Do you want to buy a house in Spain on the Costa del Sol, but don’t know what the procedures will look like? You can count on comprehensive assistance from our side. Find out about the formalities that need to be fulfilled in order to enjoy your dream flat or villa in Spain and what are the additional costs of buying it.
Choose a house in Spain for yourself
The whole process starts with choosing a house – you can opt for a property near a golf course, a house with sea views or surrounded by romantic scenery. In the offer we present, you will find many luxurious, modern buildings, ready to move in; houses that can be furnished according to your taste and needs. There is also no shortage of atmospheric houses and flats or historic villas for revitalisation. We help not only with the formalities and the choice of a house. Once you have purchased a property in Spain, we offer assistance with remodelling, interior design and decoration, as well as property administration and rental agency.
Booking and deposit agreement
It is best to reserve the chosen house while the negotiations and legal formalities take place. We draw up a deposit contract even if we make an offer lower than the starting price. Based on it, we pay a deposit of €6,000 or 1% of the value of the house to the account of the lawyer or estate agent.
Why is it so important to pay a deposit? This lets the seller know that we are genuinely interested in buying the house.
Submission of the offer
The next step is to make an offer – that is, the stage of negotiating the best price. If the seller agrees to our proposed amount, we proceed with the next steps necessary to finalise the purchase.
If the seller rejects our offer, we can continue negotiations. If they fail, we recover the entire deposit.
Preliminary agreement – so-called Private Contract and deposit
Then, with the help of a lawyer (who is in charge of overseeing the purchase, tax issues), we prepare and sign a preliminary contract, which includes the most important information regarding the purchase of the house – including the date of signing the deed (usually between one month and two months in the case of the secondary market), handing over the keys, etc.
The signing of this contract usually takes between 14 and 21 days (from the agreement of the price) – depending on how much time the lawyer needs to check the legality issues, possible debts, book entries, etc. of the property in question.
At the signing of the contract, a down payment of 10% of the property price (including the deposit already paid) is made. In the case of a contract directly with the developer, the amount of the deposit may be higher.
If the seller breaks the contract, the buyer is entitled to a refund of double the deposit. If we are the ones who cancel the purchase, we lose the deposit. If we buy a property from a property developer, we agree in the contract on a payment schedule for subsequent instalments.
In Spanish law, there is a bank guarantee for the purchase of property on the primary market. It is granted by the bank, securing our deposits. In this way, we can be sure that we will not lose our money, even if the developer does not fulfil the contract.
For both the deposit agreement and the preliminary agreement, your presence is not required – we can sign the documents remotely.
Purchase agreement and mortgage
The house purchase contract is signed at the notary’s office. Those with funds can proceed immediately to sign it. A few days before the signing of the purchase deed, the notary and the lawyer are required to register the client’s name in the register of deeds, stating that he or she will be proceeding with the purchase deed on that day. For this time, any other entry in the register book is blocked. The notary is then obliged – as soon as the deed of purchase has been signed – to send the document to the register and start the registration of the new purchaser.
If a loan is applied for, the title deed is drawn up within 6 to 8 weeks on average (it is possible to change this deadline if both parties agree). At the notary’s office, we sign two contracts at the same time: the purchase and the mortgage. If we are unable to appear in person, we can appoint a notarised representative for this purpose.
If you are buying a house from a developer, the procedure may look a little different – it differs in the form of payment. However, you will always have to make an initial reservation fee and subsequent tranches, according to the payment schedule. We only sign the deed once the construction is completed.
How do I get a loan to buy a house in Spain?
We recommend using the services of Banco Santander de España, Banco Sabadell and La Caixa and CajaSur banks. They are currently offering loans at EURIBOR +3.60%.
The maximum loan term is 20 years, which also depends on the age of the borrower. The loan terms currently offered by the banks (analysis based on the current offer from Banco Santander and Banco Sabadell) are as follows:
- 50-60% of the valuation of the property,
- 20 years – loan repayment period,
- 3.60% interest rate in the first year of the loan,
- Euribor +1.9% interest rate from the second year of repayment (non-eurozone customers are offered variable rate loans from the second year of repayment),
- 1% to 1.5% mortgage opening commission,
- 0.25% in the first 3 years (0% thereafter) commission for early partial or full repayment.
How high a loan to buy a flat or villa can I get? Non-residents in Spain can expect a maximum of 50%-60% of the value calculated on the basis of a valuation by an expert approved by the bank. If you are buying a house from a property developer, it is up to 50% of the price indicated on the Title Deed.
