not uncommon in the campo (i.e. outside urban zones) for building works not be registered in the Land Registry (see: nota simple). Any additions to the property made after the sale, such as outhouses, swimming pools, etc. used to be added without registering these in the Land Registry. The register is now slowly being updated, which helps us during the buying process.
Note that a lawyer only checks the paperwork that is sent to him. He usually doesn’t visit the property himself. This is why close cooperation between us and the attorney is so important!
Not all lawyers appreciate the involvement of a consultant and this is why we would, again, like to emphasise the importance of a good one!
In addition, your lawyer should check whether there are any property related debts: outstanding electricity and water bills, taxes due, mortgage loans or costs for maintaining common gardens and swimming pools (the latter applies predominantly to urbanisations).
These debts must be cleared by the day of sale at the latest. If not, the lawyer can demand necessary payments from the seller to ensure that all outstanding costs in are paid.
If the dossier is approved, the lawyer will draw up the private purchase contract (PPC) before going to the last stage of the sales process.
The following two things are extremely important if you are serious about buying property:
- You should apply for a NIE number: ( Número de Identificación de Extranjeros or Foreigners’ Identification Number). This is the tax reference number for all foreign nationals who live in Spain or reside in Spain for more than 182 days a year. You need this NIE number for all commercial transactions (including registration of your property with the Land Registry, opening bank accounts, starting a business, getting a phone line, gas and electricity and when taking out any insurance in Spain!) and tax returns. You can apply for a NIE number at main police stations with a special department for foreigners (Comisaria de Policía – Oficina de Extranjeros). You can find these police stations in all major cities, but we can only suggest you for your lawyer to take care of this.
- The next step is opening a bank account: when you are not in Spain, the lawyer is usually given power of attorney to open and manage a bank account to ensure that deposits and any other payments can be made promptly.
Step 4: Private purchasing contract
During this stage, 10% of the sales price is paid by the buyer. The private purchasing contract lists all buyer and seller details, a detailed description of the property, method of payment and a fixed or ultimate date on which contracts need to be closed at the notary office.
If you, as a buyer, decide for personal reasons not to go ahead with the purchase after signing the private purchasing agreements, you will lose the deposit. In case the seller decides for personal reasons not to go ahead with the sale, he is legally obliged to pay back the deposit, i.e. the 10% plus a fine of another 10%. Please check with your attorney to make sure that this provision is included.
This stage is binding for both parties and is intended to consolidate the sale.
Step 5: Title deeds (escritura)
Signing the title deeds (escritura) usually takes place within 3 months, dependent on the type of property you are buying and whether or not you need a mortgage, which can significantly delay the buying process.
In Spain the job of the notary is limited to drawing up the title deeds and lodging the deeds with the Land Registry. This is the reason why people buying property in Spain also need to engage the services of a lawyer so that they can be sure the property has been legally sold.
Costs for the buyer
A basic rule when buying a property in Spain is that you should add about 11% to the selling price to cover all additional costs. Note: If the sales price is low (eg less than € 120,000, take into account 13% because not all costs are calculated in percentage but some are flat-rate.
(If you need a mortgage, it is best to count 13% to 15% of the sales price.)
The purchase costs are distributed as follows:
8% transfer tax (Impuesto de Transmisiones Patrimoniales).
This amount is always calculated on the deed price, i.e. the indicated price.
1% lawyer fees.
This amount is always calculated on the sales price as priced on the internet, magazines or in the display case at a broker. You also need 21% VAT on this service. to pay
(I.V.A. = Impuesto sobre el Valor Añadido). The advocated office we work with (Axarquia Solicitors) charges 1% incl VAT for this.
Notary fees about 0.25% of the deed price
These are variable and depend on the complexity of the deed. If, for example, a mortgage rests on the property, the cost price is higher.
Registration fee property register approximately 0.15% of the deed price.
This amount is comparable to the notary’s fees, but is usually slightly lower.
Costs for the broker are always included in the sales price, at least this applies to the province of Malaga. In practice, it is true that the owner of the property pays the commission to the broker.
For example: you are buying a property of 300.000€
8% transfer tax: 8%of 300.000€*
1% lawyer’s fee: 3000€ incl. 21% VAT
Notary costs, depending on the complexity of the case
Registration costs (aproximately)
Application of your NIE (2)
Transfer of utility bills
Home insurance (fire, water damages, burglary)
Various administrative costs
*In case the price is divided into two parts, one for the house and one for furniture e.g. 280.000€ for the house and 20.000€ for furniture, then you only pay 4% on the amount of the furniture.
In case you need a mortgage, you will pay the above mentioned costs + opening costs for the bank (depending on the bank) and taxation costs.
Since 2019 notary fees, registration costs and stamp duties for mortgages are paid by the bank!
Buyer’s costs for resale properties:
: 0 – 400.000€
: 400.000 -700.000€
: > 700.000€
1. for a house of 250.000€, you will pay:
250.000€ x 0.08= 20.000€ transfer tax
2. For a house of 1.200.000€ you will pay:
Tier < 400.000€
= 400.000€ x 8%
Tier from 400.000 to 700.000€
= 300.000€ x 9%
Tier from 700.000 to 1.200.000€
= 500.000€ x 10%
: 0 to 30.000€
: 30.000 – 50.000€
: > 50.000€