The intent of this guide is to help you better understand the steps and decisions you will need to make during the buying process of a property on the Costa del Sol. Some of the details will vary depending on your specific circumstances, so don’t hesitate to ask our real estate agents if you have any questions.
It’s important to find an agent and a real estate team you feel comfortable with to help you as that person and his team represents you when you purchase a home.
At Prime Realty Marbella, we take pride at offering a professional service that becomes a personal service.
If what you are looking for is not in our inventory, we will go out and find the property for you through colleagues in other agencies on a commission-sharing basis.
Buyer responsibility checklist
A quick checklist for the buyer with the things you need to do during the home buying process:
- Meet with a mortgage lender and get prequalified for a loan.
- Describe the kind of home you are looking for to your agent.
- Let your agent know about all the properties you want to view.
- Request a property inspection (this is optional).
- Arrange for homeowner’s insurance and let your lender know the company you will be using.
- Transfer the utilities to your name the day of the closing (solicitor will arrange).
- Attend the closing if no power of attorney has been given to your solicitor.
EVALUATE YOUR NEEDS AND DECIDE WHAT KIND OF PROPERTY YOU WANT TO BUY AND WHEN.
About the Property:
- Your area of choice to live on the coast: Estepona, New Golden Mile, Benahavis, San Pedro de Alcántara, Nueva Andalucía, Puerto Banus, Golden Mile, Marbella town, West coast of Marbella? What kind of location are you interested in? The countryside, or a town, a residential area, beach side, etc…
- What type of property are you after? A modern apartment, town house or villa? Maybe a character home, or a cortijo with outbuildings?
- Do you want to be in a tourist development or in a more residential area? Do you want to be amongst other expats and foreigners, or live somewhere a little more authentic and Spanish?
- How big does it need to be? How many bedrooms?
- Are you looking for an old property that you can renovate, redecorate or perhaps something new that requires no work?
- Do you want/need a terrace, off-road parking, a garden or a swimming pool – or even land with fruit trees?
- Are views important? What type of view would you prefer?
- What else is needed to fulfill your property requirements?
- How far away do you want to be from local amenities like bars, shops, restaurants, local markets, beaches, or marinas?
- How close do you want to be to the airport/s?
- Are there adequate pharmacy and medical facilities in the area?
- What else do you need? Schools, entertainment, gym?
- Will you need public transport?
- When can you realistically think about viewing properties?
- When will you be in a financial position to purchase and what will your budget be?
- Do you require a mortgage?
- Are you selling a property?
- By when would you like to have been handed the keys to your new property?
MEET WITH A MORTGAGE LENDER
- Apply for loan preapproval (the lender will ask for a credit report).
- Determine the monthly payment you can afford.
- Determine the home price range you are looking for.
- Determine how much money you will need for the down payment.
UNDERSTAND THE COSTS OF BUYING
As a buyer of property in Spain there are a number of costs and taxes over the property price that you will have to pay. Depending upon whether you are buying a new property from a developer, or a resale property from a private individual, you will either have to pay VAT & Stamp Duty, or a transfer tax along with the other costs and taxes that are common to both cases.
New build from a developer or bank.
VAT & Stamp Duty (IVA & Actos Jurídicos Documentados – AJD)
At present VAT (known as IVA in Spain) is 10% on the purchase price of residential properties (villa, apartment, etc), and 21% for commercial properties and plots of land, with the exception of the Canaries. Both VAT and Stamp Duty are paid by the buyer.
Resale from a private individual.
Transfer Tax (Impuesto sobre Transmisiones Patrimoniales – ITP)
The Transfer Tax rate is ceded to the autonomous regions, who can choose to apply the general rate, or their own rate. The rate in Andalucía is as follows:
8% – if the final price of the property is under 400.000€
9% – if the final price of the property is between 400.000€ and 700.000€ or between 30.000€ and 50.000€ for garages.
10% – if the final price of the property is over 700.000€ or 50.000€ for garages.
