Buying a property is a huge step to take in life wherever you buy, buying a property overseas is an even greater step to take and many falter at the first hurdle.
Sometimes it’s hard to find the courage to move forward, especially if you take too much notice of all the horror stories that you might hear, but let’s just take a moment to look at the statistics, over half a million Brits relocate abroad each year and how many horror stories have you heard about, 10, 20? That’s quite a small percentage isn’t it?
Buying in Spain
Turn that dream into reality!
Buying a property
This guide is designed to help you understand some of the key points involved in buying and moving to Spain, obviously it’s not as good as actually talking to someone who has actually moved, but hopefully it will give you a starting point.
Banking in Spain
- To open either a savings or a current account with any bank in Spain you will need an NIE number. There is a plethora of form-filling but this is done by the manager or a member of staff at the bank and you will just have to sign where indicated. Most banks will provide you with a copy of the information in English and ask you to sign the Spanish version.
You've found the house of your dreams...
What next?
Once you have agreed the sale with the vendor the first thing that needs to be done is a sales contract, this is a private contract between you and the vendor to ensure that they don´t go off and sell it to another party, normally at this point you will have to pay a deposit of 10% of the agreed sale price and this is a non-returnable deposit if you pull out of the sale, vice versa, if the vendor pulls out they have to give you back twice the deposit paid. Points which need to be negotiated at this stage include the terms and conditions of the purchase such as sale subject to mortgage, payment terms and exchange dates.
If you need a little more time to finalise your finances (obtain a mortgage etc) a holding deposit is normally paid in order to take the property off the market for an agreed amount of time. This is usually between 1,000€ to 3,000€ and this reserves the property for a period of 2-4 weeks. All deposits are paid in cash so you need to make sure before you start viewing that you have access to funds.
- Nearly all banks offer debit and credit cards which allow you to shop and pay directly from your account and most also supply internet banking, allowing you 24 hour access to your money.
- One thing to be aware of is that banking in Spain is not free, as well as a yearly account fee, plus a fee for any cards that you have you will be charged for depositing sterling into your account, for some transfers and for cashing and raising cheques, so always check with the bank before doing transactions outside of normal day to day banking.
1.
Preparing for the sale
As the buyer of the property it is your representative’s responsibility to prepare all the paperwork for the sale and to present it to the notary.
Once the private contract has been signed it is necessary to conduct a full background check to ensure that the property is free from debts which is one of the most important tasks performed. In Spain the debt is carried by the property, not the owner, so you will be liable to pay for any encumbrances discovered at the point of sale, and thereafter. It is always best to make sure the utilities and any community fees have all been paid up to date as any missing back payments will also become your responsibility.
2.
Paying for your property
Before the notary date you will need to ensure that you have sufficient funds in your Spanish bank account, it is standard on the morning of the sale to go to the bank and collect the banker’s draft (ordered a few days before) and cash to cover purchase costs as previously agreed. Please note – Spanish banking is not free and you will be charged for raising the banker’s draft. Before you transfer money to Spain think about using a currency broker to save you paying a fortune in commission or losing out on exchange rates.
3.
At the notary
When both parties are ready to complete the sale, they (and their representatives) attend the Notary’s office to sign the escritura de compra venta (title deed of conveyance). If you’re trying to go it alone and don’t speak Spanish you have to take a translator, they will translate the deeds for you and sign that they have done so.
Unlike in the UK, it is not unusual for the same person to represent both the seller and the vendor and in fact this actually makes the sale go more smoothly as there are fewer parties to co-ordinate.
1. – Preparing for the sale:
- As the buyer of the property it is your representative’s responsibility to prepare all the paperwork for the sale and to present it to the notary.
- Once the private contract has been signed it is necessary to conduct a full background check to ensure that the property is free from debts which is one of the most important tasks performed. In Spain the debt is carried by the property, not the owner, so you will be liable to pay for any encumbrances discovered at the point of sale, and thereafter. It is always best to make sure the utilities and any community fees have all been paid up to date as any missing back payments will also become your responsibility.
2. – Paying for your property
- Before the notary date you will need to ensure that you have sufficient funds in your Spanish bank account, it is standard on the morning of the sale to go to the bank and collect the banker’s draft (ordered a few days before) and cash to cover purchase costs as previously agreed. Please note – Spanish banking is not free and you will be charged for raising the banker’s draft. Before you transfer money to Spain think about using a currency broker to save you paying a fortune in commission or losing out on exchange rates.
3. – At the notary
- When both parties are ready to complete the sale, they (and their representatives) attend the Notary’s office to sign the escritura de compra venta (title deed of conveyance). If you’re trying to go it alone and don’t speak Spanish you have to take a translator, they will translate the deeds for you and sign that they have done so.
- Unlike in the UK, it is not unusual for the same person to represent both the seller and the vendor and in fact this actually makes the sale go more smoothly as there are fewer parties to co-ordinate.
Choosing your bank
- Although the major national banks have branches in all cities and most towns, each region of Spain also has its own banks local to the region so if you are planning to travel make sure that you pick a national rather than local bank.
- There are two types of banks in Spain: savings banks and regular banks. Savings banks do not have shareholders and invest in social and cultural projects. There is a nationwide network of savings banks recognizable by the sign saying Caja de ahorros.
