Guide To Buying A Spanish Property

IPI LIMITED is an independent agency, not tied to any one builder or developer but represents you, the client. We are members of the National Association of Estate Agents and our Directors each have over 30 years’ experience in the sale of property in Spain. We provide a personal and reliable service and our aim is to help you locate the property best answering your needs, provide all the necessary information relating to your purchase and generally assist in effecting that transaction with ease. We will help and advise before, during and after your purchase.

All viewing arrangements with IPI LIMITED are on a one-to-one basis.

NEW PROPERTIES
Our new property portfolio is large, with a considerable range of prices and locations catered for. All properties are sold freehold and carry a minimum 10 years structural guarantee.

RE-SALE PROPERTIES
IPI LIMITED can offer a wide selection of re-sale properties in all locations. In general, re-sale properties are open to negotiation with the owner, but remember, the golden rule is that before you make an offer you should be in a position to buy. In other words you need to be certain that you can raise the finances before making the offer. The web site addresses of our local agents are available on request.

BUDGETS AND FINANCING
At the outset, the most important thing you should do is assess your budget. Set the limit of your purchasing power and don’t look at properties out of your price range. We can help you arrange a mortgage in Spain should you require one.

INITIAL COSTS
One should add 9 - 10% of the value of the property to cover taxes and fees relating to the legal aspects of the purchase. The breakdown is as follows:

• 7% VAT on new properties or 7% transfer tax on second-hand properties.
• 1% legal fees.
• 1-2% notary fee and property registration fees.

CHOOSING THE AREA
Remember, the cheapest property is not necessarily the best buy. From the point of view of investment potential the same rule applies in Spain as here – location, location, location! If you are not sure of the location we will give you the best advice based on your requirements and budget.

HOLDING DEPOSIT
Having found the property you wish to purchase, the first step is to pay a holding deposit (usually £2,000) which removes the property from the market. Your deposit will be refunded if anything untoward is found with the property or developer.

APPOINTING YOUR SOLICITOR
It is generally advisable to engage the services of a Spanish solicitor (or a solicitor well-versed in Spanish property law) to look after your purchase. IPI Limited has a number of experienced bilingual solicitors it can recommend. Your solicitor will first of all ensure that the property has no debts attached to it and that it is properly registered.

THE PURCHASE CONTRACT
This is the private contract between vendor and purchaser and is binding on both parties. It is usually drawn up after the holding deposit has been paid. It should specify the name(s) of the purchaser(s), the completion date and the terms and conditions governing the sale.

SIGNING OF THE DEED
This is done in front of the Notary in Spain or by someone (usually your solicitor) with Power of Attorney from you to sign on your behalf. Full payment is required before the title deed can be transferred into the name(s) of the owner(s). Spanish inheritance taxes are high so it is advisable to include the names of any children who would inherit your property upon your demise. Some purchasers may decide that it is financially more beneficial to purchase the property through a company and in this case the company name would appear on the title deed.

TAKING POSSESSION
The handing over of the property and keys will normally take place only when the full purchase price has been paid.

TRANSFER OF SERVICES
Having completed the purchase, it is necessary to connect to transfer any services. Electricity and Water contracts need to be in your name.

BUILDING AND CONTENTS INSURANCE
This is your responsibility upon taking possession of your property. IPI Limited can advise you on this matter.

PAYMENTS OF CHARGES AND TAXES
As in the case of owning a property anywhere, certain periodic payments have to be made. Your solicitor will usually be willing to look after these matters but you can appoint a Gestor (fiscal representative) to make the necessary payments and take care of whatever paper work is involved. Local rates are paid to the town hall (Ayuntamiento). You need to obtain a fiscal number (N.I.E.) from the local tax administration office.

COMMUNITY FEES
If you purchase a property within a complex or apartment block you are obliged to join its residents’ association which administers the general maintenance of the areas of common ownership, such as gardens, hallways, lifts, swimming pools, exterior lighting etc. An annual budget is calculated to cover these costs which is divided between all the owners according to the size of their properties. All owners have a vote to agree the budget at the annual general meeting.

PATRIMONIO TAX
This is a wealth tax, calculated at 0.2% of the declared value of the property and is payable each year by non-residents.

IMPUESTO DE LA RENTA
An annual tax payable by non-residents, which is based on the estimated value of the property on the assumption the property is rented out, whether it is or not. The amount is approximately 0.5% of the property value.

PLUS VALIA TAX
A one-off tax on the sale of a property, it is calculated on the appreciative value of the land the property is on and varies between towns. It is common for this tax to be paid by the purchaser.

THE ESCRITURA
These are the freehold title deeds which are presented before the Notary, showing ownership of the property.

THE NOTARY
A notary is a lawyer appointed by the Spanish government to ensure that the change of title is properly executed. It is his/her job to make sure that the seller is legally entitled to sell and the taxes are paid. The notary will register the change of ownership in the land registry office; this is in turn registered at the central registry of foreign investments in Madrid. The local land registry office is where all the escrituras relating to property transfers are recorded after the taxes have been paid. The documents are available for public inspection.

PROPERTY GUARANTEES
Spanish law states that all new properties must be guaranteed for 10 years, the architect and the builder being legally responsible for same. It is also possible to obtain a Bank Guarantee (Insurance) guaranteeing each stage-payment and frequently a no-later-than completion date.

RENTAL INCOME
You may well decide to derive rental income from your property. IPI Limited will be happy to advise you about how best to do this and about expected rental yields.

MAKING A WILL
As Spanish inheritance laws are different from those in the UK, it is generally recommended that you instruct your solicitor to draw up a Spanish will covering the succession rights to your property.

NOTE: Because the terms and conditions governing property purchase in Spain are subject to changes, all points of information included in this Buyers Guide are intended as a guideline only.