Income Tax Provision When Buying From Non-residents
If the seller is not a Spanish resident, the buyer has to withhold 3% of the purchase price and pay it to the tax authorities.
Other Costs that affect both new build and resale property purchases
- Agency Fees Unless the buyer has specifically agreed to pay the agent’s fee this cost will be built into the sale price.
- Legal Fees Most charge around 1% of the sale price which is applied to the closing costs. You are strongly advised to hire a lawyer to help you during the buying process.
- Power of Attorney Around 80 Euros depending on the Notary.
- NIE (Identity Number for Foreigners) 150 Euros though sometimes included in Solicitor fees.
- Land Registry Reports and Certificates These documents show current legal state of properties and any problem with the title deed or land registry. 100 Euros
- Town planning Certificate Granting access to a clean bill for any planning or urban issues.
- Mortgage costs The property valuation before granting the mortgage, paid by the buyer can cost around 500 Euros. Then there is usually an opening fee of around 1% of the value of the mortgage. A mortgage will increase the Notary expenses.
- Notary Expenses Notary expenses are nearly always paid by the. You should calculate Notary fees as being between 1% and 0.5% of the price declared in the deeds. Property registration fees are normally around 40% of the notary fees.
- Property Registry Inscription Fees You should calculate 1% of the purchase price declared in the deeds, though once again it depends upon the property and the area, and the fee could be considerably lower.
- Banking Costs To pay for the property, you will more than likely need to write a banker’s cheque to a Spanish bank and transfer money from the bank in your country. The cost of transferring the money can go up to 0,4% of the amount transferred. The banker’s cheque will most likely cost 0,5% of its amount.
In Summary, costs will range between 10% and 12% for resale properties and between 12% and 13% for newly constructed developments.
LOOK AT HOMES AND PROPERTIES
HIRE A SOLICITOR
It is highly recommended to hire an English speaking solicitor in Spain to handle all of the paperwork that will be entailed when purchasing your property. Your agent will have a few recommendations for you and once you are in Spain to view the properties it would be beneficial to set up a meeting with a solicitor as it might be more difficult to arrange once you are back home. Keep in mind you will have to give your solicitor power of attorney to avoid travelling to sign at each stage of the purchase process. Solicitor tasks consist in:
- He or she will check that the vendor is in fact the legal owner.
- That there are no outstanding debts on the property
- Is there an existing mortgage and if it is transferable to you?
- Whether the property complies with local building regulations and if any major construction is due in the area.
- He or she will check the minutes of the community’s last AGM to see if the charges are being met by the property owners – if not, you may find the costs increasing to compensate for non-payment.
- The solicitor will also check that the utilities are actually connected to the property.
MAKE AN OFFER
- Come to an agreed price with the vendor.
- Reserve and remove the property from the market temporarily by making a reservation agreement along with a deposit with your solicitor so he/she may start the diligence process (normally 6.000€). This fee is fully refundable pending due diligence checks.
- Negotiate the terms of the offer as needed.
- Sign a reservation agreement document with all parties stating the agreed terms.
- Aprox. 2 weeks after the reservation agreement, a private purchase contract Sign the official contract (contrato de arras) after both parties must be signed. A 10% deposit payment is made to the lawyer on signing this contract.
- New properties are paid over the construction period; all payments being made before its completion must be guaranteed by a bank or insurance company.
- The rest of the payment depends on the agreed terms.
FINALIZE A LOAN
- The mortgage company orders an appraisal and sends the loan to underwriting for loan approval.
- The title company orders a survey and does a title search.
ARRANGE FOR THE UTILITIES TO BE TRANSFERRED TO YOUR NAME
- Arrange for the utilities to be transferred into your name the day of the closing.
- The mortgage company sends the finalized loan documents to the title company.
- Attend the closing if no power of attorney. The closing takes place in a Spanish notaries office.
- You bring a cashier’s check to the closing.
- the seller will issue the public deed of conveyance (escritura) to the purchaser, free of liens and encumbrances which is passed to the tax office for Transfer Tax (resale) or assessed for Stamp Duty (newly constructed).