The process of buying property in Spain is explained, as well as useful tips to help make buying property in Spain as easy as possible.
Buying a property in Spain is usually a big step in realizing your dream of living in a sunny Mediterranean climate and enjoying the seaside.
The whole process can (and should) be a pleasant experience. You just need to know how the Spanish property market works and all the possible pitfalls you need to avoid when buying your dream home under the sun.
In this guide to buying property in Spain, you’ll find everything you need to know about the process, from planning and research to completion and obtaining title deeds.
Spanish real estate market
Spain is one of the favorites of foreign real estate buyers, especially Europeans.
The country is so stunning, so diverse and has such a wonderful climate – what’s not to love?
Many see the current situation in Spain as an opportunity they have been waiting for for years. Vendors and developers are so eager to sell in this stagnant market that there are bargains to be had.
Moreover, these market downturns are part of a cyclical process. Unless you are buying property in Spain hoping to flip it and make a quick buck, you are probably buying a very solid long-term investment.
The very first piece of the property buying puzzle is to decide why you want to buy property in Spain. Your decision will guide many elements of the rest of the process.
So are you buying for investment purposes? If so, do you want rental income or is capital appreciation more important to you? Are you buying a property for family vacations, living and working or retirement?
With a clear decision in your mind, you can look at any property with this fundamental conclusion to guide your choices. If you are buying an apartment in Spain to let on the tourist market, you will undoubtedly be looking at each property with your potential tenant’s tastes and preferences in mind, rather than your own.
However, if you are moving to Spain to live there as a permanent resident, this is a completely different situation to consider. It all depends on your plans, your tastes, your future and your preferences.
If you are going to retire in Spain, you should choose your property very carefully. The right choice will help you make living in Spain a dream come true.
Spain’s golden visa for real estate buyers
Investors in real estate in Spain can apply for a residence permit if they meet certain conditions of the “golden visa” program.
If you buy a property in Spain worth more than €500,000, you automatically qualify for a residence visa, which you can convert to permanent residence after five years, and Spanish citizenship after ten years.
If you have any questions or would like more information about your golden visa options in Spain, please contact us via our Residency and Citizenship page. We will be happy to help.
Opening a bank account for the purchase of real estate in Spain
While you’re looking for the perfect property in your favorite location in Spain, it might be a good idea to open a Spanish bank account .
You can transfer about 15 percent of your projected budget to it as working capital that you can use to make deposits and pay taxes and immediate payments when you’re ready to move on.
Remember that you will never get the best exchange rate from your bank. See currency specialists, talk to them about your Euro transfers and how to get the best transfer and exchange deals.
House hunting in Spain
Once you start meeting with real estate agents, developers, or anyone looking to sell real estate, expect the “hard sell.”
These people can put subtle pressure on you to buy. Even if you get the feeling that if you don’t sign up for that perfect property as soon as you see it, you’ll forever lose your chance to buy it, that’s no reason to rush into action.
After all, there’s always more than one perfect property, and if you really want to make sure you’re doing it right.
You should take all the time you need to learn everything about Spain and real estate before making any commitments at all. Take everything you hear with a grain of salt and stay firm and true to the process!
Choosing a lawyer
Once your dream home is found, you need an attorney to proceed.
Wherever you want to buy a house in Spain, always make sure you have an independent and professional lawyer to advise you on your purchase.
Make sure the local lawyer representing your interests is independent of the real estate agent, developer, or showing company.
If your Spanish is not very good, find an English-speaking lawyer. In Spain it is not that difficult and you ensure that all the details of the contract are explained to you without ambiguity of translation and make sure that the lawyer specializes in Spanish land law ( urbanismo ).
Ask for your lawyer’s registration number and make sure he is registered and practicing with the local bar association ( Colegio de Abogados ).
Your lawyer should also have professional indemnity insurance.
Trial
The most important advice: do not sign any papers or hand over any money until you have consulted an independent lawyer.
Once you’ve found a property that meets all of your requirements, it’s time to make an offer.
After an offer is accepted, you sign a conditional contract of sale, which protects you and your deposit in the event that your solicitor finds anything wrong with the property, the documents or the seller’s right to sell it.
Usually at this stage you pay a deposit of around 10%. If you haven’t already, you’ll need to set up a bank account and have a Spanish NIE number – your lawyer or estate agent can help you with this.
Now you need to monitor the chosen lawyer very carefully and conduct timely searches and inspections for compliance with the terms of the contract.
You can also have your property surveyed or valued by an independent surveyor and this is highly recommended, especially if you are buying a resale property.
The results of the survey can give you a stronger position in negotiations with the seller and a better understanding of how much you are really willing to pay for the property.
