The Home Buying Process
Here are the essential steps to buying your first home.
Essential Requirements for Purchase
NIE (Spanish ID Number for Foreigners)
Mandatory for foreigners, your lawyer, with Power of Attorney (POA), can apply for it on your behalf at the police station.
Spanish Bank Account
Necessary for direct debits, utilities, and annual costs. Your lawyer, with POA, can handle this on your behalf.
Power of Attorney (POA)
Enables your lawyer to act on your behalf, from signing contracts to applying for NIE and opening a bank account.
The Basics: Setting the Foundation
Before diving into property hunting, it's crucial to establish the basics
01
Research
Consider your budget, which location, and the type of property
that matches you, your family, and your lifestyle. Research and
preparation are essential.
02
Location, Location, Location
If the area is not familiar to you, we can help you with local
knowledge of the areas that might suit you and have a number of
guides for you to checkout. If you know – fabulous. Once this is narrowed down, we can find the perfect home!
03
Choose an agent
One of the major differences to buying a property in Spain compared to the UK or some other countries, is that you only need 1 agent. At Costa Dreams, we have an extensive network of relationships with other agents and subscribe to all the major multi listing services. We can show you any property that is listed by any agent on the Costa Del Sol. As well as access to agent pocket listings that have not been put out to the whole market. Your agent will search for you, organise property tours and save you lots of time as well as being your area guide and exposing problems you may miss.
04
Instruct a Lawyer
Using a lawyer should be one of your first steps.
We have many that we can recommend, but if you find one for
yourself, ensure that they are registered and a member of the
Spanish BAR association.
Your lawyer will also assist with getting the preliminaries into place - Obtain NIE / Open bank account / POA.
And, with the post completion obligations – Transfer of Utilities /
Land registry and change of ownership /Spanish will/ Withholding tax.
05
Finance / Mortgages
To streamline the financial aspect:
Start Early: Initiate discussions about finances and mortgages
early on. Our collaboration with top providers in the Spanish
market ensures the best deals.
Mortgage Process: An independent mortgage broker can guide
you through anti-money laundering procedures, source of funds,
and provide free advice for a seamless transaction.
The Exciting Part: Finding Your New Home
In the digital age, the
internet becomes a powerful
tool for property research.
At Costa Dreams, our experienced agency,
adhering to a strict code of ethics, takes the
time to understand your preferences and shares
valuable insights, making your property search
efficient and enjoyable.
Before You Arrive & Visit
To save time and effort, we can conduct preliminary work before
your arrival, shortlisting areas and properties.
During your visit, we carefully plan property tours, adapting them
based on your feedback and preferences.
Making an Offer and The Buying Process
When you find the perfect place:
Make an Offer
Through your agent, submit a written offer detailing the price, offer duration, payment terms, and any conditions.
Offer Accepted
The legal team steps in, initiating the legal procedure and coordinating with both parties' lawyers.
Buying Process
From the reservation contract to the title deed
registration, our team handles due diligence,
legalities, and financial transactions, ensuring a smooth and timely completion.
Buying Costs Explained
Understand the costs involved:
Approximate costs on a resale will be around 10% and new developments will be around 14%.
So, allow to add on 10% – 14% in various fees to your purchase price
These figures include legal fees, notary fees and property registry fees.
A mortgage fee will be additional to these fees and around 1-2 percent.
What you can expect to pay .... This depends on several factors.
- the purchase price.
- new build or re-sale property
- are you a cash buyer or need finance via a mortgage.
- Generally, you can expect to pay 9-13.5% of the purchase
price, broken down as follows:
New Properties – TOTAL 13.5%
- 10% IVA (Spanish VAT) on new properties
- 1% notary fee (notarisation of the property cost)
- 1% legal fees (the fee charged by your lawyer)
- 1.5% stamp duty tax (AJD) on NEW BUILDS only
Resale Properties – TOTAL 9%<br />
- 7% Property transfer tax (ITP) on re-sale
properties - 1% notary fee (notarisation of the property cost)
- 1% legal fees (the fee charged by your lawyer)
Mortgage costs are on top of this and are typically 1%-2%
- Note – Legal Fees – depending on the service you receive
this will be around 1% and will have IVA added of 21% - Notary Fees - These are charged on a fixed scale
depending on the value of the property and can be between
500 and 2000 euros. - Property registry Fees Are generally around 70% of the
notary fee.
Annual Property Taxes and Expenses
The ongoing costs associated with having a property here in Spain are relatively low.
IBI impuesto sobre bienes inmuebles – this is equivalent to UK council tax. It is paid annually to the local townhall and depends on the size of the property. We will tell you what this is for each property as we view them.
Basura
rubbish collection. The amount depends on where you live but is a small amount and is paid annually.
Community Fees
If located on an urbanization there will be a community fee. This is paid monthly and covers the upkeep of swimming pool, gardening, gyms, and any common areas including cleaning and lifts.
Utilities
Water, Electricity, gas, and internet. These are paid every 2 months by the user
Home insurance
Your lawyer with POA can set all of this up and organise the direct debits so that the money is paid automatically.
Taxes to be aware of
Different taxes apply to residents and non-residents:
Resident Income Tax
Income, real estate, tax benefits are all considered.
We recommend that you seek advice from a professional
tax advisor.
Non-Resident Income Tax
This is an annual tax and is payable the year following the
purchase. The Spanish State Tax Agency (Hacienda) assign
an annual attributed income of 1.1% or 2% of the cadastral
value of each property.
That’s All Folks ....
As you can see buying a property here will be a fantastic choice
and a great investment but It’s imperative to work with trusted
professionals, do your research and budget accordingly.
At Costa Dreams, we will provide you with a friend along the
way and give you all the knowledge and expertise you need to
make the best decision for you or your family.
We aim for exceptional service and maintain the very highest
standards.
