Buying Property in Spain – The Complete Buyers Guide
The Marbella property market is in full recovery. For the past 5 years, we've watched the property market on the Costa del Sol do a full swing in the right direction. This is attributed to foreign property investors, record numbers of tourists, declining unemployment rates and an improved international credit rating. All over the Costa del Sol, construction has once again started, with several new developments in the areas of Marbella, Estepona and Benahavis already completed or just about to be.
Quite simply, the Spanish lifestyle and the southern Spanish climate can't be ignored. Here in the South of Spain, you've got it all, espeically those looking for the perfect retirement homes or even for those thinking of becoming an expat in Marbella. There are plenty of reasons why people from across Europe love Marbella and continue to buy property here as well as rent during the holiday season. Even as Brexit edges ever closer, this hasn't stopped the Brits from buying property in Marbella, Costa del Sol.
Mibro International Properties can confidently predict a new "golden age" for Spanish property, and this time around without the excesses or bubbles, until at the very least 2022.
Mibro specialises in properties for sale in Nueva Andalucia, properties for sale San pedro, properties for sale in El Pariso and more...
The Property Market Turn-Around
Right now on the Costa del Sol, the market is being headed by Marbella, Benahavis and Estepona, according to the latest Government statistics. Even with Brexit just around the corner, twice the number of British buyers have chosen a second home on the Costa del Sol. Over the past year, real estate agencies on the Costa del Sol have reported a 100% year-on-year rise in home purchases made by British buyers.
At Mibro we feature properties for sale in all these locations including property for sale in Nueva Andalucia, properties for sale in Guadalmina, apartments for sale in Bel Air, villas for sale in El Pariso and more.
You can view the latest new developments, where you may purchase well below market value now and make an instant profit the minute you have the keys in your hand. You may want to buy a second holiday home in Marbella, Nueva Andalucia, San Pedro or Benahavis. Or perhaps you would like to take full advantage of rental income - the tourists records have been broken over and over again here on the Coast. Many holiday makers prefer the use of self catering than that of a hotel.
We can help you with all of this and more. We offer advice and provide you with the most up to date and relevant information about buying property on the Costa del Sol.
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Buying Property in Marbella, Spain
Today, despite looming Brexit fears, the property market in Marbella, Costa del Sol is being spear headed by three very popular towns. According to the latest government statistics, these towns are Marbella, Benahavis and Estepona. The three towns saw sales rise by 11.15% in 2017 compared to the year before, and exceeded pre-2007 levels by 10.4%.
Estepona saw sales rocket by 28.3% last year, while Marbella saw a 6.9% boost.
In Benahavís, 499 Sold boards went up, representing 6.7% of the total 7,487 purchases made in the three municipalities.
The National Institute of Statistics (INE) has confirmed that Malaga – driven by hotspots like Marbella – had the fourth highest amount of sales last year 30,064 compared to 15,917 in the Balearic Islands.
We can report that twice the number of British buyers have come chosen a second home on the Costa del Sol. Over the past 12 months, estate agencies in Malaga province have reported a 100% year-on-year rise in home purchases made by British buyers.
At Mibro we feature properties for sale in all these locations and more. You can view the latest new developments, where you may purchase well below market value now and make an instant profit the minute you have the keys in your hand. You may want to buy a second holiday home in Marbella, Nueva Andalucia, San Pedro or Benahavis.
We can help you with all of this and more. We offer advice and provide you with the most up to date and relevant info about buying property on the Costa del Sol.
Mibro International Properties Step by Step Buyers Guide
The decision has been made, and you and perhaps the entire family are ready to buy your dream property by the sea. Mibro International Properties has been in the real estate industry for years, and we understand the processes of buying property in Spain. This includes the extra costs involved, taxes in Spain, legal fees and more.
We also understand how intimidating it might be, especially if you don't understand the buying process in Spain. In order to help you and alleviate any concerns, we've put together this step by step guide to buying property on the Costa del Sol. As you will see, our guide cuts through the jargon and complicated legalities. We often remind property buyers how important it is to use an estate agent in Marbella, because the legalities must be covered in the Spanish language. Qualified and full experienced estate agents in Marbella will fully understand the process and will have the resources available to help clients from beginning to end.
