Buying a property is the biggest investment most people will make in their lives. Buying one abroad is an even bigger undertaking as it involves navigating a foreign legal and financial terrain. It is normal to feel daunted by the task, but like anything in life, the better prepared you are going into it, the more likely you are to make a success of it. That being the case, Sonneil has compiled a list of important things to consider when buying a house in Spain.
Location, location, location
A house gains in value if it is located in an area with high quality schools and with good communication and transportation routes to the main urban centers, so be sure to ask about these local amenities. It’s a good idea to ask about future development plans pending approval as these may affect the house or its surroundings, and find out as much as you can about how much other properties in the area have sold for recently.
Viewing the property
When visiting the your prospective property purchase take note of things like the orientation of the house, ventilation of the bathrooms and kitchen, the state of the electrical installation, the arrangement of partitions and doors and the ambient noise levels outside. Take photos and write down your observations in a notebook to better remember the property after you leave. Ask the seller about the building’s energy efficiency rating. Choosing a home with an A rating in terms of its energy efficiency means an estimated saving of 89% compared to an F rating, thus allowing you to save money while you save the planet.
The purchasing process
The deposit agreement
Once you’ve chosen your new home and are ready to start the process of buying it, then the legal and financial considerations come to the fore. This starts with the signing of the deposit agreement. The deposit is usually around 10% of the cost of the house. Once the agreement is signed you take on the rights and responsibilities of a buyer. If you later decide not to go through with the transaction, you will lose this deposit but if the seller cancels the sale, they will have to return the deposit to you.
The title deed
Next is the signing of the title deed. This part of the buying process must be done in front of a notary with both the buyer and seller present. The deed must contain a description of the property as well as explaining any mortgages or charges on the house, the final sale price agreed and how it will be paid, plus the taxes and expenses related to the sale.
Taxes and other charges
The main taxes to be paid are the property transfer tax (“Impuesto de Transmisiones Patrimoniales” or ITP) and VAT. Other expenses include notary costs, the payment to add your name to the property register and any costs related to the mortgage.
In the end, the total taxes, charges and expenses represent around 8% to 13% of the purchase price, depending on the autonomous community (Spanish region) in which you are buying.
If you have reached this far in the process, then congratulations, you are the proud owner of your own Spanish property!