Buying Guide

An NIE number (Número de Identificación de Extranjero) is required by all foreigners buying property in Spain and is essential for opening a bank account, obtaining a mortgage and connecting utilities in Spain. It is important to note that all named owners of the property that will appear on the deeds and named on the bank account will require a NIE number.

An NIE number is easy to obtain and can be done in a day but can take up to 6 weeks to process where there is a backlog of applications. It therefore makes sense to apply for this as far in advance as possible.

You can apply for your NIE number in person at the local immigration office (often located within the main local police station) or at the regional tax office. A small fee is payable on the day of application and once the application is completed you will be given a date to collect the certificate.

To register for a NIE you will need to provide the following documents…

– Original and copy of passport

– Application Form EX-15

Opening a bank account in Spain is an important pre-requisite when buying a property in Spain.

This account can be used to transfer money into from overseas to fund the purchase of the property and also used to connect direct debits for the relevant utilities related to the property post-purchase.

Opening a bank account in Spain is easy. There are many banks to choose from however it is worth considering the terms of the account as these may vary from one bank to another. Many overseas property buyers also arrange mortgages through Spanish banks and therefore (whilst not a requirement) for convenience it can make sense to use the same bank for both your mortgage and current account.

To open a Spanish bank account you will typically need to provide the following documentation…

• Proof of Identity – e.g. Passport
• Proof of Residency – Spanish resident or non-resident
• NIE certificate
• Proof of Address
• Proof of employment status

NOTE: If you are looking to transfer funds from overseas into Spain to fund your property purchase it is worth consulting with specialist Currency Exchange Specialists who should be able to save you considerable money on your transfer and can even lock in the transfer rate in advance to ensure that when you are ready to make the purchase you do not receive an unexpected surprise by way of an exchange rate fluctuation that goes against you. When consulting such companies make sure to check that they are FCA regulated.

Whilst it is not legally required, contracting a lawyer is highly recommended regardless of whether you speak and read Spanish or not, as throughout the purchase process there will number of documents that should be reviewed by a legal professional and checks to be made with local authorities.

These responsibilities include…

• Check the details of the legally registered seller and whether there are any debts against the property
• Check to see if there are current tenants with occupancy rights.
• Check to see whether the property is up to date with community fees & property taxes
• In the case of newly developed properties to check the terms of any relevant construction insurance.

It is important when contracting a lawyer to be sure they are qualified, have good references and have experience with property transactions in Spain. Whilst fees can vary you can expect to pay a lawyer between 1% – 1.5% of the property purchase price.

You may be referred to a lawyer by the estate agent and whilst there is nothing wrong with this, we always recommend contracting a lawyer independently. Remember that estate agents are in the first instance representing the seller and any lawyer who gains referrals from an agent may be hesitant to upset that relationship should any legal disputes arise between the buyer and seller.

Should you require assistance in finding a lawyer, Costa Property Consultants can help refer you to an experienced and qualified independent lawyer.

If you are looking to borrow money to part finance the purchase of a property in Spain it is worth first consulting mortgage providers to find out a rough idea of how much you will be able to borrow which in turn will give you a good gauge of the total funds you have at your disposal and subsequent budget to work with.

Generally mortgage providers will lend up to 80% of the property purchase price but this will vary and will depend on a number of factors including both your personal financial circumstances and the property valuation. Whilst it is not impossible to obtain a 100% mortgage these are not common practice and only offered by special providers where the property is listed for sale below market price.

The information required by banks or mortgage may vary but generally includes…

• Past 2 years income tax declarations
• Bank statement past 12 months
• Proof of Income past 6 months
• List of current loans & mortgages
• List of assets and liabilities verified by an accountant
• Copy of passport.

Banks will likely require that the property is registered in the name of the mortgage applicant.

NOTE: Ensure to check if the property already has a mortgage and if so to ensure that that (unless otherwise agreed as a condition of the sale) you will not be responsible for this mortgage.

Costs in relation to purchasing a property in Spain will roughly amount to between 13% of the purchase price (to cover buying costs and taxes) up to 15% (where a mortgage is also arranged).

Standard costs are as follows…

TAXES (IVA / ITP) 10%

NOTARY FEES 1%

PROPERTY REGISTRATION 1%

STAMP DUTY 1%

Where a mortgage is required the additional costs will apply…

OTHER FEES (GESTORIA, REGISTRY, VALUATION, NOTARY) 0,8%

STAMP DUTY (MORTGAGE) 1%

BANK COMMISSION (MORTGAGE) 0.25%

The above fees are a rough estimation and can change subject to political / economic circumstances.

When viewing properties in addition to making the obvious observations on the property size, layout, views and state of repair, it is important to also consider other factors that may not be so obvious. These may include…

• The sun direction
• Noise
• Transport routes
• Parking
• Which fixtures, fittings and furniture is included
• The distance to local amenities
• Privacy
• Whether the neighbourhood is peaceful or too quiet.

Furthermore upon request, the estate agent should be able to provide the following information on any property listed for sale…

• Nota Simple – Details of the seller as appear in the registry.
• Map showing the exact location of the property
• Surface Area – Gross Constructed Area as well as total size of plot including terraces and land.
• Energy Performance Certificate (CEE) registered by the regional authority.
• Libro del Edificio – Book showing the instructions and use of any facilities in the building.
• Proof of registration in the Land Registry.

When you have viewed and selected a property that you wish to purchase the first step is negotiate a price. Often the seller will accept an offer on the asking price. How much of a discount they will accept will depend on how inflated the asking price is over current market value or how desperate they are to conclude a sale. Often the estate agent representing the seller will not encourage you to make too low an offer, as this will affect their commission.

Try to find out how long the property has been on the market as generally the longer it has been listed for sale the more likely the seller will be open to negotiate on the price.

When a offer has been agreed by both parties a Deposit Payment (normally between €2500-€10,000 euros) is required to take the property off the market and stops the property being shown to other prospective buyers. Always get your lawyer to check this reservation agreement to make sure that in case any problems arise with subsequent legal checks or obtaining a mortgage the deposit is refundable.

Once the term of reservation agreement has expired the next step is to sign a sales contract or deposit contract (Contracto de Arras).

This contract requires a deposit down payment made by the buyer (normally equivalent to 10% – 20% of the purchase price held in an Escrow account) and officially reserves the right to purchase the property at the agreed price and sets out a timetable to conclude the sale. This contract also sets out the exact details of the property and contents (furnishings) included. If either party breaks this contract they are penalised, whereby if the buyer pulls out they lose their deposit and in case the seller pulls out they must repay the buyer double the deposit amount paid.

Like with the purchase agreement your lawyer should review the Sales Contract before signing to ensure that the details set out in the contract match that that is listed in the building survey report,

The signing of the Escritura (Deed) is the final stage to complete the property sale and declare a public change of ownership. This is the time when the transfer of the balance payment is made and keys to the property are handed over. The Escritura is signed at a Notary where both the seller and buyer attend with their legal representatives. Often the estate agent and a bank representative (where a mortgage has been arranged for the purchase of the property) will be present as well. The Notary will require official identification of both parties so you will need to bring a copy of your passport with you to the notary. (Note: If you are unable to attend the notary you can sign a Power of Attorney document for your lawyer or another representative to conclude this process on your behalf).

The Escritura will be in written Spanish (unless a dual language Escritura has been arranged in advance) and therefore it is advisable to have a translator or English-speaking representative to be present (where your lawyer is English speaking they can assist with this role).

Once signed the buyer is handed a copy of the deeds and their lawyer will send a notification to the land registry and later collect the original updated deeds.