Property Buyers Guide |
a guide to buying a property in Spain

Buying property in Spain is by far the most common way to own a property overseas. Thousands of people from all nationalities successfully buy a property in Spain or her islands every year.

The number increases on a yearly basis and popular Spanish destinations for owning a home in Spain are Costa del Sol, Costa Blanca, Tenerife, Lanzarote and Costa de Almeria. The rest of Spain is showing an increase in overseas property purchasers but these are the number one spots for buying property in Spain from 2005.

A few tips on buying a property in Spain:

• Know how much you want to spend before looking - set a budget.
• Make a number of visits to the property and the area before you buy.
• Make sure the property has all the necessary utilities or you could be caught short.
• Have a full structural report done on the property - don´t skimp or you could pay for it later.
• Find out who your neighbours are - do they rent their property out!!
• Take plenty of pictures of each room or perhaps a video of the property and are to study later.
• Always have a thorough legal check of the property and any debts outstanding by a solicitor.
• Lastly. Don´t sign anything if you´re not happy with the contents, get it changed beforehand.

So you´ve agreed a price on the property and are happy with everything above. So what additional costs are there? In general you will need to allow an accross the board sum of about 10% to cover such things as

• Transfer tax (IVA), which at present is 6% on a second-hand property and 7% on a new one.
• Stamp duty - 1 - 2% depending where and what you´ve bought.
• Registration office charges of approx €300 - to change the new deeds into your name.
• Notary fees - dependent on where but minimum of €500 for the signing of the escritura.
• Bank Charges - banks often charge a set up fee for your mortgage generally around 1%.
• Foreign Currency Transfers - some charge to transfer your money over to the relevant country when sending a deposit or balance. However, we reccommend Halo Financial who do not.

As with all home purchases there are the annual costs involved in keeping your property liveable and legal. We have outlined some of those costs below;

• There is always a local town hall tax which is an annual real estate tax and needs paying every year. This will vary from region to region but you can expect to pay . The previous owner should provide you with copies of previous bills.
• If you are buying on a complex or something similar you will need to allow for Community Fees. These are fees agreed by the community for the general tidying and upkeep of your community, swimming pool, lifts, gardens, maintenance etc and are paid monthly anywhere from €40 - €250+ depending on the size and quality of your development.
• There is also an annual Wealth Tax to pay based on the value of your property but as a non resident this will only ammount to 0.2% of your property value. As a resident
• Income tax based on your income from renting your property is taxed at 25% of gross income received with no deductions allowed.
• Mortgage costs - these will be determined by your mortgage arrangement and should be taken into consideration at all times.

There are many mortgage brokers out there nowadays that will assist in obtaining a mortgage for you in Spain even some of the bigger UK Building Societies and Banks offer the facility. Property Developers may also offer mortgages on their own developments sometimes upto 80% LTV while the local banks will normally only lend upto 60% LTV for non residents. If you apply for a residencia you will find that the LTV % from banks can be upto 80% so its worth considering as it has other benefits too.

Specialist Foreign Currency brokers When buying a property in Spain there will inevitabley be some point at which you will need to transfer monies to pay for deposits, balances or general annual running costs of your property. Do Not use your local bank to do this for two main reasons,

1. 1) the charges and
2. 2) the rate which you will receive.

The overseas property market is now well established and there are many regulated foreign exchange specialists out there who can both better any rates from banks and offer free charges for transferring your money.

We transfer literally millions of pounds worth of currency each year on behalf of our clients and we use Halo Financial as our primary source of money transfers. Contact them for a competitive quote before committing yourself to anyone else.

For a deatiled Guide to Buying Property in Spain visit our parent website Property Abroad - Spain