Who Can Buy in Spain?
There are no restrictions on who can buy property in Spain. People of any nationality can purchase land, residential property, or commercial premises. After the Spanish property market collapsed in 2008, Spain introduced “The Golden Visa”. The Golden Visa allows non-EU state residents to purchase a property for a minimum of 500,000€ in Spain and spend time in the country without restrictions. The reason for this change in law was to give the struggling property market a nudge in the right direction.
The NIE Number
Legally, the only thing a foreigner must acquire to buy Spanish is an NIE (Número de Identificación del Extranjero). This unique personal number is necessary to perform any transaction in Spain, whether it’s buying a car, a home, or opening a bank account.
Your NIE number must be included on all documents you sign when buying a property in Spain, so you must obtain one towards the start of the buying process. It is not complicated to get the NIE, but it can take a couple of months. Professionals, including real estate agents, a fiscal representative (gestor), or a lawyer, can help you apply for an NIE to make it easier for you and speed up the procedure as much as possible.
You can obtain an NIE number in Spain or the UK as a UK-based national. If you have not yet engaged the help of professionals, you can apply for the NIE yourself.
In most parts of Spain, the application process requires two visits to the police station in the area where you wish you live. During the first visit, you will make the application and on the second, collect the document. The process can take any time from a few weeks or a few months, but the waiting time will typically be around three weeks.
If you are not in Spain, you can apply for an NIE via your country’s Spanish Embassy or Consulate. This process tends to be more drawn out, and you can expect to wait a minimum of four weeks before your application is granted. The consular route can also be unreliable with papers getting “lost”, so for the small cost involved, we recommend applying in Spain either by yourself or with the help of a professional.
Opening a Spanish Bank Account
While not compulsory, opening a Spanish bank account will make the buying process easier. It will enable you to make payments quickly and probably save you money on international bank transfer charges.
As a foreign non-resident in Spain wanting to open an account, you must take your passport and a certificate of non-residency to the branch you wish to use. While you can use any branch of the bank for routine use, if you need to meet with a mortgage advisor or have specific queries, you will be asked to attend your branch, so choosing a branch close to where you plan to buy is a sensible approach.
Other documents may be required depending on the product you want to contract. The bank staff will inform you of the options and account features that best suit your circumstances.
To get a certificate of non-residency, you must go to a local police station with your passport and a completed X-15 form plus a photocopy of each and pay a fee. It takes approximately one week for the certificate to be issued and is valid for three months. If you are outside of Spain, you can apply for the certificate at the Spanish Consulate.
Buying Post Brexit
If you are British and want to buy in Spain, you will be subject to Non-EU residents’ laws, post Brexit. This does make the process slightly more complicated. However, if you want to own a property in Spain, Brexit need not discourage you. Due to Brexit, almost none of the essential aspects of buying or owning property in Spain have changed.
The significant difference is that non-EU residents can only spend 90 days out of each 180 days in a Schengen country. Under the terms of Schengen, non-EEA citizens cannot spend more than 90 days within any 180 days period in the Schengen zone without a visa. Once you’ve used up your 90-day quota, you cannot return to a Schengen country until 90 more days have passed.
However, there are ways around this rule, including obtaining a non-lucrative visa, a self-employed (freelance) visa, or a Golden Visa. You may be legible to overstay the 90-day rule in Spain for other reasons, such as having family resident in Spain. Getting around this rule will depend very much on your personal circumstances. If overstaying the 90/180-day restriction is essential to you, we advise you to speak to a lawyer familiar with Spanish visa applications.
The costs of buying Spanish property are the same regardless of nationality.
Buying Spanish Property as an Investment
The Spanish property market has deviated dramatically in recent years, but it is now in a recovery phase since its disastrous 30% drop between 2008 and 2014. While COVID lockdowns did affect the number of property transactions between 2020 and 2021, they did not significantly affect property prices. Buying Spanish property is considered by investors as an excellent opportunity right now, especially for non-EU nationals who would benefit from a Golden Visa.
