Before deciding to buy a property in Spain it is important you are fully aware of the legal process and costs involved in your property purchase. The following is intended as a guide only and is no substitute for professional advice.
Appointing a Fiscal representative, Solicitor (Abogado)
Whilst it is not necessary to use a solicitor to purchase a property in Spain, it is highly recommended, as it is in the U.K. An alternative in Spain is to use a Gestor. They will be able to ensure there are no outstanding debts existing on the property as well as helping with contracts and obtaining NIE numbers.
NIE number (Numero de Identification de Extranjeros)
For any financial dealings in Spain, it is essential you have an NIE number. This is a simple, but sometimes lengthy process requiring completion of the official document, 4 colour ‘passport’ photographs, a photocopy of your passport and your passport itself. You can apply for your NIE at the main police station in the nearest major city, or your solicitor or gestor can make an application on your behalf. The issuing of your NIE number can take between 1 and 5 weeks. There is no cost if you apply yourself, but a solicitor or gestor will charge for their time.
Apply for Bank Accounts
Whilst it is not a requirement to have a Spanish Bank Account to purchase a property in Spain we do recommend it. There are lots of banks, national and regional, and we suggest talking to other foreignors living in the area where you intend to live. For example you may want a bank where the manager or staff speak other languages as well as Spanish
Applying for a Mortgage
Should you require it, you can choose to apply for a mortgage in Spain. Mortgage rates in Spain tend to be lower than those in the U.K and are currently start at around 4% A mortgage of 70% to 80% can normally be achieved and spread over 10 to 30 years.
Applying for a mortgage in Spain is a straightforward process and similar to applications made in the U.K, you will need to prove you have an income or sufficient funds to pay the mortgage. The amount of mortgage offered is directly dependent on your financial status and also the valuation of the property you wish to purchase, as in the U.K. If you raise a re-mortgage in the U.K, the building society or bank will expect your U.K home as security, whereas the Spanish banks will take the security on the property you are buying in Spain.
As a general rule the proof of income for a Spanish Mortgage would be:
Last three months salary slips
Last years accounts (self employed)
Last year’s tax return (self employed)
Reference from your UK bank. (not essential)
Unless you already own a property in Spain, in which case you will need to provide proof of ownership, proof of income, and pay for the cost of the valuation, and notary fees. You will also need to have life insurance to cover the value of the mortgage and insurance cover on the building.
Purchasing a Property
If you are seeking a re-sale property and have found a property you wish to purchase and the terms and conditions have been negotiated with the vendor, then it is usual to enter into a private contract at which time a 10% deposit is normally required. A translation of the contract in your own language is essential unless you are fluent in Spanish. The sale will be finalised in front of a notary, the property registered in the buyers name, and a new escritura issued confirming the details of the transaction with the names of sellers and buyers and details of price etc.
If you are purchasing a new property still in the stages of construction, or not yet started construction, the builder/developer will require stage payments. These vary with the builder/developer.
Your solicitor or gestor will carry out all necessary searches on the property ensuring that it is owned by the vendor, has no outstanding debts, charges or other legal encumbrances. Once the searches on the property are completed satisfactorily and the deposit has been paid in accordance with the terms and conditions of the contract, then the deeds are signed by both the seller and buyer in the presence of the Notary.
The Notary (Notariai)A notary is a lawyer that is of a higher status than a solicitor and is appointed by the Spanish Government to witness the signing of all legal public documents. In this instance the Deeds (Escritura) of the property. He represents both the buyer and the seller of the property. The Notary fees are charged on a sliding scale and must be paid at the time of signing the deeds. The Notary, who will apply for the formal change in the land registry, retains the original signed document. The purchaser will receive what is known as the first legal copy of the title deed, which is signed and stamped by the Notary. The official title deed can take a while to process and until then this is your official proof of ownership and must be kept secure.