The most important part of making a decision to buy a property involves setting the budget on how much you are willing to spend.
In fact, usually deciding on the exact budget comes before the actual decision to buy or start looking for a property.
Therefore, it is crucial to understand the costs involved in purchasing a property in Spain and to avoid budgeting solely for the sale or purchase price.
In order to estimate accurately you need to know your taxes and fees. In basic terms if you account for an extra 10-12% of the price of the property on top, you will be just fine.
In Spain the buyer must either pay Transfer tax or VAT on the purchase price of a property. The transfer tax is paid on resale properties and equals to 8, 9 or 10% depending on the price of the property. VAT is paid on new properties and can be either 4 or 10% depending on the type of property. Purchase of land is subject to VAT at 21%.
Stamp duty is also charged on all documents authorized by the Notary Public. There is a fixed rate charged in the form of notary fees at 0,30 euros per booklet and 0,15 euros per page; and there is also a variable rate charged in the form of tax of 0,5 to 1% of the sale price of new properties or land.
Notary Public and Property Register fees usually amount to 1000 to 3000 euros.
Finally, legal costs will vary from 0,5 to 1% of the property price.
Once you have completed a realistic estimation of costs, you may consider obtaining financing for the purchase of your dream home. Spanish Banks offer up to 70-75% mortgages. Another option might be obtaining a mortgage on a property you already own in your home country from a local bank.
Having estimated all the costs accurately and set your budget, the next thing you need to think about is financial transparency.
In most European countries it is a given and the anti-money laundering legal requirements are all the same. However, if you come from a country where the legal system, customs and commercial practices are slightly different, you might find yourself unprepared.
In order to buy a property in Spain you need to be able to make various wire transfers and the Banks in Spain will not accept the funds unless you disclose your personal information.
They will ask two basic questions: What do you do and how much do you make? The type of information they will require is income statements, tax declarations and bank certificates, etc.
Bank relations is not something handled by the real estate agent, but by your legal representative. However, agents often have recommendations or contacts with the Spanish banking system, so it might be worth asking them for a referral.
CHOOSE YOUR REAL ESTATE AGENT ON LAND VS. ONLINE.
Nowadays you can find any information and contract any service online from your own computer at home in your country. However, learning about a new place, viewing its different areas, seeing the numerous properties, enjoying in the breathtaking views, feeling the climate, experiencing the culture and customs and most importantly meeting the local people are all on land vs. online experiences.
So book a trip, drive and ask around and find the person who will show you everything you need.
There are hundreds of real estate agents in Marbella! All you have to do is pick the one you like best, the one who you feel comfortable and confident working with! A knowledgeable, experienced, skilled, understanding and willing real estate agent. And you won´t be able to pick one like that until you get here!
USE YOUR REAL ESTATE AGENT APPROPRIATELY
Once you have chosen your real estate agent, work with him/ her and make him /her work for you! Be as clear and honest about what type of property you are looking, what you like and don’t like. Tell him / her if you don’t exactly know. But do not waste his/her time because you will end up loosing your own as a result.
The agent will send you something called a window card of properties he/ she thinks you might like. Review them carefully, they have all the information you need: sq metres, number of bedrooms and bathrooms, orientation, location, etc.
Additional information that you may ask for is: the annual property tax, rubbish collection fee and community fees.
When it comes to viewing the properties, plan your trip in advance and allow enough time for your agent to organize. Spain is generally late, very slow and permanently relaxed, which may come as a shock to some of us but better getting used to it sooner rather than later.
Always communicate with your agent, ask questions and request to share the pros and cons of each area, complex or property. Get his or her advice and use their experience to your own benefit.
Once you set your eye on a few or one particular property, it is time to put in an offer and find a legal representative.
CONTRACT AN EXPERIENCED LEGAL ADVISER WITH IMMACULATE REPUTATION WHO SPEAKS YOUR LANGUAGE AND UNDERSTANDS YOUR CULTURE.
Marbella is a very international place full of foreign professionals offering their services on a competitive market. So you fill have absolutely no problem finding a lawyer who speaks your language perfectly and is aware of how things work back at your home. Trust us, this can be very useful. Of course, most importantly the legal adviser needs to know exactly how things work here in Spain.
Marbella is not a very big place however and the experience and skills of any firm can be easily checked out.
The lawyer that you choose to contract will need to walk you through the steps that are coming once your offer has been accepted.
You will need to leave a Power of Attorney with that lawyer in order for him to obtain a NIE, open a bank account and sign reservation contract or private sale-purchase contract in your name. You can obviously be personally present during these if you can and like.
The reservation contract is signed once the offer has been accepted, it results in taking the property of the market and involves payment of a deposit to the seller. The deposit is usually between 6.000 euros up to 1% of the price of the property.
Next your lawyer will undertake legal due diligence on the property you are about to buy and if you have applied for a mortgage, the bank will do that and evaluate its price also.
Finally, a private purchase agreement is signed and 10% of the purchase price is expected to be paid by the buyer to the seller. The parties can choose to jump this step and move straight to completion.
On the day of completion, an authorized by a Notary Public title deed is signed by the buyer and seller. The buyer pays the rest of the purchase price and the seller grants the buyer access to his new property. Money and keys are exchanged.
The title deed is then registered at the Registry of Property of the municipality where the property is located and you have officially become the new owner on record!
KNOW WHAT´S COMING NEXT BUT ALWAYS KEEP IN MIND THAT “IT´S SPAIN”.
Mentally preparing yourself for dealing with a whole new order of things and ways these things get done can be key to no-stress and no-time-wasted property purchase experience in South of Spain. Become informed, aware and accept the reality: it all comes hand-in-hand with 9 months of sunshine, fantastic wine and privileged life style.