A Step-by-Step Guide To Buying A Property In Spain Simple, actionable advice Written By: Christopher Clover July 2014

2

Buyers tend to struggle when looking to find the right property, negotiate a purchase and

close a sale when they’re not in their own country.

As is the case with many resort areas, everybody seems to be in the business, whether it’s a

taxi driver or the hall porter of a hotel. Property is a popular subject of conversation and

almost everyone has an opinion on it, which could confuse a potential buyer.

So where should you start?

Finding a Property

It can take people years to find a property that meets their preferences.

Some are lucky enough to find a property and have the confidence to purchase on their first

visit to Marbella.

However, others need to take their time and carry out a number of viewings before making

an assured decision.

3

What Type of Property Are You Looking For and in

Which Area?

Many potential buyers are swayed by opinions and discover new preferences along the way,

so they end up choosing something totally different.

Unless you are certain about what you want and are aware of its existence, you should try

and keep an open mind and be prepared to make some compromises.

This can also help you build up your knowledge of market values in the area you have

designated, which is a major advantage in negotiating and ensuring that you are getting fair

market value for your money.

4

Finding a Reliable Estate Agent

It’s always important to find a reputable estate agency and there are many highly qualified

agencies on the Costa del Sol, alongside some of the more opportunistic ones as well.

In the past, qualified agents have either been APIs (Agentes de la Propiedad Inmobiliaria) or

GIPEs (Gestores Inmobiliarios), but now anyone can open a real estate agency!

Therefore, it’s really important that you carry out a thorough search for qualified, well-

established agencies that are trustworthy and have good recommendations from non-

interested parties. A recommendation from your lawyer or a local resident should put you

on the right track.

5

What Should I Look Out For?

Good agents are always happy to listen to you and interpret your requirements.

They will provide you with their marketing knowledge and proof of experience, whilst they

will work with properties from the portfolios of collaborating agencies to find the right

properties to offer you if they exhaust the properties suited to you from their direct

portfolio.

There are some important qualities to watch out for in any estate agent, including

experience, professionalism, product knowledge, sincerity, positive communication and a

friendly desire to help you in any way possible in your property search.

If you're not happy with your agent or the work they are doing you shouldn't hesitate to

seek advice elsewhere.

When you find one who is easy to work with and understands what you are looking for, stay

with that agent for as long as it takes to identify your dream property, or until you are

satisfied that you have been offered all the properties available through that agency and its

collaborating agencies.

Sticking with an agency motivates the agent you are working with do all they can to find the

perfect property for you, whilst you won’t have to keep jumping ship and explaining your

preferences to new agents over and over again.

6

Some Helpful Advice

1. Compromise always pays dividends

It's nearly impossible to find a property that meets your demands exactly, even if you build

it yourself. If you do find your dream property, don't be sure that your partner will totally

agree with you.

It’s important to find somewhere that both you and your partner are satisfied with (even if

this means compromise!)

2. Do you mind being a pioneer?

Empty plots of land usually point towards the potential for property construction, so you

may find yourself in the middle of an ongoing construction site for many years to come

should you decide to move somewhere where there is the potential for new investment.

7

3. Protect your investment

It’s important to have enough land around you to maintain your privacy, such as views from

a prospective building project.

4. Ensure the protection afforded by the law is given to you

When buying a property that is still under construction, the developer is legally required to

provide an insurance policy or bank guarantee to protect your payments should the

construction be incomplete.

Developers must also provide proof of ownership, as well as insurance against building

defects, planning permission and the required licenses.

A lawyer experienced in property transactions will anticipate these particular concerns.

5. Buy for your own use first and foremost

Unless you are aware of the fact that your grandchildren will regularly visit your home, it is

generally a mistake to buy with their use as the main priority.

Many people end up selling their large homes after their family did not visit as often as they

originally thought.

Purchase primarily for your own preferences, taste and objectives.

6. Realistically analyse the potential costs of modernising an older

villa or apartment that has romantically taken your fancy

Unexpected repairs can be expensive and unwanted surprises. However, second hand

properties tend to have a better location and may be less expensive than newer properties.

8

7. Look at comparables

The best way to determine the value of a property is to look at real sale prices of similar

properties that have recently sold. You’ll need an agent with good marketing knowledge to

do this.

It will also help if you view properties yourself so that you get a basic understanding of the

market.

8. Think ahead to the day you sell

A property bought today becomes a vital asset and a potentially healthy investment.

You should therefore take into account not just personal preferences but also general

investment criteria, such as location, design factors, quality of finishes and facilities.

9

Negotiating the purchase

1. Get Outside Help

Your agent may not have the necessary skills to negotiate the price of your offer as he or

she had to help find you the property in the first place.

Try and get some help from the Sales Director or Managing Director of the agency to help

you negotiate your purchase.

Experienced estate agents are fully capable of handling any commercial elements associated

with a sale in comparison to lawyers, and will try their hardest to ensure you and the seller

can come to an agreement should there be conflicting viewpoints, as any good negotiator

should do.

You can consult your lawyer during the negotiations to ensure that the offer complies with

his or her legal criteria, and becomes actively involved in more complicated negotiations.

10

2. Make Sure Your Seller Takes You Seriously

When making an offer it is important to try and identify the smallest possible price a seller is

willing to stretch to but at the same time qualify as a serious bidder.

If your offer is too low you may lose the interest of the seller, which can prove to be

counterproductive.

3. Detailed Negotiations

Try and get the entire negotiation process covered in one meeting rather than spreading it

out over a vast amount of time to negate the potential for unwanted surprises.

4. Background Research on Past Offers

An offer that is too low could damage your strategy and simply insult the seller, so the

chances of getting a response are slim.

