Spain’s real estate market presents a wealth of opportunities for those aiming to buy a property in Spain, be it for retirement, as a second home, or for relocation. The process, while offering potential rewards, requires a deep understanding of the market’s intricacies to ensure a smooth transaction. This guide is designed to clarify the process and address common queries potential buyers might have.
Essential Requirements for Buying a Property in Spain
The primary requirement for foreigners wishing to purchase property in Spain is obtaining the NIE (Número de Identificación del Extranjero). This unique identification number is mandatory for all transactions in Spain. Although not compulsory, having a bank account in Spain simplifies the process, facilitating payments and potentially saving on commissions. Non-residents must appoint a tax representative in Spain once they own property.
Step-by-Step Guide to Buy a Property in Spain
Tax and Budget Planning: Costs vary by region, but generally include property transfer tax (ITP) (6–10% for existing properties – Check the list by Comunidad Autónoma at the end of this article) or VAT (10% for new properties), notary costs, title deed tax, land registration fee (1–2.5%), and legal fees (1–2%).
| Cost Type | New-Build Property in Spain | Resale Property in Spain |
|---|---|---|
| Overall Cost | +/- 14% | 10-14% |
| VAT/Transfer Tax | VAT = 10% | 6-10% (varies by region) |
| Property Registration Fees | 1.5% | 1.5% |
| Lawyer Fees | 1-2% | 1-2% |
| Additional Costs | Notary, stamps, etc. | Notary, stamps, etc. |
Obtaining Your NIE: This tax identification number is essential for property transactions. While a bank account is not required, it is recommended to facilitate the process.
- Locate Properties of Interest:
- Begin by searching for a house or apartment that meets your needs. You can use various channels for this, including:
- Contact the seller or real estate agency to learn about the property’s details, such as size, energy rating, number of rooms and bathrooms, etc.
- Consider properties sold by banks, which may include foreclosed homes.
- Visit Each Property:
- Schedule visits to the properties you’re interested in. Inspect every corner, check the condition of walls, doors, windows, noise levels, and the amount of natural light.
- If shown by an agency, you might be asked to sign a visitor sheet, which is a record of your visit and ensures the owner doesn’t bypass the agency.
- Generally, real estate agencies typically charge a commission ranging from 3% to 6% of the final selling price. Additionally, a Value Added Tax (VAT) of 21% must be added to this fee.
- Present Your Offer:
- If you find a property you love, it’s time to make an offer. Write down your proposed price and submit it to the seller, either directly or through the real estate agency.
- Consider the seller’s asking price, your financial situation, and the cost of similar properties in the area.
- After a few days, you’ll know if your offer is accepted, leading to a reservation, or if negotiation is needed.
- Reserve the Purchase with a Contract of Arras:
- Once an agreement is reached, formalize a contract of arras (earnest money contract), committing both parties to the sale within an agreed period, usually 3-4 months normally when there is a mortgage involved.
- Before signing, ensure the seller provides all necessary documents like the property’s nota simple, community debt certificate, IBI payment certificate, etc.
- You’ll need to pay a part of the price (usually 10%) as a deposit to guarantee the Contrato de Arras.
- Sign the Purchase at the Notary:
- When the funds or mortgage are ready, set a date with the seller to sign the deed of sale at the notary. As the buyer, you have the right to choose the notary.
- After signing, register the property in your name at the Property Registry, either by yourself or through a management company.
Understanding the Role of Realtors in Spain
Selecting the right realtor is a crucial step in buying property in Spain. These agents offer extensive knowledge of local market trends and property options. However, it’s important to remember that they primarily represent the seller’s interests. Typically, realtors charge a commission of 3% to 8%, indirectly borne by the buyer.
While realtors can offer basic guidance, legal matters should be handled by professional lawyers. Choosing a realtor involves checking their credentials, assessing their online presence, and considering client reviews. A good realtor should understand your specific needs and facilitate a smooth property buying process.
Investment Potential in Spanish Property
The Spanish property market has been recovering since its decline between 2008 and 2014. Buying property in Spain is considered a good investment, especially for obtaining a Spanish Golden Visa.
Below you can find a House Price index progression by Comunidad Autónoma (2007-2022)
If you would like to see a more granular price report by geographic areas, we higly recommend using https://www.idealista.com/maps/, where you can select specific areas and see the m2 price progression since 2006.
Post-Brexit Property Purchase
British citizens can still buy property in Spain post-Brexit but are subject to Non-EU regulations. Applying for a Spanish Non-Lucrative Visa may facilitate the process.