Working Out Your Budget
As well as the purchase price, you will need to add an extra 10 -15% on top to meet legal fees. The buyer mainly meets the costs of buying a Spanish property. Taxes and other fees paid by the buyer include:
- A property transfer tax which is around 6–10% for resale properties or VAT (IVA) at 10% for new properties
- Notary fees
- Title deed tax
- A land registration fee of 1–2.5%.
- Legal fees 1–2%
Remember, you will also need to budget for visits to Spain while searching for a property, pay to have belongings sent from the UK, and furnishings or possible renovations for your new home.
On the subject of renovations, consider if you will need to do work after deciding the property is the one you want to buy.
If this is the case, ask your agent to get builder’s quotes for the refurbishments because you’ll need adequate funds to renovate.
The Property Transfer Tax
The property transfer tax (ITP) is a progressive tax dependent on the property’s price. What you must pay varies in each Autonomous Community, but the following will give you an idea of the amount due:
- Up to 8% for a property costing up to 400.000€
- 9% for a property costing 400.000€ to 700.000€
- 10% for a property costing 700.000€ and over
However, this varies between communities. The community of Valencia charges a flat fee of 10%.
The Tax Agency (Hacienda) may claim a higher levy from the buyer if it considers the home is worth more than a buyer paid. Thus, you may find yourself in a situation where, after paying 8% of what you paid for the house, you are later charged extra ITP.
This extra amount would be 8% of the difference between the amount paid and the house’s value in the taxman’s eyes.
For example, if you buy a flat for 200,000€, you will pay 16,000€ for ITP. If the Tax Agency documents it has a minimum value of 250,000€, they will claim payment of the difference: 4000€ plus interest.
In some Autonomous Communities, there are ITP discounts for large families. For example, in Catalonia, the ITP rate is 5% for large families if it is their primary residence.
The total amount of ITP is due after signing the public deed.
Taxes on New Properties
When buying a new property for sale for the first time, you must pay 10% VAT (IVA) on the cost of the property and an additional 1.5% Legal Documentation Tax.
The Land Registry
The Spanish Land Registry (Registro Catastral) is a national database that registers property and landowners in Spain. It should be updated whenever a property is sold and transferred to safeguard ownership rights and prevent illegal and fraudulent sales.
Property Lawyers In Spain
If you want to buy an apartment, villa or plot and save yourself potential problems, it is advisable to seek guidance from a property lawyer. On the Costa Blanca, many lawyers speak English, and the time saved and peace of mind far surpass the cost of legal fees.
Buying a home is usually the most significant investment most people will ever make. Even owners of several properties take care when investing in the real estate market. Real estate investment companies always use legal services when purchasing, and you should too.
The services of a lawyer are more practical for preventing issues than correcting them. But many people will wait until a problem arises before seeking legal help.
Taking the step to hire a good legal advisor can save you trouble down the line.
Finding the Ideal Property
The most qualified person to help you find your ideal property is a real estate agent with experience in selling properties in your desired area.
You can start your search online but be aware that scammers may be at work on the major property portals. Always check the seller’s credentials and make sure you enlist the help of an agent or lawyer before signing anything.
A good agent is a valuable asset in your property search. Reputable estate agents can give you extensive information about a region and are often bilingual and accustomed to overseas buyers. However, regulation in the sector is somewhat poor, and dishonest estate agents do exist, so be cautious of anyone who asks for payment upfront or proposes cutting corners.
Ideally, you will have contacted several estate agents in your desired area and chosen one to collaborate with you before going to Spain with the intention of viewing. You need to work with somebody experienced, dependable, and willing to listen precisely to your needs when you describe the type of property you want.
You can usually tell a good agent by how proactive they are, how willing they are to answer questions, if they call you back when they are out of the office when you call, and help you with other questions you may have. A good agent will help you till the end of your moving process, assisting with bank accounts, changing utilities into your name, helping you find schools, a doctor, and informing you of social activities in the area.
Seeking past buyer feedback can help you ensure your prospective agent is willing to go the extra mile.
Ask the agent questions and make a note of how responsive and enthusiastic they are to help. Most agents will operate within a local area, so choosing an agent that knows your favourite area and the different neighbourhoods within that area extremely well is a distinct advantage.
Before you decide on an agent make sure you send them your brief.