Let's get started with our step by step guide to buying property in Spain...
#1 - Marbella Area Research
1. Researching the Areas
As you can well imagine, there are many properties for sale along the Costa del Sol, which include several brand new developments along the coastal line. The seaside resort town of Marbella is one perfect example of where you can find prime real estate. Just a short drive further up the road is the luxurious and famous Puerto Banus, then San Pedro, Benahavis and Estepona, just to name a few. in between all these quaint and beautiful locations, you will find many smaller communities, so it is really important to be sure you are buying property in the right area for you and/or your family. Important questions you will want to ask before buying a property on the Costa del Sol Should you be closer to schools? Do you prefer a second holiday home or beach house? Would you rather a small apartment that is more central? Once you decide on the right area and property, you will feel confident about the next steps in the buying process. As you can imagine with such a major decision, the do's about buying property will match many relevant don'ts as well. Therefore, carefully researching the areas should includes asking more relevant questions - for example: - Will your new home be inland instead of closer to the coast? If yes, do you have a car? Are you planning on buying one? Remember, transportation in the smaller towns inland is very limited. If you want to live on the campo for example, we can guarantee you will need a car to get around. When researching or asking an estate agent, additional questions worth asking yourself is what type of property do you want? For example: - Off-plan or a re-sales property? - A brand new development? An estate agent can help you get a better price for example on an off-plan property. Any new developments for example, offers several different options that includes bespoke designs. Do you want to live in your new off plan or new development home? Or would you prefer to make some rental income? Did you know a resales property can be one of the safest ways to buy property in Spain? You won't find any sort of surprises, because the property will have a recorded history of any problems and whether they've been fully resolved. Our main point is the list of research can be long, but believe us when we tell you, it's incredibly worth-it.
#2 - Simplified Buying Process
Here is the simple process of buying a property in Spain
- You, the buyer will make an offer. This is usually done through the seller's estate agent. If the offer is accepted, then you and the seller will sign a preliminary contract ( contrato privado de compravento ). The buyer will then pay a deposit, which typically is 10% of the purchase price unless otherwise agreed. However, we recommend you stick with the basics and the commonalities.
- The contract of the sale (escritura de compravento) is usually signed in front of a notary, at which point the full sales price, taxes and any other costs become due.
#3 - Costs Associated with Buying Property in Spain
How much are fees when buying property in Spain?
When it comes to buying property on the Costa del Sol, there are a number of costs including taxes, which are above the property price. Many of the costs, fees or taxes involved will also depend on the type of property you are buying. For example, if you are buying a property in Estepona from a developer, or perhaps a resale property from a private individual, you will be expected to pay VAT & Stamp Duty or a transfer tax.
Below, we list the property types and the costs, and taxes involved:
For a new property build from a banker or developer
For residential properties being sold for the first time, which means basically that no one has ever lived there; these taxes will apply:
VAT & Stamp Duty (IVA & Actos Jurídicos Documentados – AJD)
This includes commercial properties and plots of land. VAT is the national tax in Spain and is known as IVA. Presently, the IVA is 10% on the purchase price of residential properties, which includes villas, apartments, etc; and 21% for commercial properties in Spain, and plots of land in Spain. Wherever you are buying property in Spain, VAT will apply. In the Canaries however, a different version of VAT will apply.
Both VAT and Stamp Duty are paid by the buyer. If a deposit was paid before the sale was final, the deposit is also subject to VAT.
Resale from a private individual
For resale properties or buying property from a private individual, the following taxes apply:
Transfer Tax (Impuesto sobre Transmisiones Patrimoniales – ITP)
The ITP tax applies when the property was lived in previously, and is to be paid by the buyer. If a deposit was paid before finalising the property sale, you don’t have to pay ITP tax. But, the full ITP will have to be paid once the sale is complete. On a resale or private sale by owner, you won’t have to pay VAT, and Stamp Duty is already included in this tax.