Costs Involved in Buying a House in Spain
Property prices per square meter vary across cities, with Malaga at €2110, Barcelona at €3579, and Madrid at €3576, among others. Taxes include Income Tax, Real Estate Tax, and Non-resident Property Tax for non-residents.
| City | Price per m² (€) (Average 2023) |
|---|---|
| San Sebastián | 4212 €/m2 |
| Barcelona | 3579 €/m2 |
| Madrid | 3576 €/m2 |
| Bilbao | 2743 €/m2 |
| Palma de Mallorca | 2604 €/m2 |
| Cádiz | 2286 €/m2 |
| Vitoria | 2126 €/m2 |
| Pamplona | 2124 €/m2 |
| Málaga | 2110 €/m2 |
| Sevilla | 2023 €/m2 |
| Ceuta | 2002 €/m2 |
| Gerona/Girona | 1942 €/m2 |
| Valencia/València | 1870 €/m2 |
- Notary Fees:
- For granting the public deed of sale, usually between 600 and 875 euros.
- Depends on the property price (e.g., around 850 euros for a 100,000 euro flat).
- Land Registry Fees:
- For registering deeds signed by the notary, typically between 400 and 700 euros.
- Taxes for New Homes:
- VAT (IVA): 10% of the property price.
- Documented Legal Acts tax (IAJD/AJD): Varies by Autonomous Community.
- Taxes for Pre-Owned Homes:
- Property Transfer Tax (ITP – check percentages below): Generally between 6% and 10%, varies by Autonomous Community.
- Optional Advisor (Gestor) Fees:
- For processing tax settlements and paperwork, approximately 300 euros.
- Additional Mortgage Costs:
- Property Valuation: Between 250 and 600 euros.
- Opening Fee: Up to 2% of the capital loaned (varies by bank).
- Insurance Requirements:
- Some banks may require home or life insurance for mortgages.
- Realtor’s commission
- Ranging from 3% to 8% + 21% VAT
- Typically paid by the seller, but included in the sales price. Therefore, the buyer will pay this commission indirectly.
It’s important to note that these costs are in addition to the property price and vary based on whether the property is new or pre-owned, its location, and the specific terms of the mortgage if applicable.
To summarize, you should budget for approximately 12% to 15% of the purchase price to cover taxes and additional expenses, although this can vary based on the type and location of the property you are purchasing.
Buying Process: Deposits and Mortgages
The process of obtaining a mortgage in Spain, especially for non-resident buyers, involves several key steps and considerations. Non-residents typically can secure mortgages covering up to 70% of the property’s value, while fiscal residents might be eligible for up to 80%. It’s essential for buyers to have at least 20% of the property price for a deposit, plus an additional 12-15% to cover various taxes and fees, depending on the region.
Key Aspects of Securing a Mortgage in Spain:
- Mortgage Calculations: It’s crucial to calculate the maximum mortgage you can afford, considering your net income and existing debts.
- Pre-Approval Benefits: Having a mortgage pre-approval clarifies your budget, aids in negotiating purchase prices, and reduces stress during the reservation process.
- Consultation Services: Free consultations are often available to discuss banks, interest rates, valuations, purchase contracts, and the completion process.
- Approval Process: The mortgage approval process typically takes 2-3 months, depending on complexity and timing (e.g., holiday periods).
- Legal Representation: Appointing a lawyer registered with the College of Lawyers is strongly recommended to ensure all necessary checks on the property and protect your interests.
- Additional Costs: Be prepared for costs like property tax, which varies by region (e.g., 10% in Catalonia and Valencia, 6% in Madrid).
- Borrowing Limits: Non-residents can borrow up to 70% of the lower of the valuation or purchase price, while fiscal residents can borrow up to 80%.
- Professional Assistance: Services like Mortgage Direct offer expertise, fast-track approvals, exclusive conditions, and a high approval rate, enhancing the mortgage acquisition experience.
By understanding these aspects and working with experienced professionals, buyers can navigate the Spanish mortgage landscape more effectively, securing their dream home with greater confidence and clarity.
Legal Assistance in Property Purchase
Hiring a property lawyer in Spain is advisable to avoid future problems. They can assist with research, analysis, and ensuring that contracts and mortgage loans are in order.
Conclusion
Buying a property in Spain can be a rewarding investment, offering a blend of cultural richness and a favorable climate. However, it’s essential to navigate the process with a clear understanding of the legal requirements, taxes, and costs involved. Seeking professional advice and conducting thorough research will ensure a smooth and successful property acquisition in Spain.
Related articles
- Buying property in Spain: Introduction to the process (part 1)
- Buying property in Spain: Getting a mortgage in Spain (part 2)
- Buying property in Spain: Becoming a homeowner! (Part 3)
General ITP (Property Transfer Tax) rates for 2023.
| Autonomous Community (Comunidad Autónoma) | General ITP Rate |
|---|---|
| Andalucía | 7% |
| Aragón | 8-10% |
| Asturias | 8-10% |
| Baleares | 8-13% |
| Canarias | 6.5% |
| Cantabria | 10% |
| Castilla y León | 8-10% |
| Castilla-la Mancha | 9% |
| Cataluña | 10-11% |
| C. Valenciana | 10-11% |
| Extremadura | 8-11% |
| Galicia | 9% |
| C. Madrid | 6% |
| Murcia | 8% |
| C.F. Navarra | 6% |
| País Vasco | 7% |
| La Rioja | 7% |
