How to Buy Property in Spain – A Legal Guide
Spain has long been a popular destination for foreign property buyers. Whether looking to invest in a holiday home, rental property or even a permanent residence, the Spanish property market is definitely worth your consideration.
With its sunny climate, laidback lifestyle and relatively low property prices compared to other parts of Europe, it’s easy to see the appeal of buying a house or villa in Spain.
Buying property in Spain is much easier than you might expect. The Spanish real estate market possesses some incredible potential for new and experienced homeowners and property investors looking for that next challenge. Ultimately, with some careful planning, research and with some expert legal representation, you will find the process straightforward and hassle-free.
This guide breaks down the key steps and legal considerations you’ll need to keep in mind when purchasing real estate in Spain.
Buying Properties in Spain: All You Need to Know
The following steps will outline all the key requirements for buying a house, apartment, penthouse, or villa in Spain and recommendations to take on board.
Choose the Right Location
Just like anywhere else, location is crucial when buying property in Spain. Popular cities like Madrid and Barcelona offer convenient urban living combined with excellent and reliable infrastructure, while smaller, rural towns can provide more tranquil destinations for those that prefer being by the sea.
Coastal areas like Costa del Sol are some of the most highly-sought-after property destinations. This area offers a healthy blend of rural and urban lifestyles, meaning you can get the best of both worlds with the right location.
Consider your own goals and then research different cities, towns, and regions to find the right fit for you. Look at the specific markets in the areas you are considering and recognise how they align with your property goals.
Once you’ve settled on a Spanish property location, take the time to visit in person and get a sense of the urbanisations and complexes available. Reputable and experienced estate agents like Windsor can advise you on the best locations (around La Cala de Mijas, specifically) and value buys for your budget and timescales.
Get a NIE Number
Arguably the most important thing you need from a legal perspective is the NIE (Numero de Identificacion del extranjero). This unique tax identification number from the Spanish government is required for all property owners in Spain, whether citizens or foreign nationals. It’s vital to be in possession of an NIE to carry out any transaction in Spain; this number must appear on all signed documents in Spain.
You can apply for your NIE through the nearest Spanish consulate or embassy in your home country, or in person once in Spain. You do not need a Spanish bank account to buy a property in Spain, but it’s often recommended.
Understand Ownership Laws
Spain has specific rules regarding foreign property ownership, but they are no more complicated than buying in any other destination.
Unlike in the UK, the concepts of freehold and leasehold land don’t explicitly exist in Spain. If you buy a property then you own it outright, including the land that a house or villa may sit upon, and the ceiling, floor and walls that an apartment may be contained within. You have full rights to sell, rent out, or pass the property to heirs or beneficiaries in your will and testament.
It’s important to understand the ‘Ley de Propiedad Horizontal’ (Law of Horizontal Ownership) when buying Spanish properties in complexes or urbanisations. The horizontal property law stipulates the rights and obligations of you as the property owner towards the community. It applies to and covers terraced or detached properties or apartments in which there are communal sections or areas. Horizontal ownership costs would apply to property owners that share the costs of maintaining these communal areas, which will vary depending on the area and size of the property and amenities.
This is why it is imperative to seek legal guidance to determine the most appropriate ownership structure and what rights you are entitled to.
Hire an Independent Lawyer
Using an independent Spanish property lawyer (abogado) to represent your interests is non-negotiable when buying property, as you would if you were buying a home in the UK. If you feel confident in your abilities, you can search for available properties using portals, but you might fare better going direct to a professional, experienced Spanish estate agency like Windsor.
Be sure to find a qualified and reputable Spanish legal expert who speaks English fluently and has extensive experience assisting foreign buyers.
Your lawyer will handle key aspects like conducting title searches, reviewing contracts, navigating paperwork and legal fees, and ensuring compliance with ownership laws. Having an experienced property lawyer ensures you avoid any misunderstandings or getting taken advantage of.
