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 woods from 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 paid into the account of Andalucia Vastgoed’s client. Only once this amount has been deposited into the account and both buyer and seller have signed the document is the property considered to be reserved.
The reservation period is usually 1 month (can be extended if the checks or obtaining the right documentation takes more time than this).
Reasons for a termination of contract where you can still get your deposit back could be: being unable to get a mortgage, or irregularities in the Land Registry or cadastre, if specified in the contract.
Step 3: Get a good, reliable attorney or solicitor, somebody who knows his job!
Experience has shown that it is better and more efficient to use a local Spanish attorney rather than a foreign attorney who speaks the same language as you do. The language should not be a problem. Most attorneys speak English and, if necessary, we are always there to advise you.
The attorney 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 also checks to 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 works in the Land Registry. The register is now slowly being updated which helps us during the buying process.
Note: a attorney only checks the documents which are sent to him. He does not usually visit the property himself. This is why close cooperation between us and the attorney is so important! Not all attorneys appreciate the involvement of a consultancy and this is why we would again like to emphasise the importance of a good attorney!
In addition, your attorney 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, your attorney can demand necessary payments from the seller to ensure that all outstanding costs in his name are paid.
If the dossier is approved, the attorney will draw up the private sales contract before the next stage of the sales process.
In het geval het dossier OK bevonden wordt, stelt de advocaat het privé-koopcontract op wat de volgende fase van het verkoopsproces inleidt.
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. You can also ask your tax agent (gestor or attorney) to help you with this. We can also assist you with this process.
- The next step is opening a bank account: when you are not in Spain, the attorney 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.
Stap 4: Private purchasing contract
During this stage, 10% of the sales price is paid by the buyer. The private purchasing contract is comparable to the compromis stage in Belgium and 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 exchanged 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.
Stap 4: 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 an attorney so that they can be sure the property has been legally sold.
A fundamental rule when buying property in Spain is to add approximately 11% to the sales price to cover all additional costs. Please note: if the sales price is low (e.g. less than €120,000) this could be 13% since not all costs are worked out as a percentage of the sales price, some are fixed.
(If you require a mortgage, please allow an additional 13% to 15% of the sales price).
We can break down the purchasing costs as follows:
8% transfer tax (Impuesto de Transmisiones Patrimoniales).
This amount is calculated on the basis of the purchase price declared in the deeds, i.e. the specified price.
1% attorney’s costs.
This amount is calculated on the basis of the sales price as given on the internet, in magazines or in the estate agent’s window. You also need to pay 21% VAT on top of the solicitor’s fees.
(I.V.A.= Impuesto sobre el Valor Añadido).
Notary fees approximately 0,25% of the purchase price declared in the deeds.
These vary dependent on the complexity of the deeds. The fees are higher if the property is mortgaged, for example.
Land Registry Inscription Fees approximately 0,15% of the purchase price declared in the deeds.
Comparable to the notary fees although generally a little lower.
The estate agent costs are always included in the sale price, at least they are in Malaga. However, in practice the property owner pays the estate agent a commission.
An example: you buy a property of €300,000
8% transfer tax: 8% of 300.000€
1% attorney’s costs: 3000€ incl. 21% VAT
Notary costs approximately 0,25%* of the purchase price declared in the deeds
Registration costs approximately 0,15%* of the purchase price declared in the deeds
Total estimated costs*
If you require a mortgage, you will pay 2% to 3% more since you also have to pay notary fees for mortgage registration. On top of this there are costs for registration in the Land Registry, taxes, administrative costs (gestór), valuation and dossier costs.
Tax changes since 01/01/2012 for buying/selling property!
The transfer tax to be paid when buying a resale home has increased as of 2012.
Sales price up to €400,000 : 8% on top of the sales price
Sales price between €400,000 to € 700,000 : 9%
Sales price above €700.000 : 10%
For a €250,000 property you pay €250,000€ x 0,08= €20,000 transfer tax.For a €1,000.,000 property you pay :
up to the amount of €400,000 x 8% = €32,000
on the amount between €400,000 to 700,000= 300,000 x 9% = €27,000
on the amount between €700,000 to €1,000,000= 300,000 x 10% = €30,000
Total transfer tax = €89,000
Sales price up to €30,000 : 8% on top of the sales price on the amount between €30,000 to €50,000 : 9%
Above €50,000: 10%