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Your Real Estate Agency in Puerto Banús - Marbella - Spain
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Buying process

Sometimes, buying a house can feel like an overwhelming set of rules and regulations, but knowing what to expect is essential. For many people, buying a house represents the biggest financial transaction they'll ever make in their lives, so small mistakes can cause a large consequence. That's why doing it right the first time, is so important.

The buying process

In general terms, in most countries, the buying process is very similar. It is important that at the earliest stage of purchase you have an English speaking lawyer appointed who is fully conversant with the local laws. We can recommend a local lawyer or, of course, you can make your own appointment.

When you have decided on your property you will be required to make a deposit of between 3,000€ - 6,000€ on the property to secure it for you and to take it from the market. (The deposit can vary from one developer to another.) If you are buying a resale, to get the best deal, you will also be requested to place a deposit to start the price negotiation or bargaining… You should have sufficient funds on your credit card or cash when you travel for a property inspection visit. Please be aware that you cannot carry out or in most of the European countries, more than 10,000€ or the equivalent in any other currency.

After 28 days you will be required to make a further payment which will be in the region of 30% of the value of the property, (Again this can vary, depending on the payment terms.) You will only be asked to pay this when your lawyer has made all the necessary checks on the property and confirmed that it is clear for you to purchase and has all the necessary licenses. Depending on the agreed payment terms you will then either pay percentage payments and a final payment on completion when you exchange final contracts or one final payment.

Your lawyer will deal with all payments, land registration fees and local taxes. (Remember to allow for these extra costs over and above your purchase price. We show an indication of this as a percentage on our country guides.)

We will be glad to help you at all your property purchasing stages.

At Smart Xcape, we have drawn up this Spanish buying guide, with a lot of advice and steps to follow. This guide is intended to help you to obtain the information you will need and also an overview of the entire process of buying a house in Spain, nevertheless, you should always appoint a well-established law firm to represent you legally and look after your interest.

The following are some very useful tips:

1. Legal advice

The Spanish property conveyancing system, it´s not too complex, however, when buying a house you should always ensure that those involved in the transaction are qualified professionals who have expert knowledge of the system. The role of a lawyer is acting in your best interests so they will do all that is necessary for you, ensuring your purchase contract achieves everything you expect and have agreed on.

2. Working out what you can afford

One of the best places to start analysing whether you can afford to buy a house is with a detailed expense breakdown. Go over your budget by looking at how much you make and spend each month. This will serve as a reality check about what are fixed expenditures and where there is room in your budget to accommodate the expenses associated with home ownership. Besides, you need to analyse what type of property you will prefer to buy. A new build & off plan? A resale property?

In the case of an off-plan purchase, you will be asked to sign a reservation contract and pay a small fee, at which point the property will be taken off the market for a limited period. This allows time for legal checks to be carried out, a contract of sale to be drawn up, and for you to make the first of a series of payments. Take a very important note that this first payment is normally 10 per cent or less of the purchase price and is non-refundable. If you want to buy a resale property, you will pay a small deposit to carry on the negotiation and in order to obtain the best price for you, your offer must be accepted and the deposit is non-refundable. Your lawyer then carries out the necessary legal investigations for you to sign the contract of sale, which states the price and what it covers

3. Getting a mortgage

For most people buying a property, the biggest ongoing cost is the mortgage, so you should analyse and compare a range of different products and services offered by different lending companies. It might be vital that you secure a mortgage with a lender before starting the searching process. This way, when you find the right property, you will avoid being beaten to it by another buyer and you will also be in a much stronger negotiating position.

Look for the mortgage which is most appropriate for your capabilities and needs. Generally, buyers with Spanish residency will be able to loan a higher amount than non-resident buyers and in the case you are a resident, the best mortgage deals will be available to people who put in at least 15% of the property’s value, leaving the mortgage company to lend the other 85%. If you put in less than 10%, you may have to pay a “Higher Lending Fee” which will add to the cost of your mortgage.

4. Taxation

The Agencia Tributaria is the tax authority that you must know well when buying a house so you are fully aware of your obligations. Once a year you will have to pay a property tax in addition to a good initial dose of taxes:

  • Legal fees (usually between 1 and 2 per cent of the total amount);
  • IVA at around 10 per cent, plus stamp duty of 0.5–1 per cent of the total amount, on a new property; Stamp duty at 8 to 10 per cent of the total amount on a resale, depending on the value of the property; Notary and property registration fees of about 1 per cent of the total amount; If the property is located within a complex, there will be maintenance charges. These will usually cover such costs as swimming pool and garden upkeep.

If you are a non-resident, and you are considering to a buy a property in Spain, you should know there are some tax advantages for residents as: 95% reduction in inheritance tax; exemption from capital gains tax; right to inhabited the property; not being subject to having 3% of the total purchase price withheld and deposited with Spain's tax authorities; unlimited stay; etc. In Spain, to be a tax-resident you must make an annual tax declaration to the Spanish tax office.

5. Getting the most out of viewings

Pay attention to the overall layout, number of bedrooms and bathrooms, kitchen amenities, and storage. Visit properties you're seriously interested in at various times of the day to check traffic and congestion, available parking, noise levels and general activities. Also, look at comparable houses in the neighbourhood. If you are unsure about the price, have the home appraised by a local appraiser, who also look at comparable sales.

When appraising a home, appraisers will look for comparable homes in the area which have similar features, size, etc. If your home is more expensive than the comparable homes, or the appraiser has to find comparable homes in a different subdivision or more than 1/2 mile (0.8 km) away, beware! Never buy the most expensive house in the neighbourhood. Your bank may balk at financing the home, and you probably won't see your home appreciate in value very much. If you can, buy the least expensive home in a neighbourhood — as homes around you sell for more money than you paid, your home's value increases.

6. Negotiating and making an offer

If possible, tailor your bid to the seller's circumstances. What is the seller’s financial prospects? Are they in desperate need of money or are they sitting on a pile of cash? How long has the home been on the market? Have they already bought another house? etc. Based on this, you will be able to make the right offer for them and of course, for you.

7. Conveyancing – the legal aspects

The last steps of your buying process are: obtain sellers’ responses to questions, check copies of any guarantees on the property, details of planning permissions and building regulation certificates, check the seller really is the owner of the property, check local authority searches and plans for the local area, pay stamp duty tax on the property and arrange registration of title in your name.

Before you complete your property purchase you should make sure you have seen the following documents:

  • A paid-up receipt for the previous owner's annual property tax (IBI);
  • The Catastral certificate giving the exact boundaries and square meters of your land;
  • A receipt that proves all utility bills have been paid by the previous owner;
  • A certificate signed by the President of the Community of Property Owners stating that there are no outstanding debts:

On completion, the public deed should reflect an accurate description of the property. It is advisable that you register the property in your name with the Land Registry as soon as possible to ensure full protection of your rights. The notary can even send advance notification to the Land Registry electronically once the public deed is signed.

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