It is legal (and common) for a foreigner to purchasing permanent accommodation in Spain. To do so, you will need an NIE (see our NIE and residency section) but you do not need to be a Spanish resident.
Once you have this (and have completed the arduous task of looking for the perfect house), you should choose a notary (Notario). This is basically a real estate middle man who will act as a go-between for both you and the property´s vendor. A notary is not the same as a lawyer (you´ll need one of those, too) and you will be recommended one by the estate agent. Your notary will work with your lawyer throughout the process. Hopefully, you will already have arranged an abogado when you arrived in Barcelona; if they are not able to handle a property transaction then they will certainly know someone who can.
Buying property in Spain can be quite complicated, but it is worthwhile. Housing prices tend to be lower than in the rest of Europe, the resale value is good and because the economy has taken a nosedive there are some bargains to be found.
Your lawyer will walk you through the process, but the basic process runs as follows:
- Find the house you would like to buy. Take your time doing this, particularly in a stalled housing market, and in the meantime talk to banks about their mortgage packages (Property developers will lend up to 80% of the cost of a property to non-residents and banks will lend up to 60% of the value).
- When you have found ´the one´you can put together a pre-agreement with the owner: It’s usually a simple document in which the seller expresses their intent to transfer the property to the buyer, and the buyer expresses their intent to buy at the price and conditions agreed upon. At this time, the buyer also gives to the seller a deposit (between 10% and 20%). You must seek legal advice before signing this and making any deposit and you must be sure that this is the property you want to buy. The typical agreement in Spain (called arras) is if the buyer backs out of the contract, they lose the deposit; if the seller backs out, they have to pay double. Of course, the buyer and seller may choose another type of agreement if they prefer.
- Once financing is arranged and the proper documents have been made available by the seller, settlement will take between 30 and 90 days (or whatever is agreed upon). After this time, the keys are handed over at a final formal meeting between the buyer, the seller and the lawyers and you are free to move in. When it comes to signing the contract, this has to be before a notary, in the form of a public deed. This ensures that the details are entered onto the public records.
As well as the cost of the property, the buyer will be liable for transfer tax (IVA), which is around 6% on a second-hand property and 7% on a new one, plus 1/2% stamp duty. The property registration office will charge you a fee to change the new deeds into your name. This is usually around 300€. There will also be notary charges for copies of the ‘escritura publica’. The charge is on a scale depending on the contract price. In total you should allow 10% of the purchase price for costs. It is often the case that the buyer also pays the seller’s fees. Check this at the point of enquiry as it is often possible to negotiate. Banks may also charge an opening commission for mortgage loans.
Approx additional costs of buying a home listed at 128,000 euros
- IVA 7% (Spanish VAT) payable on declared property value €8,960.00
- Legal fees Searches, preparing deeds and translation etc €900.00
- Notary’s fees Preparing escritura, registering and stamp duty €600.00
- I.A.J.D Spanish tax of 0.5% of the declared value €640.00
- Connection charges Water, gas, drainage, electricity etc €300.00
- Plus Valia (Capital Gains Tax on increased value of plot since last sold. Levied by the Town Hall) €60.00
Total Approximate of the additional costs: €11.460.00
The local town hall charge IBI which is an annual real estate tax. The previous owner is obliged to give you copies of previous bills. Community charges apply when you buy a property on a community development. These cover services like maintenance, swimming pools, gardens and so on. You will also be liable for a wealth tax, payable annually and based on the value of the property and a property owners income tax based on your income from the property. You should clarify these in detail with your estate agent at point of enquiry.
Many developers of new properties are now offering up to 80% over 20 years for non-residents. Local banks will offer anything up to 60% for European residents. Most loans are long-term and secured on the property.
Expat-friendly mortgage providers include:
- La Caixa (http://lacaixa.es)
- Where on Earth (http://www.whereonearthgroup.com/)
- Banco Sabadell (https://www.bancsabadell.com/cs/Satellite/SabAtl/)
The documents typically required by a bank are:
- Your DNI/NIE
- Your work contract
- Your last 3 paycheck stubs
- Your latest income tax return
- Your pre-agreement with the seller
- Proof that the property tax (IBI) on the house is paid up.
- Other mortgages or loans that you may have
- All property titles, both in Spain and overseas
- Certificate from work authorities (vida laboral), showing your past work history
- Records of your assets (bank/mutual fund statements, etc.)
- Prenuptial agreements, if any
- Nonresidents: A certificate of nonresidency (form available from the bank)
- If self-employed: Local tax on economic activities (IAE)
- If self-employed: VAT tax you paid for the last trimester and last year
If you get a mortgage, you will become acquainted with an appraiser (tasador). The bank requires an appraiser to ensure that their loan to you is safe. You will need to pay for the appraiser’s work, usually between 300-500 euros. Note that the tasador by law is a licensed architect, so even if you don’t need a mortgage, but have doubts about the structural integrity of the house, you might want to hire an appraiser.
Every home ever built, transferred or sold in Spain is supposed to be registered with the Ayuntamento (town hall). In practise, this often does not happen and a buyer could be caught in a tangled web of angry adult children (potential inheritors of the property), complicated anecdotes of transfers, or straight fraud by someone who sells a property that is in no way theirs to sell. This is where your lawyer is invaluable. Even if the property has been registered at some stage (although most of the old village properties don`t even have Title Deeds), if the license and registration has not been kept up to date then the fines and registration expenses will fall to you. Again, make sure you have lawyers, or at the very least the checklist below when you first talk to a seller. Don´t believe any excuses for a seller not having any of these documents. The stories are probably true but it won´t make your life any easier with the authorities. Special attention should be paid to the ´Latest copies of domestic bills.´ Although illegal, it is common practise in Spain for utility providers to hold new tenants responsible for old debts and they routinely hold the connection of your electricity or water to ransom until you have settled them.
The seller of a second-hand home should provide the following documents:
- The title deed of the property
- Receipt of payment of the real estate tax for the last year
- Receipt of payment of the tax on the increased value of Urban Land
- Certificate that any community charges (if applicable) have been paid up to date
- Latest copies of domestic bills so that you can take over the services such as electricity and water
The seller or developer of a new property should provide you with:
- Deed of declaration of new construction
- Occupancy permit
- Certificate of rateable value of the property