Buying process

Buying a property in Spain is, of course, different to buying in the UK. The legal process can seem daunting and maybe even a bit confusing as it is new to you. We here at Spanish Dream Property understand how it feels as we ourselves have been through the process and own our own dream property. This outline of procedures is a general guide and is in no way definitive and is not legal advice.

A few things to remember:

You must have legal representation for your purchase by an English speaking Spanish lawyer, Abogado. He is responsible for all legal checks on the property and ensures the conveyancing runs smoothly and there are no outstanding debts linked to the property. We can arrange for you to meet an independent lawyer during your viewing trip.

When deciding on your budget for your dream property remember to factor in the ‘extras’. The overall cost of buying a property in Spain is around 11-12% of the purchase price, which includes taxes, legal fees and searches. If you are buying a second home it will need kitting out in full before you can use it. Many re-sale properties are sold part furnished but you will still be looking to replace or buy a lot of smaller items, which can add up. A new property needs everything and furniture packs are the easiest way to turn an empty shell into your home, and we are happy to help with these also.

Within your budget allow for currency fluctuations between the date when you first plan to buy and the date when payments are due. Do your sums with caution to avoid being caught out, and if the fluctuation goes in your favour then you can treat yourself to something extra!

It is possible to finance the purchase from the UK through the sale or re-mortgage of your UK home, but equally you may consider a Spanish mortgage. We have experts in Spain to guide you through that process. There are pros and cons to both and which is best is down to your individual situation. Spanish banks, just as UK banks, will require proof of income before agreeing to lend money. Generally, as long as you can prove you can afford the re-payments, Spanish banks will agree to lend up to 60 or sometimes 70% of the property value, but this is at the banks discretion and dependent on your income. Provisional discussions to agree a mortgage in principle can be arranged during your viewing trip. We do not want you to pay a deposit on a property that you then cannot proceed to buy as you will lose your deposit.

Documentation required as proof of income for a Spanish mortgage will probably include your passport, proof of UK residency (such as driver’s licence or council tax bill), if in employment your 3 most recent wage slips, if self-employed 2 yeas audited accounts and proof of payment for last 2 years’ tax returns, 6 months worth of bank statements showing declared income, proof of any other sources of income you wish to borrow against such as pension or rented out property. You will also need to give details of the value of any property owned and any outstanding mortgages, loans and credit cards. Plus details of how you are raising the balance of the property purchase costs. It will save a great deal of time if you take these with you when you go on your first viewing trip.

Before proceeding with a purchase you will need to obtain your fiscal identification number, NIE, for each person named on the deeds, Escrituras. You will also need to open a Spanish bank account. These can be done on your first viewing trip.

When viewing properties:

At each property make notes. Write down the good and not so good points you notice about the property. Take a compass to see which way the terraces face; is it on mains water and electricity; note details such as how far from a communal pool, the shops, beach and local restaurants; are there any repairs needed; is furniture included and, if so, what items. Using your pre-defined priorities ‘score’ the property.

Re-visit the best ones a second time at a different time of day.

If the property is in a community ask how much the annual community fees are and what they cover, how many houses share the pool and what times is it available to use.

Take a walk around the immediate area and talk to local residents.

Once you have chosen your dream property:

Having already ascertained that you will be in a position to finance the purchase you now need to place a holding deposit. In Spain if you back out of the sale the vendor gets to keep this deposit, so be sure before you pay. The holding deposit is usually in the region 3000 euros and can be paid using a credit card to our Spanish partners. (Please notify your bank/card supplier before you go to Spain that there may be a transaction in euros of this size during your stay otherwise they may block it.) Alternatively you can pay the deposit into your Spanish account in advance of your trip to finance the deposit payment. Remember that if you pull out of the purchase you do not have the deposit refunded. (If the vendor cancels your agreement then the deposit should be returned to you.)

When payment is made you will sign a Reservation/holding agreement which also acts as your receipt. Usually the rest of the purchase price and all fees are paid on completion. With an ‘off plan’ property however payments are usually staggered over the building process. With a new property a payment of 40% may be requested 4 weeks after the signing of the reservation contract with the balance on completion.

Now you must appoint your Abogado (legal representation). This is essential. Unless you are a fluent Spanish speaker and reader use a bilingual lawyer. We can help you choose one.

The signing of the Escritura is done in front of the Notary, a lawyer appointed by the Spanish government to ensure proceedings are legal and taxes are paid and to handle the change of ownership at the land registry. All payments must be made on completion.

Sometimes clients prefer to appoint a representative to sign the documentation on their behalf, usually your Abogado. This avoids the necessity for additional trips to Spain. To do this you must first attend the Notary office during an earlier visit and sign a legal document giving your Abogado power of attorney for the purpose of purchasing the property.

Now you are the proud owner of your own Spanish Dream Property!

You, or your Abogado, must transfer the services such as water and electricity into your name. You can set these payments up as a direct debit from your Spanish account, along with tax payments and community fees. You will need to take out both buildings and contents insurance for your home which can be done through the bank, a Spanish based insurance broker or one of the companies in the UK who specialise in second home insurance. We also recommend that you now instruct your Abogado to draw up a Spanish will to cover the inheritance of the property.