DETAILS & PROCEDURE...
Once you have decided on a property you will be asked to pay a deposit. The amount can vary but should be a minimum of 10% of the purchase price, and should be held by your legal representative whilst contracts are being drawn up. It is important to establish at this point whether the deposit is refundable should any unforeseen problems arise.
You should appoint a legal representative to act on your behalf on all matters relating to the purchase of the property. They will make sure that:
a) The contracts are in order.
b) Conduct a search on the property to ensure that the title deeds are correct.
c) There are no outstanding debts on the property. The latter is checked by obtaining a Nota Simple -
Registry Office showing who owns the property and whether there are any debts registered on the property. You will need to pay a small fee for this. It is not usual to have a survey carried out on a Spanish property. You can arrange for this privately if you wish. The fee for an abogado (Lawyer) can be around 1% of the purchace price. The
Should you require a mortgage to purchase the property this can be arranged in Spain or in the UK. Remember to make sure that the necessary funds are available to meet the completion date. It is possible to raise finance to assist with the purchase of a property in Spain either by mortgaging the property itself or by mortgaging or adding to the mortgage on any property which you may have in Britain.
If you own a property it is strongly advisable to open and maintain a bank account in Spain in order to pay monthly utility payments and non-
Signing of Contracts:
Upon securing that the details of the contract are in order, you will be required to sign, at which stage it becomes legally binding for all parties.
Transfer of Title Deed:
Full payment is required before the title deed can be transferred into your name. If you are buying a new build property you must follow the payment schedule as detailed in the contract as the building reaches each stage of construction.
Property Registry Fees:
The registry fees are based on the registered value of the property.
You must pay this tax before the Escritura (title deed) can be registered in your name. In the case of a new private property (land and a dwelling), the tax is a percentage of the value registered in the deeds. You can sign an Escritura for just the land that your property is going to be built on, and a subsequent Escritura for the Obra Nueva once the dwelling has been built. Upon completion of the house a further percentage for IVA (tax) would need to be paid.
The Notary's fees can vary but should be no more than 0.5 % of the value of the property as delared in the deeds.
Plus Valia Tax:This is a tax relating to the property and is calculated and applied by the local Town Hall in respect of the increase in the value of the land since it was last sold. Strictly speaking, this tax should be paid by the buyer but, sometimes it is paid by the seller. This tax must be paid otherwise, in the long term, the property will be the gaurantee for the payment of this tax.
Stamp Duty & IVA (VAT) on new properties only :
1% stamp duty is payable on new residential properties. The IVA tax is 10% on new residential properties, on commercial properties it is 21%.
Handing over the property and it's keys will normally take place once the full purchase price has been paid.
Transfer of Utility Services:
Having completed the purchase, it is necessary to connect or transfer utility services. Both electricity and water meters need to be in your name, and to avoid payment problems, a direct debit or standing order with your Spanish bank should be used.
Insurance re: New Properties:
It is now law that all constructors must take out an insurance against subsequent serious defects or their company going bankrupt before the building has been completed (much like the NHBC Certificate in the UK). Because these insurances are relatively new in spain they often take months to arrange, which could delay completion of the property, it is worth checking your constructor has this aspect in hand so it is not left until the last minute. Constructors usually pass the cost of this insurance on to the purchaser, and it is quite a significant amount. Ensure that this has been accounted for in your expenditure list, or is included in the contract price. This insurance cover is for the structure only.
It is adviseable to obtain a certificate from the Land Registry stating that there are no outstanding debts on the property. This certificate should be attached as an annex to the purchace deed (escrituro). If there are outstanding debts on a property the buyer may inherit these debts.
If you purchase a property within a complex, urbanisation or apartment block you are obliged to join it's residents association which administers general maintenance on areas of common ownership such as swimming pools, gardens, hallways, streets, etc. An annual budget is calculated to cover these costs, and divided between all the owners according to the size of their properties. All owners have a vote to agree the budget.