Purchasing a new build property
Unlike when buying a resale home, when buying a new home from a promoter you do not get charged transfer tax but VAT. The reduced VAT from 8% to 4% will be kept. You will also need to pay an administrative tax which has increased from 1% to 1, 2%. This means that when you buy a new apartment for €300,000 you pay €300,000 x 5, 2% = €15,600.
The Value Added Tax for sellers once was as high as 35%, then 18%, last year (2011) 19% and as of 2012: 21%.
The 3% which is deducted as standard upon sale, to ensure that the seller will meet their tax obligations, is maintained at 3%.
Purchasing new build property
Privately or from a promoter
Payments for off-plan property are made in instalments depending on the various stages of the project. In the same way as with resale homes, you need to pay a holding deposit in order to reserve the property and to ensure it is taken off the market.
Apart from this sum (€6000 or a multiple of this amount) you often pay 30% at the start of the project (deducted by the amount of the first deposit). You do not pay the rest until completion.
Payment terms vary from promoter to promoter and the type of project (construction period, sale price, project stage…)
It is important to have a bank guarantee. This is to ensure that the development will be completed in case the developer goes bankrupt.
New build residential properties in Spain are sold with a 10-year building guarantee for work done by the developer. This only covers defects arising from initial construction faults, the developer cannot be held liable for damages caused by third parties, construction management or a force majeure (storms, floods…)
Purchasing costs for you as a buyer
See ‘resale homes’ for a detailed explanation of the costs.
As a rule of thumb when buying property in Spain, allow for 9% to 10% max of the sale price in taxes and other costs.
If you need a mortgage, these costs can be slightly higher, i.e. between 10% and 11% of the purchase price. If you buy a resale home, or an existing dwelling, you will pay a transfer tax of 8% (Impuesto de Transmisiones Patrimoniales).
In the case of a new build property, there are two different rates, and you don’t pay transfer tax, you now pay VAT or I.V.A (impuestos sobre el valor añadido) instead.
4% VAT: (previously 8%)
When you buy a plot from a promoter who is also going to build the property.
When you buy a new home from a property developer.
21% B.T.VAT: (previously 18%)
When you only buy a building plot – without construction – from a trader or promoter.
When you buy commercial premises or, for example, a garage without a residential dwelling.
1.2% stamp duty (previously 1%)
In the case of a new build or off-plan property (which means that the property is still under construction), you also pay 1,2% stamp duty (NOT in the case of resales).
This means that you pay €300,000 x 5,2% = €15,600 in taxes on a new build apartment of €300,000.
1% solicitor’s costs + 21% VAT
Notary costs amount to approximately 0,25% of the purchase price declared in the deeds of sale (variable).
Land registry inscription fees are approximately 0,15% of the purchase price declared in the deeds of sale (variable).
Building permit: Licencia de obra.
The municipal authorities issue this document if you are building or renovating on a building plot zoned for development (Urbano.) If the plot is not in a zoned development, i.e. terreno rustico, a planning application or a change of use must be approved by the provincial authorities, the Junta de Andalucía.
Please note: planning applications are valid for a fixed period with a start and completion date! A planning application which expires, will not be automatically renewed or extended. This depends on the current building standards and laws.
Unfortunately, a lot of innocent and gullible customers still have the wool pulled over their eyes as far as building permits are concerned. It is important to make sure that all legal documents are present and in order. It is not always easy to check this and this is therefore best done by your own attorney. You should definitely not rely on the promoter’s or seller’s attorneys to do this for you!
Completion of the project: Documento de final de obra
This document is drawn up by the chief architect and technical architect after completion of the project. This document will later be submitted to the electricity company (Sevillana) so that they can legally supply the residence with electricity.
Licence of first occupation: Licencia de primer ocupación
This document is supplied by the municipal authorities, i.e. a technical civil servant. He or she will check if everything has been done in conformance with the licence which was issued and Sevillana will also request to see this document.
New Build Declaration: Declaración de Obra Nueva
This document is issued by the notary with a certificate of the chief architect that lists any modifications made to the property.
This usually concerns constructed areas, improvements, shrubberies and trees,…
To have this registered in the Land Registry, you will need to hand in this document once the work is completed.
Different types of architects in Spain:
In Spain you always need 2 architects: a technical architect (Arquitecto técnico, aparejador or perito) and a chief architect (arquitecto superior).
The arquitecto superior creates and compiles the dossier. The dossier consists of the basic project (proyecto básico), implementation project (proyecto de ejecución), specifications and list of materials (memória de calidades).
Once this document is complete, it is submitted to the local college of architects (colegio de arquitectos) in Málaga. Here the dossier is checked for technical and structural details only. Every page and plan in this dossier is stamped (visado). After approximately 3 weeks, the dossier is returned to the architect and submitted to the Urbanisation Department (Urbanismo) of the local council municipal authorities.
Architect fees in Spain are significantly higher than those in Belgium or the Netherlands. They are calculated in accordance with statutory fees of the college of architects (these are adjusted annually). Fees are linked to the amount of square meters of floor surface of the new development. As a rule, the fee of an architect is about €55/m²: the technical architect asks for approximately another 30% of the chief architect’s fees.
Example: new build 200m²
* All fees are calculated dependent on the individual project: size, duration, complexity .