The Transfer tax rate will be different depending on what autonomous region you are buying property. In some cases, the regions have applied higher local rates, generally however, the ITP is 7%.
What are the estate agency fees in Spain?
Estate agency fees or any commissions is paid by the seller, unless there is another agreement in place. Despite the internet that has several sites connecting buyers and sellers, many people still use a real estate agent to find and buy property in Spain. One thing you must be made aware of is the fees or commissions charged by real estate agents. Agencies on the Costa del Sol charge between 2% and 15% of the sale price. This will also depend on the region and type of property.
#4 - Preparing Your Budget
The buyer is expected to pay at the start of the process
As you can see, the process of buying Spanish property is relatively uncomplicated. You the buyer, are expected to pay to get the process started. So, taking some time to fully understand the order in which things are done, you can easily avoid any unexpected surprises or expenses. However, don't forget that having the right estate agency by your side, will make the process even easier.
With all that said, when preparing your budget to buy the property on the Costa del Sol, it´s vital that you consider the total expenditure that will be needed to secure your new home and when you will be expected to pay. Therefore, once you've found the perfect property in Marbella for example, and negotiated the sales price with the estate agent; you will then be required to sign the reservation contract.
Once done, rest assured this commits both buyer and seller to complete the sale.
As previously stated, you will be asked to pay a reservation deposit to secure the property at the price agreed between you and the seller.
This, depending on the agreed base from 3.000 € up to 10% of the purchase price and will be deducted from the final sale price upon completion.
#5 - NIE - The Número de Identidad de Extranjero
Applying for the Spanish fiscal identification number, known as the NIE
First things first, you cannot buy a property in Spain without an NIE. So, if you haven't done so already, you must apply for an NIE (Número de Identidad de Extranjero). At Mibro, we can help you apply for an NIE, even if you are not physically present here on the coast. You will also need a Spanish bank account, and applying for an account here is really straightforward and best of all, cost free. The bank will require only your current address and a valid passport to prove your identity.
You absolutely should appoint a Spanish advisor or English speaking lawyer who specialises in conveyancing work. Your lawyer or advisor will work on your behalf to ensure the paperwork is in order and that there is no debts secured to the property. Mibro works closely with an "abogado" here on the coast, therefore we can help you through this part of the process with ease and no confusion.
The costs of appointing an advisor to administer your property purchase in Spain varies, but expect to pay around 1% of the purchase price. At this point, your advisor will arrange a date for completion of the sale that is suited to both buyer and seller. This meeting usually takes place around 4-6 weeks after the purchase price has been agreed. The meeting will be arranged at a Notary´s office with both buyer and seller or, their representative present.
In case you are not able to travel and assist the notary appointment, you can provide a power of attorney to your lawyer or advisor, who will then represent and act on your behalf. It is at this point, you will be asked to provide the remaining funds to cover the purchase price of the property. Usually this is done either in the form of an electronic bank transfer or in bank draft.
Whichever you choose, the funds must be transferred in Euro´s and usually payment in other currencies cannot be accepted. As a buyer, you will need to pay a purchase tax called IPT, or Transfer tax. This is paid to the Spanish Tax Office (Agencia Tributaria) subsequent to completion and amounts to 10% of the property´s purchase price.
#6 - Advisory VS Notary
Understanding the roles played by the advisor & notary
To avoid any misunderstanding regarding the roles played by a Notary and your advisor, we want to make sure you understand and know the differences.
Also referred to as a lawyer, conveyancing lawyer or English speaking lawyer, can be appointed to represent YOUR interested.
A notary is a registered legal representative of the Spanish government and operates independently of your interests. The Notary oversees the completion transaction between you and the seller, ensures that the balance of the purchase price and taxes are paid in full, and manages the signing of the deeds (the escritura).
Notary fees vary depending on the purchase price of the property, but typically cost from €600 to €1,000. Once the contract has been concluded the Notary registers your property with the Spanish Land Registry (Registro Catastral) in the new owners name(s).
There is a fee payable for registration which is generally half the cost of the fee charged by the Notary.