Once this is done and an agreement is reached with the buyer, your solicitor will carry out the necessary checks and due diligence. This usually includes reviewing the sales contract, checking the title, and performing other checks to make sure your interests are protected.
The next step is to sign a private contract with the supplier. At this stage you will also be required to pay a deposit as stated in the contract terms. Remember that changing your mind after signing a contract can cost you a fortune, so be absolutely sure of your decision before you sign.
You are then given time to get your money on the spot before signing the deeds in front of a notary public and taking possession of the property. The last step requires you to enter the title in the property registry, pay the appropriate taxes and connect utilities.
Additional costs
In most cases, the purchase price includes an estate agent’s commission (usually 5%), but ask before signing the contract. It is common practice in Spain for Spanish sellers to tell the estate agent what net amount they want from the sale.
The agent must then charge as much as they can to increase their commission.
Foreign suppliers are more likely to choose the traditional method and agree on a commission as a percentage of the sale. Keep this in mind when negotiating the purchase price.
Generally, you will have to pay 10% of the purchase price as transfer tax, which goes to the Spanish Treasury.
Don’t forget to factor in notary fees and land/property registration fees, which vary depending on the purchase price of the property. Also, consider the attorney’s fee, which can be 1 percent of the purchase price + VAT of 21 percent.
Buying real estate in Spain
If you are going to buy directly from a builder in Spain, which is not uncommon in a country where much of the construction market is focused on foreign buyers, make sure you are dealing with a reputable company.
Buying a property that has not yet been built involves certain risks.
Remember that the real estate market in Spain is rich, so there is no real need to sign a reservation contract immediately under pressure from an agent that the building will be sold the next day and you will be left behind.
When you’re sure you want to proceed, try to negotiate a better deal with the developer.
There’s always something you can negotiate to make the deal better for yourself: either a simple discount, scheduling, financial terms, and/or any grace period terms. It is even possible to negotiate a 5 percent price reservation on your part until the hurdle period is over.
Spanish booking contract when buying off-plan
Once you and the developer have agreed the terms, you will need to sign a Reservation Agreement ( Documento de Reserva ) and pay a deposit, which is usually specified by the developer.
Make sure there is a clause in your booking contract that the deposit is refundable if you decide to cancel. This clause is rarely found in contracts of this type, so you may want to try to insist on it to protect yourself. Most reliable developers will agree with the point.
Due diligence when buying off-project
Before doing this, ask your lawyer to do your due diligence.
Make sure your solicitor has checked whether the land on which the building is located is registered in the developer’s name, is properly classified, has a building license issued by the local municipality and a building permit has been obtained.
Do your own due diligence on your environment, infrastructure, facilities, etc.
Make sure you have as detailed plans and specifications as possible, including built-up area ( superficie construida ), usable area ( superficie útil ), total area including common areas ( superficie total ), and technical plans showing functional installations.
And finally, make sure your developer has adequate insurance or a bank guarantee (aval bancario ), which is required by law for developers who receive installment payments for off-construction properties. This warranty is designed to protect your funds if something goes wrong during construction.
The builder should be able to provide you with a statement from the bank or insurance company to confirm that adequate insurance has been taken out.
Construction contract with down payment and license for first operation
Next, you will need to sign a down payment contract or a private contract ( Contrato privado de compraventa ).
When signing the down payment agreement, make sure you get a document from the guarantor confirming that your installment payments are guaranteed. Your name must be on the document.
A down payment is usually required when signing the contract.
Final payment is made when the property is completed and the deeds are signed.
Once completed, the development must obtain a first occupation license (or ” Licencia de Primera Ocupación” ). This license is issued by the city hall and is a legal confirmation that the new building fully complies with all planning and development regulations and is ready for use as a dwelling.
Purchase of real estate in Spain with renovation
If you buy an old property in Spain and plan to renovate it, if you generally want to improve the house you have already purchased, you need to apply for permission from the local council.
You will find that you need a permit for even the most minor building work.
Ask your foreign colleagues to recommend architects and builders. An architect can make the permit application process much easier for you by doing it on your behalf. Or you can use Gestor to help you with the documents.
When you get your quote, make sure you find out if VAT is included, and bear in mind that it’s normal to pay around 50 per cent upfront before building work starts.
Buying real estate in Spain – summary
The process of buying a property in Spain is very simple if you know what it should be. Proper research is the key to a successful purchase.
So, take your time, don’t rush or fall for your real estate agent’s veiled threats, and remember that this is one of the most important purchases you’ll ever make, so it’s worth taking the time to make sure everything goes smoothly.