A brief will be of great help to an agent, and it will also help you remember what is important to you in a property and not lose your focus and be distracted by homes that are not ideal for your needs. Make sure the brief notes everything important to you and lets the agent know your circumstances, i.e., if you are a cash buyer, require a mortgage, or need a combination of mortgage and cash.
Make sure the agent knows if and when you will be in Spain when you are available for viewings, and if you have a deadline date for moving to the country.
You can choose your notary, mortgage lender, and lawyer; you do not have to use a service proposed by an estate agent. However, if you trust the agent, their recommendations could be the best option. But also do some research and ask expats in the town for suggestions.
Obtaining a Mortgage
The eligibility criteria for obtaining a Spanish mortgage if you are a non-resident is on par with many UK lenders’ requirements. The standard length for a mortgage is usually between 25 and 30 years.
The biggest issue with any mortgage is if the lender believes the borrower can afford the repayments.
Lenders will look at your:
- Employment situation
- Credit or debt history
- The type of property
How much can you borrow?
The amount you can borrow varies depending on your individual circumstances and the lender. However, as a rule of thumb, expect the amount to be around 60 to 70%.
So, if you want to buy a property priced at €300,000 and your lender agrees to loan you 70% of the property’s market value, they will give you a mortgage of €210,000.
This would mean that you need a 30% deposit of €90,000, plus a further €35,000 to cover fees and taxes.
Mortgage lenders may adhere to different rules, so don’t be put off trying again with another company if one turns you away.
Can you get a 100% mortgage in Spain?
Before the property market crash of 2008, banks gave 100% mortgages and even 110% to just about anyone who asked for one. While some lenders will give 100% mortgages, they are only likely to be approved under specific circumstances and not to foreign buyers.
Therefore, most lenders will only agree to lend higher percentages of a property’s value if the borrower has outstanding credit, a high income, and viable security.
The amount of tax you pay in Spain largely depends on whether you earn rental income from the property. However, you’ll need to know the differences between the Spanish and UK tax systems.
For example, if you have a non-Spanish resident mortgage, you must pay income tax even if you don’t let the property.
A misunderstanding of how much tax you must pay could end up costing you in missed payments and late fees, so it’s essential you enlist the help of a lawyer or gestor who will oversee the paperwork and requirements on your behalf.
If you plan to do any work on your property, you’ll need to know about planning regulations in Spain and how they will apply to the type of work you intend to do.
Minor modifications, such as installing new doors or windows, will require a works license from the local town hall, granting consent to do the work.
More substantial reforms require a different type of license. Once you inform the town hall’s planning department of the work you want to do, they’ll give you the relevant forms to fill out and charge a fee. They may also charge a small tax between 2-6% of the total cost of the work.
It’s important to check the paperwork with a solicitor when arranging building work, as going ahead without the proper permissions can result in significant fines.
Reserving the Property
Once you have found your dream property, had your offer accepted, worked out your budget, and know how much tax you will have to pay, it is time to reserve the property.
In Spain, a buyer pays a fee that reserves the right to buy a property for an agreed length. The seller or developer states that they will not sell the property to another party during the reservation period.
In addition, a letter of intent may be presented by one party to the other and subsequently negotiated before signing.
Making the Down Payment
Unlike in other countries where a down payment is paid to an escrow agent or placed in a closed account with a trustee or notary, the down payment is paid directly to the seller in Spain.
This may sound risky, but if the time between paying the deposit and completing the sale is not excessively long, making sure the seller is not a company on the verge of bankruptcy, it is expected in Spain to do as the Spanish do.
This payment is made when signing the “Contrato de arras” which translates to “earnest money contract”. The earnest money or down payment represents a buyer’s good faith in purchasing the home.
When signing the Contrato de Arras, the usual amount payable is 10% of the purchase price. However, you can negotiate this. The contract will include a penalty clause. This clause states if the buyer backs out of the deal, the monies paid are lost, and the seller may keep them.
A notary earns their fees from individuals and companies but is essentially a public official who plays a neutral role in witnessing the signing of many types of contracts in Spain. Their job is to ensure both parties understand the terms of an agreement, that the terms do not break any laws, and that taxes related to the transaction are paid.