#7 - What to expect upon completion
Once the sale is complete
As previously stated, the completion for the property purchase in Spain is always undertaken in the offices of the notary. The buyer, seller and all connected parties must be in attendance in Spain. This includes any bank personnel for an existing loan, the bank providing a new mortgage, and the sellers legal representative (if you the buyer cannot be in Spain at the time, your legal representative must be there to sign for you).
In the event the Buyer attends in person without their legal adviser being present the Notary will insist you either are fluent in Spanish or have an attendant with you who is. Before completion you will need to understand and ensure you have accounted for all costs, have sufficient provision of funds required for costs and taxes and all relevant cheques, or bankers drafts have been written and are available.
Further more, your reputable Marbella estate agent will have an advisor or consultant that works on your behalf to ensure that the utility contracts for water and electricity supply (and gas and telecommunications if applicable), are transferred correctly in to your name as the new property owner. At Mibro International Properties, we will help you with all necessary arrangements for setting up the supply contracts and the direct debit through your Spanish bank account.
#8 - Legal Requirements
The services of a notary are not legally required to complete the sale, but it is advisable and required by many mortgage companies.
Please be advised that the seller is responsible for hidden defects in the property, even if they are not aware of them. Paying the costs and taxes associated with buying a home can be completed by the buyer or their agent. It is the buyer’s responsibility, however, to ensure taxes are paid.
The buyer is also responsible for registering the property. The notary may provide this service for a fee, and/or may notify the registry office that the sale has taken place, without completing full registration.
#9 - Deposits & Mortgages
Funding the purchase
Mortgage lenders will not complete on a mortgage agreement until you own a property. For this reason, it’s important to include a clause in the contract allowing you to exit the agreement if you cannot acquire a mortgage.
Fees & charges
Costs are primarily paid by the buyer, and vary from region to region. Many are negotiable – there are no fixed fees for lawyers or estate agents. Costs paid by the buyer include:
- Property transfer tax 6–10% (existing properties) / VAT (or IVA) at 10% (new properties);
- Notary costs, title deed tax and land registration fee 1–2.5%;
- Legal fees 1–2% (including VAT).
- The estate agent’s fees are usually paid by the seller, and this is typically their only cost. Estate agents usually charge a percentage, typically around 5% of the final sale price.
#10 - Debts Transferred with Property
In Spain, any mortgage or debt tied to a property is transferred to the new owner when the property is sold. It’s thus critically important to ensure that there are no debts attached to the property when it is sold, or that if there are, they are covered by the terms of the contract. Debts may include:
payments due to a tenant’s associations;
property tax (impuesto sobre bienes inmuebles).
Mibro's quick check list for buyers
Let's wrap this up with our quick check list to buying property in Spain. As a buyer, you have seen all that is required and some of the more important elements to buying property in Marbella, Costa del Sol. So, before you complete the property purchase here in Spain, you should make sure that:
- To request the land registry extract (nota simple), which can be obtained from the Colegio de Registradores - Mibro can help you with translations for an extra fee.
- Check the property and land for sale, matches details registered and the sellers are in fact the registered owners.
- Check there are no debts or additional charges like a mortgage on the property.
- Check there are no legal proceedings initiated against the property.
- Check planning permissions are in order and that the property is in fact a legal build - Mibro can help you with this process especially if you are buying off-plan or direct from a developer.
- You should have the property surveyed and it is a good idea to get a chartered surveyor to check the property.
Documents you should see before purchasing the property in Spain:
- A paid receipt of previous owners annual property tax (IBI)
- The cadastral certificate that gives you the exact boundaries and square metres of your new land
- The licence of first occupancy or habitation certificate issued by the town hall, which you will need to connect electricity, water etc.
- A document or receipt proving the utilities are in fact paid and up to date
- If you are moving onto an urbanisation or community in Spain, you can request a certificate signed by the president of that community showing there are no outstanding debts to the community on that property. This is important because such outstanding debts transfers to you, the new owner
- Make sure the property has an energy efficiency certificate - the seller must show you this certificate
Finally, on completion of the sale, you should register the property in your name with the Land Registry. The notary can even send advance notification to the Land Registry electronically once the public deed is signed.