Buying a property in Spain whether as an investment, holiday home or to make it your permanent residence can be both exciting and daunting. With the newspapers constantly full of horror stories, we hope you find the following tips and information helpful.

Firstly it is important to establish your budgets,  type of property required and the location that would suit you best.  There is no point in purchasing a second floor, two bedroom apartment off plan that won’t be ready for 2 years, if you need a 3 bedroom house with a garden to move into within 6 months.

Secondly, once you have found a property you would like to purchase, you need to ensure there are no outstanding taxes or other debts like mortgages, leasehold payments or court orders registered against the property.  It is also best to check if it is affected by any local planning regulations, this is particularly important if you are thinking of purchasing a property outside an urban area.  Most financial information can be obtained from the local Land Registry office (Registro de la Propiedad), however it is best to retain the services of a Spanish Lawyer, who can carry out all the necessary checks against the property on your behalf.

Once everything has checked out and you would like to proceed with the purchase, the next step is “the pledge”.  The pledge is a sum of money which basically represents the equivalent of a deposit or downpayment on the property in England.  It is normally a small percentage of the total purchase price, and acts as a guarantee that the sale of the house will be completed within a given period of time.  If after this period has expired,  you decide not to buy, you will lose the sum of money pledged.  However if the owner of the property sells to a third party before the end of the period, he will be obliged to pay you twice the amount that you pledged.

Following this you and the vendor sign a contract of the sale (escritura de compraventa) in the presence of a notary.  The notary is an official public body who witnesses the signing of the deed and makes it a public document.  This is then enscribed at the local Land Registry and the buyer appears as the new owner.  Before signing the contract ensure all the clauses have been clearly explained to you, pay special attention to those which specify who is responsable for paying the costs and taxes that will result because of the purchase.  If at any time before you sign the contract you feel you have insufficient information always seek help and advice from a lawyer.

Possible costs that may be incurred and are not included in the purchase price:

Valuation fees. 

If you apply for a mortage on the property there will be a valuation fee.  The valuation is carried out by professional valuers registered with the Bank of Spain.  The valuation fee will vary according to the size of the mortgage you take out.

Solicitors fees. 

If you engage the services of a lawyer for conveyancing you will be liable for their fees on completion of the purchase.  However it is advisable to obtain a quotation of the likely costs these will come to.

Notary fees.

For the granting of any mortgage loan and the title deed of the property you will be charged notary fees.  Consult with your bank, lawyer or notaries office for information on what these costs will be.  These fees will vary depending of the purchase price of the property and size of any mortgage you have.

Taxes.

On the signing of the public deed for the establishment of a mortgage you will be required to pay IAJD (Impuesto sobre Actos Juridicos Documentados) which is the equivalent of stamp duty, this amount is determined by each autonomous regional government.  Where no specific regulation applies, 0.5% will be levied on the cost of the mortgage loan.

Property taxes vary according to whether the propertry is new or old.  7% IVA (VAT) is applicable on new properties.  On older properties there is a transfer tax (Impuesto de Transmisiones Patrimoniales).  This tax is established by each autonomos region and where there is no specified sum, this is charges at 6%.