When you buy a home in the UK, you exchange contracts, pay the seller, and receive the keys. After, you can register your title in the land register. In Spain, you can’t add your name as owner in the property register unless a notary witnesses the signing of the contracts. A notary’s signature is required to turn a private contract into public deeds that can be inscribed in the land register. So, without a notary’s signature, you cannot register the property as yours in the property register.
It is crucial for British buyers to add your name as owner in the property register, as it is the only proof of property ownership. Other advantages include protection from the seller’s creditors and the ability to take out a mortgage against your property. So, all buyers should complete the sale in the presence of a notary to gain the benefits of inscription in the property register.
When you sign depends upon whether you are buying a resale property or a brand-new property from a builder or developer under construction, or you buy off-plan.
If buying a new build from a developer, you can make the remaining payment and sign the deeds (escritura) when the property is certified as completed by the architect. Until then, you should not make a payment or sign the deeds.
When buying a resale property, you can sign the deeds before a notary at the earliest suitable time for you and the seller. This is usually 1 to 3 months after signing the initial contract.
Signing At The Notary
Whatever type of property you buy, you should only prepare to sign at the notary once your lawyer has completed all legal checks. These include the seller’s name, that all licences are in order, and there are no outstanding debts on the property.,
You also need to agree on the payment plan with the seller before your appointment with the notary. A Spanish bank-guaranteed cheque is usually preferred, though it should also be acceptable to transfer monies to the notary’s escrow account. Bankers’ draughts from a foreign bank are likely to be regarded with suspicion by many Spanish sellers and may well be turned down. To prevent a problem in the notary’s office, ensure the vendor is happy with your planned payment method and that all your funds are in place.
Make sure you have the required documents when you go to sign. You will often only need your passport, but it depends on the notary. So, ask your lawyer what you must bring before signing day.
If you cannot sign in person, you can grant someone power of attorney. The easiest way to grant power of attorney is to sign power over before a notary in Spain. You can also arrange the process through the Spanish consulate in the UK or with the aid of a UK notary public and Hague Apostille. All the sellers, buyers, and lenders must be present at the signing or represented by powers of attorney.
Once all parties are present, the notary will confirm the identities and details of the buyers and sellers, then read the deeds to those present. You need to be sure the deeds are in order before signing, which means having a translator with you or relying on your lawyer if your Spanish is not up to much. A notary may refuse to sign the deeds for a non-Spanish-speaking foreign buyer who arrives without a lawyer or translator.
The notary will also make checks which vary by autonomous region. At a minimum, they should have the property registry filing to confirm the vendor’s title, and check the property is free from unexpected debts or issues. Some inexperienced estate agents claim the checks made by the notary are sufficient, and hiring a lawyer is unnecessary. But in reality, a notary offers little protection, so always hire an experienced and qualified professional before signing any deeds.
If everybody is satisfied with the content of the deeds, the notary will ask the parties to sign and confirm the outstanding payment amount before the keys change hands. This moment is when you produce a bank draft or other payment method for the outstanding amount.
If you have agreed to pay a percentage in black or “under the table”, never bring out this cash in front of the notary. This is still a widespread practice in Spain, though not advised. Wait until the deeds are signed, and the Notary has departed before producing an envelope or paper bag full of notes. The seller will then count the money in front of you, and when both parties agree, you are free to leave.
Legally, all that is left to do is pay the related taxes and add your title to the property register.
After the signing, the notary’s office will give you a copy (copia simple) of the title deeds. You can use the copia simple to set up utility services and pay taxes. Each copy costs approximately 30€, so decide how many duplicates you need in advance.
A few days after signing, your lawyer can collect the original deeds signed by the notary (Copia autorizada). This version is required to add your name to the property register. The notary should send a notification of your purchase to the property registry immediately after the signing, which blocks the registry entry for ten days and stops anyone else from claiming the property as theirs during this period.
The government sets notary fees according to the number of clauses added in the deeds and the property’s declared value. As a rough guide, the cost ranges from 0.1% of the stated price if valued at 400,000€ or more to around 0.4% for properties valued at under 100,000€. If you buy with a mortgage, you will have to pay extra notary fees.