Arrange Financing Upfront
As with any mortgage or loan, pre-financing your Spanish property investment is crucial to have in hand ready to go once you have identified a house you like. Locking in financing early before you house hunt allows you to peruse the market confidently knowing your price range, monthly outgoings, and affordability.
Like any other international bank, Spanish banks have specific lending criteria regarding prospective property ownership. You may find that consulting with an independent mortgage broker who specialises in dealing with foreign buyers may yield better results than going straight to the bank for a mortgage valuation.
At the time of this writing, mortgage interest rates in Spain are relatively low in comparison to other European countries.
Understand Taxes & Fees
Spain has several property transaction taxes and fees that you must budget for and factor into your overall investment costs. These differ depending on whether you are buying a new build home or a second-hand property in Spain.
It’s important to understand new and resale purchase taxes for properties in Spain to avoid any ambiguity.
Resale Property Taxes
- Property transfer tax – 7% on all property types and prices in Andalusia
- Notary & Land Registry fees – Approximately 1 – 1.5% combined
- Lawyers’ fees – Typically 1 – 1.5% of the purchase price
Off-Plan or Newly Constructed Property Taxes
- IVA (VAT) – For new construction and first sales, 10% VAT applies
- AJD – (Documented legal acts tax or stamp duty) which is a further 1.2% of the purchase price for properties purchased in Andalusia
When it comes to selling your property and understanding all the taxes behind that, please consult with your legal representative. We will be unveiling a detailed guide on the taxes on Spanish property sales in due course.
If you are a resident, you are subject to Income Tax and Real Estate Tax (IBI). If you are a non-resident, you are subject to Income Tax, Property Tax, and an additional Non-resident Tax. Again, consult with your lawyers so you are fully aware.
Your Spanish property lawyers can confirm precise figures based on your specific purchase.
Review the Sales Contract
A buyer typically pays a fee and reserves the right to acquire the property for a set length of time (i.e., the reservation term), known as a reservation agreement. During this period, it’s agreed that the property will not be sold to another party. A letter of intent may be distributed from the buyer to the vendor and subsequently negotiated.
The contract of sale (contrato de compraventa or contrato de arras) outlines the legal terms and obligations between buyer and seller. Your lawyer will translate and analyse the contract in detail before presenting it to you for signing.
Key clauses will typically include:
- Sale price and payment timeline, including deposit amount.
- Property description – location, size, age, reference number.
- Inclusion of fixtures – kitchen appliances, lighting, etc.
- Possession date when you assume ownership.
- Penalties if either party breaches the contract.
Don’t sign anything not clearly understood. The sales contract is legally binding under Spanish law once signed by both parties.
Arranging Payment & Completion
In most Spanish property transactions, you’ll typically pay the reservation fee followed by the deposit directly to your appointed lawyer or estate agent. Funds will be held securely and transferred by your representing lawyer to the seller’s lawyer.
It’s wise currently to ensure the time between deposit payments and the possession date is not excessively long and conduct relevant checks on the seller. Your lawyer will register the signed deed with the Spanish Land Registry office, thus transferring the property to you and completing the purchase.
Facilitating Your Spanish Property Purchase
Buying property in Spain involves some specific factors to consider, but it’s relatively easy when you have the right legal representation working alongside you. Additionally, with proper guidance from reputable and experienced Spanish estate agents, you can find property in Spain relatively easily and without much hassle.
Spain offers incredible lifestyle benefits and property investment potential, so don’t be dissuaded. With the right guidance and support, you can seize all the incredible benefits of living in a beautiful part of the world without all the complicated legal headaches.
For reputable and expert advice in anything from rental administration and insurance to representing you as your estate agent in your Spanish property transaction, look no further than Windsor. Why not browse our available properties for sale including apartments, villas or penthouses for sale in popular regions in La Cala de Mijas? If you’d like to schedule a free consultation, get in touch with us today.
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