It's important to identify the market value of the property, as well as clarifying how much it

is worth to you.

If the seller has rejected previous offers, find out how much these offers were. What is the

minimum offer that will engage his interest?

5. Cover Every Aspect of the Purchase in Writing

Provide your offer in writing if possible (of course, subject to contract), and include the

price, the deposit amount, when you are prepared to pay, your preferred date of

completion and what you understand to be included in the price (for example furniture and

fittings if applicable).

11

It's also important to find out and confirm that all machinery and installations are in good

working order.

6. Prove You Have the Funds

Show the colour of your money to the seller. He is far more likely to take your offer more

seriously if you have a healthy deposit available for immediate action in a Spanish bank

account.

This is normally around 10% of the purchase price. Many agents also offer credit card

facilities, wherein a small deposit from €5,000 to €50,000 can be taken to “seal a deal” with

a seller.

The deposit remains in the agent's client account during the time it takes for the lawyers to

prepare the private contract and the transfer of the 10% to arrive.

7. Learn About Municipal Added Value (Plus Valia) Tax

Municipal Added Value is the increase of the index value of land since it was last purchased

to its present sale.

This tax corresponds to the vendor who is responsible for its payment, unless negotiated

otherwise.

It is advisable to measure the land you purchase. If you are looking to buy a plot of land and

no topographical survey exists, it may be a good idea to negotiate a "Euro per square

metre" price subject to survey.

8. Be Firm with Your Offer

You should always leave yourself room to make improvements on your first offer.

12

However, if you believe your offer is realistic and perhaps have a second property in mind, it

can be a wise strategy to provide your seller with an ultimatum offer.

This makes the seller aware that you are prepared to leave negotiations should you fail to

come to a swift agreement.

13

Property Purchase Costs

Please note that the figures below are correct at the time of publishing this guide and may

be subject to change. Please check with your agent and lawyer about the latest costs

associated with buying a property in Spain.

Property Purchase Costs

Transfer Tax (I.T.P.)

Scaled at 8%, 9% &

10%

Payable by the buyer for the purchase of any Real Estate (villas, flats,

land, commercial premises, garages), provided the vendor is not a

developer or normally trading in the business of resale properties. If the

“minimum fiscal value” of the property, as per the Regional

Government, is greater than the price, then the minimum fiscal

valuation applies: 8% is applicable up to the amount of 400,000€ or

30,000€ in the case of garages except those belonging to the dwelling

and with a maximum of two; 9% is applicable to the amount between

400,000€ and 700,000€ or between 30,000€ and 50,000€ for garages;

10% is applicable to the amount exceeding 700,000€ or 50,000€ for

garages.

VAT and Stamp

Duty

10% + 1.5%

For any villa or apartment, or garage that is annexed to an apartment

or villa, where the vendor is a developer, promoter or habitual trader

for brand- new properties.

VAT and Stamp

Duty

21% + 1.5%

For the first sale or resale of parcels of land, and only for the first

sale of brand-new commercial premises where the vendor is a

developer, promoter or habitual trader or a company.

VAT and STAMP

DUTY or

TRANSFER TAX

(I.T.P.)

(10% dwellings / 21%

rest of properties) +

In resales of any villa, apartment or commercial premises, where

the vendor is a company, developer, promoter or habitual trader and

the purchaser is a company that will apply or use the property for the

development of its activity, they can chose between paying Transfer

Tax at the scale of 8-9-10% or VAT* (that can be deduced with the

normal activity of the company), where the applicable rate is 21% in all

properties (commercial premises, plots, etc.) with the EXCEPTION of

14

2% or Scaled at 8%,

9% & 10%

those properties (dwellings) that have an applicable rate of 10% plus

2% of stamp duty or Transfer Tax in all cases where VAT is applicable.

*Declination of VAT Exemption: Change of Tax Payer has been

recently approved, where the buyer must pay VAT directly to the

Revenue Office and not to the Seller.

Notary and Property

Registry Fees

3,000€

The cost increases according to the number of pages or complexity of

the title deed, and value of the property.

Municipal Added

Vaule Tax (Plus

Valía)

The Plus Valía tax (described earlier) can be as little as a few hundred

Euros or as much as many thousands of Euros on a property with a lot

of land that hasn’t changed hands in many years. This tax corresponds,

by its nature, to the vendor who is responsible for its payment, unless

otherwise negotiated.

Lawyers Fees

1% Approx.

Lawyer’s fees are in the order of 1% of the selling price, more or less,

depending on the lawyer and the price of the property.

Summary

The total official costs involved in purchasing a constructed residential property should be around

10-11% for resale properties or around 12% for new properties if VAT is paid on the purchase

price, plus lawyer’s fees.

15

What to Do Once an Offer Is Accepted

Once the seller has accepted an offer, always get a lawyer to check the land registry.

He will prepare a private contract that will bind both parties to the deal and prepare the

public deeds for signature in front of a Spanish Notary, once the balance of the purchase

price is paid and vacant possession of the unencumbered property is granted, completing

the sale in the process.

There are some outstanding lawyers in Marbella, with many speaking fluent English

amongst other languages. The best way to locate an excellent lawyer is to speak with your

agent or get a personal recommendation.

Many of the above guidelines are more focused on the purchase of resale properties, as

new developments have a fixed price list and payment schedule with very little room for

negotiation, at least when it comes to price. Sometimes extras or modifications can be

negotiated within the purchase price, depending on the policy of the developer.

16

In Summary...

Finding and buying a property in Spain can be either extremely simple or highly complicated

depending on the steps you take. The old rule of Caveat Emptor, (Let the Buyer Beware!)

always holds true.

Finally, always listen to your intuition, as this can prove to be the best possible guide!

This guide was brought to you in association with Panorama Properties in Marbella.