10 simple steps to buying a property in Spain

Buying a property in Spain is a big decision but it doesn't have to be a stressful one. The following steps apply to anyone who is considering buying a property in Spain.

Before you even think about coming to Spain, take the time to decide exactly what you're looking for. This may sound like common sense, but the reasons for your purchase will affect all the subsequent decisions that you have to make. Some people buy property purely as an investment; others want to relocate; some want a second home in the sun.

Insight Spain can find your perfect property and clarifying what you really want will make our property search more effective.

The sorts of questions you need to ask yourself are as follows:

Will this be a holiday home for a few weeks a year, or will it be a main residence for spending all or part of the year?

A holiday home means you should think about property that is easily managed with good rental potential.

A more permanent home requires greater thought should you plan to spend large parts of the year living there. You need to think about the infrastructure you would like to have around you, such as hospitals, schools, shopping, leisure activities, etc.

Is investment a primary or secondary concern?

Many people have bought Spanish property in recent years primarily as an investment, both in terms of rental income and capital gains. If you are buying as an investment then you have to focus on the type of property with the greatest potential in these terms. If you are buying primarily as property for living in and enjoying, then you will find you have a wider choice of properties.

What sized property do you need?

Be realistic about the size of property you need. Don't buy a property on the assumption that extended family will always be staying, as you may end up with something too big for you. Focus on your own requirements.

2. Choose your location

If you're looking for investment property for example, it's important to choose a property of the type and location that will give you a maximum return. As a general rule, properties by the coast attract higher rental incomes. If you plan to make a permanent move you may be more interested in properties in residential areas.

3. Decide your budget

Decide how much you want to spend and remember there are always associated costs when buying property in Spain. As a general rule allow 10-12% on top of your purchase price to cover various taxes and legal fees. You can get a mortgage in the UK or in Spain and for the latter it is normal for banks to advance a loan of up to 80% of the valuation of the property for a term up to 35 years.

4. Do your research

Once you have a clear idea of what you want to buy and where, spend some time on detailed research. Check out our area guides to the key locations in which to buy in Spain and the types and average prices of properties there.

5. Visit in person

Never buy any property without making a personal visit. Our associates will help you arrange inspections at a time that is good for you. They will provide you with all the information you require and can help organise flights and accommodation at competitive prices.

6. Find a lawyer

Spanish property law is complicated so make sure you have a good local lawyer to look after you interests. Lawyers will usually charge you 1% of the sale price of the property. Be aware that under Spanish law only the person named on the title deed has the right to sell the property.

Insight Spain can introduce you to independent and highly professional lawyers who are fluent in English.

It is advisable for all non-resident property owners to appoint a Spanish based lawyer so they can take care of all the necessary legal matters throughout the purchase of your home as well as making sure all your taxes are paid each year, including payment of rates to the town hall and annual property tax.

7. Negotiate terms

Once you've chosen a suitable property, the price and conditions will need to be agreed. It is quite acceptable to make an offer subject to mortgage approval and, for properties that are still being built, you'll want to agree a schedule of stage payments rather than pay the whole amount up front. If you haven't already appointed a lawyer, you must do this now or run the risk of entering into an agreement that cannot be enforced under Spanish law.

8. Reservation Agreement

The property market in Spain is buoyant and properties can sell extremely quickly. Normally the purchase is initiated with a reservation agreement, which takes the property off the market and fixes the price. In most cases the deposit payable at this stage will be between 3.000 and 6.000 Euros. This can be paid in cash or by credit card. Avoid the temptation to pay by cheque as this can take up to 10 days to clear - ample opportunity for a rival investor to step in with a cash deposit. After you have paid this reservation deposit your lawyer will start a search on the property. This is very important because this search will show whether there are any mortgages or charges against the property (Mortgages in Spain are attached to the property, not the person). This is confirmed in a document called a Nota Simple which also identifies the registered owner.

9. Private Contract

On average within 1 month a private contract is signed between you and the seller. The 'Contrato Privado de Compraventa' states the agreed price and what is to be included in the sale. At this stage it is normal to pay 10% directly to the seller. The seller's representatives and your lawyer get together to determine all outstanding debts and rates in order to arrange the payment of these according to the agreement. This could include outstanding property taxes, community fees, telephone, electricity and water bills. The purchasing costs will also be determined at this stage.

10. Final completion and registration of the title deed

This is the last phase of the purchase procedure and in the case of a resale property, the completion will take place 2-3 months after the reservation agreement. The title deed or 'Escritura de compraventa' will be signed in front of a notary and you pay the balance of the purchase price. If you buy the property with a mortgage, the bank representative will also be present. In the case of a new construction, it can take up to 18 months before completion and usually payments are made in stages of 3-4 months. The signed deed is lodged with the land registry and your lawyer will take care of the remaining formalities such as payment of the relevant transfer taxes.

Remember there are a number of associated costs and taxes payable when purchasing a home in Spain. Click here for details.

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