Buying a property overseas can be exciting but it can also be a daunting experience if you have never purchased a place in Spain before. Before making such a large investment, it's a good idea to equip yourself with as much knowledge as possible and completly understand the buying process!
Typical buying costs
You should estimate expenses of around 10 to 13.5% of the purchase price when buying a property on the Costa del Sol. If you require a mortgage, most Spanish banks will typically charge a set-up fee. This can cost 1 to 1.5% of the loan amount.
- 1% - Legal fees
- 1% - Notary and registration fees
- 10% - IVA (VAT)
- 1.5% - Stamp duty
- 1% - Legal fees
- 1% - Notary and registration fees
- 8% - Under €400,000
- 9% - €400,000 - €700,000
- 10% - Over €700,000
1. Decide on a property and location
Too many people get lost and bogged down when searching for their dream home on the Costa del Sol. We can understand why, it’s not an easy task, and there’s so much choice, but you can make it a lot easier for yourself right from the get-go!
The first piece of advice we can give to potential buyers is to identify the main reason why you’re looking to buy. Are you looking for a holiday home, investment property or even planning on living here? Each of these different scenarios will likely affect not only the type of property you’d want to buy but also where it’s situated.
You can narrow down your search criteria by making two lists. The first includes features that are non-negotiable such as the number of bedrooms you need, type of accessibility required and size of the property. The second is a wish list of things you would like to have but are not compulsory such as fitted wardrobes, an en-suite etc. Remember, having a lengthy wish list can make searching for a property a frustrating process so try to keep it concise.
2. Choose the right estate agent
A buyers agent can be very valuable because they represent the buyers' interests. A good agent will also have local knowledge of the surrounding area, prices and will have the experience to guide you through the entire buying process while answering any questions you may have.
Using a buyers agent can make the experience of buying on the Costa del Sol, fast and straightforward. They should help you take care of numerous tasks, including arranging viewings, negotiating prices and corresponding with Spanish agents.
3. Apply for an NIE number
To be able to buy a property in Spain or get utilities connected, you will need to obtain an NIE number (Numero de Identificación de Extranjero) used as an identification number for non-Spaniards. It is recommended to apply for this as soon as you start looking at properties.
You can apply for your NIE number in person from the Policia Nacional who have offices in every town. If you are unsure, your estate agent or lawyer can help you with this.
4. Open a Spanish bank account
It's necessary to open a Spanish bank account to pay for utilities and to make any mortgage arrangements. When opening a bank account don’t forget to bring your documentation with you including your passport and NIE number. It's a good idea to pick a bank who speak your language and offer a reliable online banking service.
5. Make an offer
When you have found the right property, you can make a verbal offer through your estate agent. A good agent can help negotiate with the seller until you are satisfied to move forward with the purchase.
6. Appoint a lawyer
We strongly advise you enlist the help of a Spanish lawyer who can work on your behalf to ensure that the property has no nasty surprises before you buy it. If you are not in the country, you may want to give your lawyer power of attorney. This document will enable your lawyer to complete the buying process without you needing to be present.
When looking for a lawyer, you must ensure they are qualified and able to practice Spanish law. Do not be afraid to ask to see proof of this.
Your lawyer will be responsible for conducting due diligence on the property and completing the legal requirements of the sale. The most critical check will be reviewing the “Nota Simple” from the land registry, which is a legal document that exposes information on the registered owners, boundaries and any outstanding charges or debts such as mortgages on the property.
7. Sign a reservation agreement
When the final purchase price has been agreed, the next step is to sign a reservation agreement. This document takes the property off the market for a specified period while your lawyer conducts due diligence on the property.
The reservation agreement sets out the basic terms and conditions of the purchase and includes the full name of the buyer and seller, agreed sale price, property address, date to sign a “private purchase contract”, deposit amount and any special conditions.
You'll be required to pay a deposit of around 6,000 euros to secure the property. Your lawyer or estate agent will usually hold the deposit in a client account.
Your lawyer will conduct thorough checks on the property to ensure all documents are in order. If your lawyer discovers any legal impediments, your deposit is fully refundable.
8. Sign a private purchase contract
After the reservation agreement, your lawyer will prepare the private purchase contract to be signed by both the buyer and seller. The private purchase contract contains the exact address, dimensions, features, government registration of the property, terms and conditions agreed by the buyer and seller and a completion date for key handover etc.
When signing the private purchase contract, it is usual for the buyer to pay 10% of the property price minus the deposit amount already paid. This payment will be non-refundable.
Once both parties sign the main contract, it is binding. The buyer will be obligated to make the final payment, and the seller is legally required to transfer ownership.
9. Completion at the Notary
Completion of the purchase is held in front of the public notary to sign the title deed known as the “Escritura”. All parties involved will need to be present including the buyer, seller, mortgage lender, agents and lawyers. If your lawyer has power of attorney, you will not need to attend.
At this point, the seller will receive the rest of the payment. If paying without a mortgage, you will need to provide a bank guaranteed cheque to make the final payment. You will then become the new registered owner of the property, and the keys will be handed over to you.
10. Collect the original title deeds
Lastly, you will be given a copy of the title deeds "Copia Simple" so that you can to set up utilities. Within a few days, your lawyer will collect the original title deeds, register them and arrange the payment of taxes.