The key to the successful purchase of a property in Spain is to understand the buying process and the costs involved in doing so.
Once you have made your decision to go ahead with a specific property it is standard practice that a “reservation” agreement is signed to secure the property. This reservation requires that a “reservation fee” is paid to secure the sale at the agreed price and take the property off the market. This fee is normally around 5.000€ and forms part of the price to be paid.
The next step is the deposit contract of about 5 to 10% of the price. This is usually done after one or two weeks enabling the buyer to make arrangements such as transfer funds, open an account, and obtain a tax number, called a NIE.
The actual purchase contract, the Deed, also known as Completion in the UK, will be signed at the Notary’s office once all Due Diligence work and Searches have been carried out, usually by your solicitor. All property transactions in Spain must be approved by a registered Notary. Only Notaries can register you as the rightful owner of a property in Spain’s Land Registry, which they do after witnessing the signing of the deeds (Escritura) by the buyer and vendor, and ensuring all associated payments and taxes are paid.
Costs Associated with the Purchase:
The buying costs in Spain vary from 10% to 13.5% of the purchase price, broken down as follows:
- 10% IVA (VAT) on new properties, 8% to 10% IVA (VAT) on re-sales depending on price category
- 1% Notary fee ( Notarization of property cost)
- 1% Legal fees ( a fee charged by your selected lawyer to conduct the * Due diligence
- 5% Stamp Duty Tax ( A tax charged to make all documents legally effective)
- If you should require a mortgage, you should calculate an average of 1- 1.5% cost for the set up fee of a mortgage with a local Spanish bank