Direct debits
- Setting up a direct debit to pay monthly or yearly bills in Spain is easy, your bank can do it if you take in a copy of the bill to be paid or you can provide the company with the bank’s IBAN number.
- To stop a direct debit visit your branch and tell them you wish to cancel, it’s always best to contact the relevant company as well.
Buyers Financial Responsabilities
On the top of the agreed sale price, the buyer has extra financial costs which cover the following:
Internet Banking
- Most Banks offer this service, but you will need to request the setup and authorization on your account.
Debit and Credit Cards
- You can order your debit or credit card at your branch and they take anywhere between three and ten days to arrive. When you pick it up you will be given your PIN number. You need to tell your bank if you are planning to use the card for internet payments as it has to be activated for online use. Your debit card gives you access to all ATMs in Spain but you may be charged for using your card at another bank’s ATM.
What happens after the sale?
What next?
At the point of sale a fiscal representative will be appointed to you (normally your representative) and it is their responsibility to ensure that all taxes on behalf of both the seller and buyer are paid within 30 days from the date of signing the deeds. Once all the taxes are paid the new deeds are presented to the Land Registry and the ownership of the property is transferred into your name (this can take between 2-3 months).
All the utilities also need to be changed over into your name and direct debits set up from your nominated bank account.
Now I own a house in Spain
What further expenses are there?
Obviously you will have to pay for the utilities that you use:
- Iberdrola (electricity)- bills come every month.
- Hidraqua (water) – bills come every 3 months.
- Movistar (telephone) – bills come every 2 months.
- SUMA (council tax) – this is paid once a year around September time.
- Community Fees (if applicable – Community charges apply when you buy a property on a community development. These cover things like maintenance, swimming pools, gardens etc.) – these are normally paid twice a year.
Don't Take a Currency Risk
To illustrate this we can look at an historical example:
- A villa priced at 400,000 euros would have cost £266,666 at the end of June 2005 but increased to £279,720 by the end of July (4.7% in just 4 weeks).
- It goes without saying that the reverse could happen and your property could become cheaper if the euro were to weaken but if you are happy with the cost at the start you would be well advised not to speculate and risk paying more.
F.A.Q.s
What if you don't have an NIE number?
Recent Spanish legislation makes it compulsory for anyone buying and selling property in Spain to have an NIE Number - Numero de Identidad de Extranjeros which, translated, means "Identity Number for Foreigners".
What if one of my party is unable to come to Spain to sign before the notary?
A power of attorney can be done in the UK, valid for a house purchase in Spain. You need to speak with a notary close to where you live to discuss this, it helps if the power of attorney is written in both Spanish and English as this will save having to get it translated, your representative will be able to help with this if needed.
What insurances do I need?
Fire and death insurance is compulsory by law when taking out a mortgage. As in the UK there are a variety of insurances available covering home and contents, vehicle, life, travel and anything else you might need.
Banking in Spain
- To open either a savings or a current account with any bank in Spain you will need an NIE number. There is a plethora of form-filling but this is done by the manager or a member of staff at the bank and you will just have to sign where indicated. Most banks will provide you with a copy of the information in English and ask you to sign the Spanish version.
- Nearly all banks offer debit and credit cards which allow you to shop and pay directly from your account and most also supply internet banking, allowing you 24 hour access to your money.
- One thing to be aware of is that banking in Spain is not free, as well as a yearly account fee, plus a fee for any cards that you have you will be charged for depositing sterling into your account, for some transfers and for cashing and raising cheques, so always check with the bank before doing transactions outside of normal day to day banking.
Choosing your bank
- Although the major national banks have branches in all cities and most towns, each region of Spain also has its own banks local to the region so if you are planning to travel make sure that you pick a national rather than local bank.
- There are two types of banks in Spain: savings banks and regular banks. Savings banks do not have shareholders and invest in social and cultural projects. There is a nationwide network of savings banks recognizable by the sign saying Caja de ahorros.
Direct debits
- Setting up a direct debit to pay monthly or yearly bills in Spain is easy, your bank can do it if you take in a copy of the bill to be paid or you can provide the company with the bank’s IBAN number.
- To stop a direct debit visit your branch and tell them you wish to cancel, it’s always best to contact the relevant company as well.
- You can order you debit or credit card at your branch and they take anywhere between three and ten days to arrive. When you pick it up you will be given your PIN number. You need to tell your bank if you are planning to use the card for internet payments as it has to be activated for online use. Your debit card gives you access to all ATMs in Spain but you may be charged for using your card at another bank’s ATM.
Internet Banking
- Most Banks offer this service, but you will need to request the setup and authorization on your account.
Debit and Credit Cards
- You can order your debit or credit card at your branch and they take anywhere between three and ten days to arrive. When you pick it up you will be given your PIN number. You need to tell your bank if you are planning to use the card for internet payments as it has to be activated for online use. Your debit card gives you access to all ATMs in Spain but you may be charged for using your card at another banks ATM.
Don't Take a Currency Risk
To illustrate this we can look at an historical example:
- A villa priced at 400,000 euros would have cost £266,666 at the end of June 2005 but increased to £279,720 by the end of July (4.7% in just 4 weeks).
- It goes without saying that the reverse could happen and your property could become cheaper if the euro were to weaken but if you are happy with the cost at the start you would be well advised not to speculate and risk paying more.