There truly is a Spain for everyone – but whichever one you choose, life is more relaxed. It is easy to be alone in beautiful countryside, yet nowhere feels cut off, thanks to fast-flowing autoroutes and excellent air connections. Have a look at our quick guide below to give you an idea of what buying a property in Spain entails.

The Process in Detail 

There are a number of legal procedures to complete ahead of a Spanish property changing hands and being registered in a new name. Here are the steps in detail.

1: Instructing a Lawyer

Ideally your lawyer should be bilingual and specialise in property law. As well as assisting with the fundamental steps above, your lawyer can help with the following procedures:

• Explaining thoroughly all tax-related matters, particularly inheritance tax, wealth tax and the requirement to fill in an annual tax return as a non-resident. Tax rates are assigned regionally so will differ according to location and the value of the property you wish to purchase. More details on this can be found below in the ‘Purchase Costs’ section.

• Spain has the law of subrogation, whereby properties carry certain debts of their previous owners. Your lawyer will therefore ensure that there are no outstanding charges against the property for utilities and maintenance costs, such as infrastructure charges, council tax (Impuesto sobre Bienes Inmuebles; IBI), or community fees. The lawyer will also confirm that the property has a full title by checking the Registro de Propiedad.

• As a consequence of strict planning laws on the mainland, and even more so in the Balearics, your lawyer will carry out a search at the local council planning office, to find out whether legal construction and occupancy permits for the building exists, and ensure that the built area meets all regulations and license standards. Once this is proven, the Seller shall assign to you the existing certificate of habitation (Cédula de Habitabilidad).

• Conduct the relevant searches at the Catastro registry office. The Catastro is a government agency which acts as the central registry, which collaborates with the Land Registry for two main reasons:

1. To ensure firstly that the property is correctly registered ie including swimming pools, outbuildings etc.

2. Secondly, to confirm the cadastral values. Please note that each property may have two different cadastral values: The base cadastral value, used to calculated IBI and usually lower than actual market value and the market reference cadastral value, which should be similar to market value. Be aware that in case that you are buying at a price below the cadastral reference cadastral value, the transfer taxes will be assessed using the market reference cadastral value, rather than the actual purchase price.

• If you are buying within a development or complex, your lawyer will check any communal obligations and obtain proof of payments made by the previous owners.Your lawyer will finalise the terms and conditions of the contract, arrange registration of the final deeds at the property registry office and ensure that the relevant taxes are paid within 30 days of completion of the sale.

• Your lawyer can also advise you on how to obtain an NIE; Número de Identificación de Extranjero. This is a unique identification number assigned to all foreigners and is required in order to buy a property in Spain, open a bank account, apply for a driving licence, or to buy a car. You will need this before completion.
• A lawyer can organise your utility bills (electricity, water, gas etc.), by firstly notifying utility companies of the change in ownership, and secondly organising your future payments through your Spanish bank.

For this work, a lawyer typically charges a fee between 0.5% and 1%, subject to the purchase price of the property for sale and the complexity of the transaction. However, we are aware that in the Marbella area, the fees tend to be higher.

2. Purchase Costs

As with much of mainland Europe, buying costs in Spain are higher than in the UK and they are regulated by each autonomous region and therefore vary slightly depending on location.

On top of the notary fees, there are a few other costs to consider:

Transfer Tax (Impuesto deTransmisiones Patrimoniales; ITP) – This is when a property or parcel of land is sold by an individual and it is therefore a resale. This amount differs by region, from 6% to 11.5% of the Purchase Price. Currently Andalusia is charging 7%.

Value Added Tax (Impuesto al Valor Agregado; IVA) – The equivalent of VAT. This is only applicable when a property is sold by a developer to a first occupier and is 10%. If a parcel of land is sold without any construction, by a developer or corporate owner, then 21% IVA applies.

Stamp Duty (Impuesto de Actos Jurídicos Documentados; AJD) – This tax is paid in addition to IVA when purchasing a new house from a developer. This varies in Spain from 0.5% to 2%, with Andalusia currently charging 1.2%.

Land Registry Costs – Variable according to property price but between €300 - €2,200.

It is important to establish whether the seller is a fiscal resident or non-resident in Spain. In the latter case, the buyer’s lawyer must withhold 3% in lieu of potential capital gain and pay the Spanish tax authorities (Hacienda) the applicable amount within one month of completion.

3: Golden Visa

Since October 2013, the Spanish government has given residency rights to non-EU nationals who invest €500,000 or more in property, through a bond or home purchase in their Golden Visa programme. A purchaser who spends more than 180 days per year in Spain will automatically become a Spanish tax resident, with its corresponding fiscal responsibility. For more information on this, please consult a lawyer.

4: Contacts

While the London office may give advice, our associate agents work regularly with lawyers, bankers and mortgage advisors, and collectively offer a large database of contacts that you may wish to use. You are under no obligation to use the individuals recommended, but we try to help as much as we can to make the process as simple and efficient as possible.

*Please note that the content of this document is meant to provide a general guideline only and does not constitute legal advice.

(Original post written by Alice Storrie, Head of French Desk, Global Residential and Tom Vickery, Negotiator, Global Residential International Network, Savills UK.)