Your 10 Step Guide To Buying A Home In Spain
1. Decide why you are buying
2. Choose your location
3. Decide your budget
4. Do your research
5. Visit in person
6. Find a lawyer
7. Negotiate terms
8. Be prepared to act quickly
9. Exchange contracts
10. Final completion
Buying a property in Spain is a big decision but it doesn't have to be
a difficult process.
Take things slowly, ask lots of questions, read
around the subject and make sure you take legal and financial advice.
The following steps apply to anyone who is considering a property
investment in Spain whether it's for a retirement home, holiday home or
investment property.
1. Decide why you are buying
Before you even think about looking at brochures, visiting property
exhibitions or searching the Internet, take the time to rehearse
exactly what it is you’re looking for. This may sound basic, but the
reasons for your purchase will affect all the subsequent decisions that
you have to make. Some people buy property purely as an investment;
others want to relocate, some want a second home on the sun.
2. Choose your location
If you’re looking for investment property, for example, it’s important
to choose a property of the type and location that will give you a
maximum return. As a general rule, properties by the coast attract
higher rental incomes. If you want a property to retire to, consider
buying somewhere further inland to get more for your money and think
about how far you’re prepared to travel for shops and other amenities.
If you plan to make a permanent move and take up employment in Spain
you may be more interested in properties that are close to the major
population centres.
3. Decide your budget
There are always hidden and additional costs when you buy property and
Spain is no exception. As a general rule, allow 10% - slightly more for
new and off-plan properties - on top of your purchase price, to cover
various taxes and legal fees. You can get a mortgage in the UK or in
Spain and, for the latter, it is normal for banks to advance a loan of
up to 80% of the declared value of the property. For more information
on mortgages and advice on avoiding a potential pitfall, click here.
4. Do your research
Once you have a clear idea of what you want to buy and where, spend
some time on detailed research. Magazines, Sunday supplements books,
guides and the Internet are all useful sources of information and it’s
a good idea to visit a few property exhibitions such as ‘Homes
Overseas’ and ‘Viva España’.
5. Visit in person
Never buy any property without making a personal visit at least twice.
While you’re there, spend some time in the immediate area, get to know
people, ask questions and find out what the local amenities are like.
See how the environment changes throughout the day. Are there busy
times where traffic becomes a problem? Is there a noisy bar or club
nearby? Where’s the nearest hospital?
6. Find a lawyer
Spanish property law is complicated so make sure you have a good local
lawyer to look after you interests. Lawyers will usually charge you 1%
of the sale price of the property but it’s an excellent investment for
peace of mind. Be aware that under Spanish law only the person named on
the title deed has the right to sell the property and that some
investors have been tricked into paying large sums of money to people
who were merely tenants of the property.
7. Negotiate terms
Once you’ve chosen a suitable property, the price and conditions will
need to be agreed. It is quite acceptable to make an offer subject to
mortgage approval and, for properties that are still being built,
you’ll want to agree a schedule of stage payments rather than pay the
whole amount up front. If you haven’t already appointed a lawyer,
you must do this now or run the risk of entering into an agreement that
cannot be enforced under Spanish law.
Further advice on the role of the lawyer in property purchases can be
found here.
8. Be prepared to act quickly
The property market in Spain is buoyant and properties can sell
extremely quickly. Assuming you’ve done your research and have
appointed a lawyer; be prepared to make a fast decision and back this
up with a deposit (usually around €3,000) to secure the deal.
The
deposit can be made in cash or by credit card. Avoid the temptation to
pay by cheque as this can take up to 10 days to clear – ample
opportunity for a rival investor to step in with a cash deposit.
9. Exchange contracts
With the offer accepted and the deposit paid, the next step is to
exchange private contracts, ‘Contrato privado de compraventa’, which
states the agreed price and what is to be included in the sale. This
usually happens within two weeks from the offer being accepted and its
where your lawyer really starts to earn his money by conducting
property searches and making sure that there are no outstanding debts
attached to the property, for which you may be liable. This is
confirmed in a document called a Nota Simple. In most cases you will
now be required to pay a non-refundable deposit of around 10%
10. Final completion and registration of the title deed
Final completion takes place when the title deeds are signed before a
notary and you pay the balance of the purchase price. The signed deed
is lodged with the land registry and your lawyer will take care of the
remaining formalities such as payment of the relevant transfer taxes.
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