After completion, there are more costs you need to budget for. If you are relocating to Spain permanently, you will likely need to hire an international removal company. Ask for quotes from around three months before the planned move. Ask several companies for quotes before deciding which firm to hire. Removal estimates depend on how many items you transport or the cubic meterage plus the milage.
You may need temporary storage so ask the removal companies if they offer this service.
You can arrange with utility companies to change the services to your name. However, gas companies will charge a new owner for a complete installation check and set up a new contract rather than just passing the title over.
In some cases, a seller may have just filled a boiler with heating oil or paid for a stack of gas bottles, so in these circumstances, an extra payment may be agreed upon between the buyer and seller.
Town Hall Tax (IBI)
The IBI tax (Impuesto Sobre Bienes Inmuebles), is a council or municipal tax based on the property’s cadastral value and is due annually. Some town halls may offer slight reductions, such as if you pay early or are a pensioner. Others may allow you to pay in installments.
When selling a property, the vendor is liable to pay the IBI for the year if they were the title owner in January. However, if a property changes hands in May, for example, the buyer and seller will typically agree to share the cost.
If buying a home that is part of a residential community with a communal pool, gardens, and other shared spaces, you will have to pay communal fees.
An independent company will usually administer the collection of fees and can give you information and help if you have a complaint.
The community of owners will meet at intervals and vote on any decisions made regarding the building, such as repairs, new facilities, etc. The admin company will acquire at least three quotes from local companies to complete the work, and the residents then vote for the best company. The work is paid for by an extra charge to the regular monthly or quarterly payments or by existing funds if there is enough to cover it.
Before signing, potential buyers should be made aware of any upcoming planned works which will require an extra payment, as in the case of major works, this could affect your decision to buy.
Many companies offer house insurance in Spain, including banks. It is a good idea to ask for quotes from reputable insurance companies before completion and then contract the chosen insurance plan soon after the sale.
Touristic Property Licence
If you want to let the property to offset costs and hopefully make a profit, you should register it with the tourist board before looking for renters.
The process of acquiring a licence is less than 500€ in most towns. Renting without a licence is a risky business these days and may incur substantial fines. Not all requests for licences are granted. If renting your new property is crucial to you, make sure your agent is aware of this and shows you properties with an existing licence, or in an area where permissions are readily granted.
When you have a licence, you will need to include the code in your ad when renting on sites like Airbnb or Booking.com. If you are a single property renter, the code starts with VT, or if you rent several properties or are a company, it will begin with EGVT.
If you buy a Spanish property that you do not intend to live in full-time, you will need to consider hiring a property management company or individual to keep an eye on your property.
Property management firms will perform several services ranging from simple key holding to managing bookings if you plan to rent your home out to tourists during the summer months.
Depending on your property and the amount of time you plan on spending there, some of the services you require may include:
It is advisable that someone in the area has a key to your property, be a friend or neighbour, or a property management service. You never know when something may go wrong such as a burst pipe, and somebody needs to enter your property.
Although you will likely pay most of your bills by direct debit, you may want an agent to make sure everything is paid on time. Overdue payments usually incur a 20% fine on top of the total bill, so if you do not have direct debit set up, this is quite important.
If you plan to rent the property, someone must thoroughly clean the place between tenants. If you do not rent the property, it is still agreeable to have a clean home to return to if you have been absent for a while.
Swimming pool care
If you have a pool, it should be maintained several times a month with the filters cleaned and chemical levels tested.
Your lawn will need to be mowed, weeds removed, and leaves swept up in your absence. These tasks are particularly important if you plan to let.
Garden maintenance costs vary depending on how often you want work done, the size of the grounds, and if garden waste needs to be disposed of away from the property.
We hope the tips and advice have been helpful to you and will help you decide that purchasing a property in Spain is the right move for you and your family.
Here at Javea Estate Agents, we have successfully helped hundreds of families relocate from the UK to Spain during our 25-plus years in the Javea real estate sector.
We can put you in touch with builders, property developers, and legal professionals who will make the purchasing process hassle-free and a joyful experience for all involved.
If you want further help, don’t hesitate to contact us today.