Buying Property In Spain
By far the most popular location was Spain and for good reason. Spain offers a great combination of climate and value both within easy reach.For years Spain has been a hugely popular holiday destination. Importantly however the rise of low cost airlines has boosted the independent travel market. More people making their own holiday arrangements means Spain is the ideal location for the property investor.
Moreover the capital growth of some Spanish property in recent years has outstripped even those seen in the UK.
So Spain is an attractive investment. But what should you know about the Spanish property market? What are the pitfalls? Who can you trust? This guide outlines some of the issues you need to consider when buying in Spain
In short, these are the steps you should take when buying a property in Spain.
- Choose a solicitor
- Decide whether you need a mortgage
- Register your property requirements (location, bedrooms, price and so on)
- Contact the listing agent with regards to properties of interest
- Arrange a visit Spain to view your selected properties
- Place a deposit on a property of your choice ensuring that your deposit is held in the solicitor's Escrow account. (use our free legal advice link on the left)
- Ask the solicitor to help with opening a bank account in Spain
- Arrange for a currency conversion at the best possible rates (we can help)
- Finalise the transaction in the solicitor's office
Searching for a property in Spain may be easy but making sure that the property is still available when you go to Spain to view it can be another matter.
So whilst searching for a property in Spain, ensure you always contact the agent about any suitable properties and once you have found 5-10 potentially suitable properties arrange to visit them as soon as possible.
It's important to re-contact the agent a day prior to your departure to ensure that viewing appointments are arranged and your selected properties are still available.
Once you have found a property, you will be required to secure the deal by paying a deposit. Make sure that your deposit is held in Escrow and that your purchase contract indicates not only the selling price of the property but ALL additional charges payable by you, the buyer.
Make sure that the seller indicates what is to remain in the property at the time of the sale, many properties are sold furnished but you must be aware of what you are buying with the property and whether the property includes a garage, all these details must be mentioned in your deposit contract.
If you are buying a property managed by a community, your solicitor will ensure that community charges have been paid and are up-to-date for the completion date. If they previous owner has not made community payments this debt become yours!
You can expect to have to pay various additional costs at an average of 10% of the selling price of the property. If the property is new, the price may also be subjected to IVA (VAT) at the rate of 7%
If you do not require a mortgage, your solicitor can arrange for all of the required legal steps to be taken in advance making sure that on the closing day of the sale, everything goes smoothly and the process of the property being registered in your name can proceed.
Its important to note that documents indicating you own the property are generated after the sale is completed and can take up to 2-3 months to be made available to you.
The fact that you have appointed a solicitor to act on your behalf will ensure that all required documents are in order and that you receive the title deed for the property in due course.
You will also need to arrange for the electricity/gas and telephones to be transferred to your name and we would advise you to arrange for a standing order to make these payments, as utility companies in Spain do not hesitate in disconnecting your services if your payments are late. Your solicitor can assist in arranging this for you make sure to mention this when instructing your solicitor.
You do not necessarily have to attend for completion on the purchase of your property; your solicitor can complete the transaction on your behalf. Keys to your property must be handed over on the day of completion with the full legal possession given to you.
Mortgage interest rates in Spain are quite low. In most cases, you can obtain a mortgage at a rate of around 5%. Getting a Spanish mortgage is not as difficult as you may think. Banks in Spain tend to lend money based mainly on the ratio between loans to value (the amount you are looking to borrow against the value of the property you are buying). Your credit worthiness comes second and in most cases, a letter from an accountant/bank manager indicating that you can afford the re-payment, along with recent bank statements in your country will do the trick.
Your solicitor can help you a great deal in getting the mortgage as you will be directed to the right bank locally to the property you are buying. Once your mortgage offer is secure, your bank's representative is likely to visit the property to make sure it is in good order and that the purchase price 'makes sense'.