We can obtain favourable credit terms for the purchase of a house from a developer who has financing for the construction of the property. In this case, the credit is “transferred” to the buyer. This is subrogation, i.e. the conversion of a creditor to a third party.
In Spain, so-called certified bankers’ cheques, issued by the bank, are still in force. These are used to pay for the purchase of a property. Another option is to transfer the money to the trust account of a client of a law firm. The lawyer will apply to the bank to issue the cheques, which will save us the fee the bank charges for issuing the cheque. Law firms, on account of serving a large number of clients, have significant discounts offered by the bank.
Who pays for the bank valuation?
Once the deposit for the purchase of the chosen house has been paid, the buyer has a bank appraisal carried out at his expense. This is the basis for the loan. The cost of an appraiser’s service in Spain starts at around €300 and depends on the purchase price.
Transaction costs of buying property
Approximately 8%-13% of the value of the property we choose must be added to the price of the property. These include the cost of legal fees, notary fees and taxes, or the costs dependent on the Autonomous Community. Below is some basic information on these fees in Andalusia.
1. tax
Secondary market:
– transfer tax (ITP)
Currently, this tax is only 7% of the value of a house purchased on the secondary market.
Primary market
– VAT
If we buy a house from a developer, we have to pay VAT of 10% of the value of the property.
– a tax on civil law transactions, known as AJD, of 1 .2%.
2. legal costs
- lawyer: 1% of the transaction value +21% VAT
- Notary fee: from approx. € 1,000 depending on the amount of the transaction; for a purchase of € 2,500,000 approx. € 2,200
- registration in the land register: approx. € 500 – 1,000
3 Mortgage costs
- AJD: 1.2% of the value of the loan granted. This cost is a bank cost imposed by law from 2019. It is therefore not a cost for the buyer.
- cost of mortgage: between 1% and 1.5% of the capital
4 Other costs
- costs for signing utility contracts (water, electricity, telephone):from approx. € 500
- Cost of N.I.E. number approx. 190 € +21% VAT/person
How to make an N.I.E. number in Poland?
Foreigners buying houses in Spain must obtain a N.I.E. number (Número de identidad de extranjero). It is the equivalent of the Polish NIP. You can apply for it at the Spanish Embassy in Warsaw. The application form and the fee form (in Spanish) can also be submitted at the Policia Nacional branch in Spain. There is a wait of approximately 3-4 weeks for the number to be assigned. The N.I.E. number is necessary for transactions in Spain and for dealing with social matters, signing utility contracts, etc. The easiest way is to authorise a lawyer of your choice in advance to apply for an N.I.E. number in Marbella on your behalf.
A bank account in Spain – how to open one?
To start the formalities of the purchase and legal services, we need to set up a bank account with which to make the payments for the property. It is also necessary for signing utility contracts or paying tax. When going to the bank, prepare (translated into Spanish):
- copy of identity card or passport
- proof of address (energy or water invoice in our name and address of residence in Poland)
- documents confirming our employment and earnings (last year’s PIT, certificate from the workplace)
- documents concerning the source of the money for the purchase of the real estate (e.g. notarial deed of sale of the real estate, document confirming the receipt of an inheritance, statements concerning deposits in banks, etc.).
- recommendation card from a bank in Poland
- N.I.E. number
Credit application – what documents?
- a letter of recommendation from a bank in Poland, stating how long you have been a client of the bank, approximate annual turnover, etc.
- contact details of your bank custodian in Poland who can confirm the validity of your statement (e-mail, telephone number)
- a certificate from the employer stating wages, type of contract, period of employment, information about the company, its contact details, link to the website, etc.
- tax returns from the last 2 years (PIT)
- certificate of non payment of taxes
- a certificate from the BIK that there are no claims against you
- utility bill confirming the address of residence (e.g. electricity, water, telephone)
- a statement signed by the borrower about the real estate he owns, including the address and approximate current market value of the property
- any other additional documents required by the bank
We assist at every stage
I have lived in Spain for 25 years and have a lot of experience in consultancy and mediation. I know the needs and requirements of Polish clients and all the procedures that need to be fulfilled to enjoy a house in Spain. Together with our team of professionals, we offer assistance at every stage: in choosing the area where you want to live; in finding a house; in choosing a lawyer and a notary and any other issues necessary to complete the purchase. We also take care of remodelling, interior design and finishing, as well as comprehensive property administration and rental agency.
