As explained in our Buying Property Abroad (link to this page) page, many people are now looking to buy property in foreign countries. Buying is Spain has become very popular as it has a nice climate and is not too far away from the UK, should there be any need to return. Spain also generates a large amount of income from its tourists, more than any other country in Europe.
In order to help you purchase a property in Spain, there are many real estate agents who can advise on the different types available on the market. Obviously, you will have to pay a company for their services, but it is best to do this and have someone explain your options to you given their understanding of the foreign property industry.
When buying in Spain, the buyer will not only have to pay for the property but they will also be liable for transfer tax. Currently, this rate is 7% on a new property and 6% on a second hand property. Stamp duty land tax is also required to be paid. Other charges include a fee from the property registration office where you will have to pay for the deeds to be changed into your own name and a notary charge for copies of the 'Escritura Publica'. This is a scaling charge but you should allow for 10% of the purchase price when calculating costs. Also in Spain, it is quite common for the buyer to pay for the sellers fees. However, discuss this with your solicitor.
An annual real estate tax is charged by the local town hall. Community charges come into place when you buy a property on a community development. These charges account for things like the upkeep of communal areas, standard maintenance and gardens etc. Wealth tax will also need to be paid. This is based upon the value of your property. Property owners income tax will also need to be paid, which will be based upon any earnings that you have made from the property.
If searching for a loan from a Spanish lender or bank, be sure to check the current rates of interest. Ask if this interest rate is fixed or subject to change. You will be required to produce your passport, permits, sale contracts and the title deeds if you are dealing with a bank. Obviously when dealing with banks in Spain, any monies that you borrow will be in Euro and so always keep an eye on currency rates as they can change regularly.
You will find that many properties in Spain are in not legally registered. Most of the properties that are sold are done so by the Spanish people themselves. The best way to find out if a property is registered, meaning it can be legally sold by the ‘owner’ is to check with the ‘Catastral Department’ and Town Hall. It may be for a number of reasons that a property in Spain has not been registered, the death of a parent for example.
If a property is not registered then it is the buyer who has to pay for it. Most new build properties that are now being built are registered to avoid any confusion further down the line. It also allows for a less complicated sell.
When buying a property in Spain, always ask your Solicitor for a check list that you can work with. This is for both new and second hand properties as different documents are required for each.
