The Buying Process
The key to the successful purchase of a property in Spain is to understand the buying process and the costs involved in doing so, here we will help you understand these points further in relation to purchasing a property on the Costa Blanca.
All property transactions in Spain must be approved by a registered Notary, a legal representative of the Spanish government. Only Notaries can register you as the rightful owner of a property in Spain’s Land Registry, which they do after witnessing the signing of the deeds (Escritura) by the buyer and vendor, and ensuring all associated payments and taxes are paid.
Once you have found your dream home it is standard practice that a “reservation” is signed to secure the negotiated price of a property, this reservation requires that a “reservation fee” is paid to secure the sale at the agreed price. This fee is normally € 2,500 and forms part of the price paid for the property.
Before you get to the final stage of signing deeds in front of the notary, what is called completion in the many countries, your independent lawyer will perform due diligence on your chosen property.
It is standard practice for a purchaser to sign a deposit contract and pay a 5-10 % deposit, which commits the purchaser to purchase the property and the vendor to sell. There is always flexibility though, and as your estate agent, we at GRUPO BHS will find a solution that suits both you the buyer and the vendor.
To buy a property as a non-resident in Spain you MUST obtain a fiscal identification number, known as an NIE and open a local bank account in Spain. Ensure you do this in good time before the planned completion date with the Notary. Again, your lawyer can help you do this.
So what about additional costs when purchasing in Spain? As a ballpark, when buying a property you should budget for a further 10-12 per cent, dependent upon the purchase price of the property to cover all taxes and fees. If you are buying with a mortgage, costs will be slightly higher than if buying outright.
If the property you are buying is a resale property, as a guide the 10 – 12 per cent can be broken down as follows:
- Transfer tax (ITP), which is 10 per cent of the property’s purchase price
- Notary fees (fixed on a sliding scale but typically €500 – €900)
- Land Registry fees (roughly half the cost of notary fees)
- Independent lawyer’s fees, approximately € 2000 including IVA
The extras for anyone buying with a mortgage would typically include: a valuation (approx. €350), stamp duty (AJD) of 1.5 per cent of the mortgage deeds (capital loaned) and a lender’s commission (typically 1 per cent of the capital loaned) as well as Notary and Land Registry Fees.
Costs for a new build property, which should come with a Licence of First Occupation, are slightly different. Transfer tax is not payable, but instead VAT (IVA) is payable at 10 per cent of the purchase price and stamp duty is also payable at 1.5 per cent of the purchase price (without VAT). Notary, Land Registry and legal costs will also apply.
Annual Council Tax
Once you are a proud home owner on the Costa Blanca, you will have to pay annual council tax, known as IBI and also referred to as SUMA in the southern Costa Blanca, as well as a tax for rubbish collection.
In addition to that, you will need to think about the usual running costs that come with home ownership, from electricity bills to community fees (if your property is part of a complex). Check a property’s running costs before buying it, so you know what to expect if you were to become its owner.
We at GRUPO BHS have a dedicated team of professionals that will assist you all through the buying process and will also be there after you have bought your dream home whether that would be info on getting your utilities going, furniture purchase, adding a pool or whatever you might need.