Buyer's Guide

  • Buying a property in Spain

The buying process for a real estate transaction in Spain involves several steps, and is a little different than what we are usually used to. At Red Palm Estate, we guide you through all the parts so you are prepared for what awaits.

 It is also important that you look at the overall picture of the costs that arise both at the time of purchase and when you use your new home. Expect about 15% on the purchase price. For those of you who are going to buy a house in Spain, we give below examples of things you should think about.

 At the end of this guide, we have made a list of what the costs may look like, remember that this is just an example, and may look different depending on which home you choose to buy!

 For tips on other things to keep in mind when choosing a home, see our guide “Choosing the right Property”.

 

 Documents required to be able to buy a property in Spain

  • Valid passport
  • A so-called NIE number (Spanish identification number) 
  • Account number in a Spanish bank. (Nowadays some foreign banks are approved, let your agent test if your bank account works for this purpose if you do not want to open a Spanish bank account) 
 

If you do not have an NIE number and account number in Spain, we can help you arrange this.

 The process

 Once you have chosen the home that suits you, the process is divided into a number of steps, the most important of which are summarized below:

 Signing of a purchase agreement, which is a legally binding document. In connection with this, a down payment is paid for the property. The down payment varies but is usually between 4000-6000 € for a used home and usually 10% of the price of the home for a newly built home.

 If you do not complete your purchase, you will lose this entire amount, so it is important that you have received a statement of total costs and that you have your financing of the home ready. If the seller wants to break the agreement, they are entitled to this under Spanish law, but must then repay the double down payment to the buyer.

 Used home: When you buy a used home, the remaining amount is paid in connection with legal registration with a Notary Public. In connection with this, all the keys to your new home are also handed over and you are from now on the owner of your new home.

 Newly built home: When you buy a newly built home, it varies a bit how payment plans look. Usually a certain percentage is paid within 3 months and the rest when you sign the registration. You will receive a specific payment plan in connection with the reservation of your new home.

 Most of our customers choose to issue a power of attorney to an agent who can represent you in Spain. The representative handles, for example, contact with the notary public, arranges contacts with authorities and necessary public documents and ensures that water and electricity agreements are written in your name and are connected until you take over your home.

 The purchase agreement will be in Spanish to be legal in Spain, but a translation will be attached. When buying a used home, it will state, among other things, that the home is debt-free, without tenants and with all the required licenses. The seller has also been allowed to sign this. Your representative will start these checks after you have reserved the home, if something is not right, you will have the opportunity to terminate the agreement.

 A building permit is required for all development that has changed the living space of the home (glazing of a balcony is also included in this). In the past, many have built without a building permit, which we occasionally encounter now. Your agent will make sure that everything is included in the legal record, but sometimes it is not possible to enter an extension or the seller does not want to bear the cost of this. Then you also of course have the opportunity to terminate the agreement if you want.

 

Financing

If you already have the financing ready, and you are going to transfer a larger amount in a currency other than the Euro, it is a good idea to use securities transfers to get a better exchange rate. The companies that have this service also usually offer payment checks at much lower prices than the banks. Feel free to ask to compare the prices for this with your current bank, usually there is a lot of money to save! We work with Currencies Direct, but of course you can also use another company for this purpose. Currencies Direct web page

The most common is that your agent then takes the checks to the Notary when the signing is to take place. It is unusual to make a bank transfer at the Notary, this is because it is possible to cancel the transfer afterwards from a Spanish account.

 

Bank loan

If you want to take out a bank loan in Spain to finance your home, we can help you get in touch with a Spanish bank for this purpose. The banks have slightly different terms, but you can usually borrow up to 70% of the sale price of the home if you are not a resident of Spain (then you can borrow a higher amount). The repayment period is up to 20 years, but no longer than the year in which the youngest borrower turns 70.

Banks usually calculate the ceiling for your loan amount by ensuring that your expenses, including the Spanish loan, do not exceed 30% of your total income. Of course, you can combine your income if you are two or more borrowers.

Ask us if you want to know more about mortgages in Spain!

 

Rent-to-buy

One way to buy a used home in Spain is Rent-to-buy. It can be an alternative to be able to finance the part of the home you cannot borrow for. Then you rent the home for a period, usually between 1-2 years. What you pay in rent during the agreed time, you then have to deduct from the purchase price when you buy the home. This can be a way to cover the cost of fees of about 15% and the 30% that you are not allowed to borrow from the bank. However, not all sellers accept this form, but ask us about a specific item and you will find out if it is possible. Also keep in mind that you can not get a loan promise granted when you start renting. The loan is only granted when you buy the home.

 

To take over the home

When you buy through us and have given a power of attorney to your agent, you do not need to be physically present with the Notary Public at the time of writing the law. You can calmly plan your trip down to your dream home when it suits you. We make sure you get keys and all documentation when you are in place.

Note! Do not book your trip to your new home until you have been definitively notified when the deed will be signed.

Unfortunately, it is not uncommon for something to happen and the date must be moved even if you received a preliminary date when you signed the purchase agreement.

Arranging home insurance is important so that it is activated when the home is taken over. At Red Palm Estate, we can help you with this too.

After that, the home is yours and then only the fun is left. Move in, furnish and enjoy your new ownership in Spain!

 

Other things to think about

Depending on your own situation, it may be worth considering other aspects of your ownership. For example, it may be a good idea to write a will now that your assets have changed.

To manage fixed costs, direct debit linked to your bank account is the best. Both for taxes and other fees such as insurance, electricity, water, internet, community fee and more.

Time perspective

How long it takes before you get access to your home is of course individual, but it usually takes 1-4 months from the time the down payment is paid until the takeover of a used property. When you buy a newly built house, it varies from area to area, ask us what applies to each object!

If the home is to be financed with a bank loan, it is important to start the process as soon as possible after the purchase agreement has been signed so that everything is ready until the home is to be taken over.

It takes 4-6 weeks from the time you take over the property until you receive the original. In Spain, this is a very important document that defines the scope and content of your property.

Remember that we also work with several reliable companies. Through them, you can get help with home insurance, fiber installations, TV subscriptions, craftsmen, interior designers, cleaning companies, key management and more if desired. Do not hesitate to ask us!

Costs that come with buying a property in Spain (Approx. costs)

 

Costs 

Purchase amount           

€150 000

10% IVA

€ 15 000

Document fee (AJD) ca. 1,5% (Only new propertys)

€ 2 250

Legal costs at the Notary and registration

€ 1 500

Water and electricity start-up cost 

€ 500

Legal representative in connection with takeoverIncludes, among other things, law enforcement, signing and interpretation by a notary, payment of taxes, registration in the property register, ordering water and electricity contracts, etc.

€ 1 500

Total investment cost

€170 750

 

The size of additional costs is individual. This is just an example. Community charges (urbanization costs) are usually lower in Spain than in other northern European countries.

Operating costs

Here we have set up an example of fixed costs that can be considered relatively average for a non-resident (not registered in Spain). Tax representation includes, among other things, a tax return and responsibility for taxes being paid on time and to the right authority. Electricity and water consumption will be added. Electricity is slightly more expensive than in many other European countries, but consumption is generally lower. Below you see approximate, fixed annual costs (consumption of water and electricity is not included). All costs are approximate prices. 

 

Price €

 

Community fee (urbanization fee) per year

€ 500

 

Suma/IBI (Municipal property tax)

€ 300

 

Tax representation

€ 150

 

Fixed fee water (approx.)

€ 200

 

Fixed fee electricity (approx.)

€ 150

 

Property and home insurance

€ 300

 

Total annual fixed fees

€  1 600