Legal Advice when Buying in Spain
Here is some guidance, including some does and dont’s, if you are thinking about buying a property in Spain.
It might surprise you, but there is no legal obligation to use a solicitor is Spain. Many Spanish nationals don’t, but buying or selling without a lawyer for a non national, represents a considerable risk. It’s their job to work on your behalf, to ensure that the property you are buying is 100% legal and that there are no charges registered against it. If you are buying in a community, they can also confirm the level of monthly service charge payable and the solvency of the Committee of Property Owners. Your lawyer can also guide you on annual property owners taxes such IBI and Basura, both of which are generally speaking much lower than their equivalents in the UK.
If you are buying in the Province of Málaga, then before engaging any solicitor to act on your behalf, you should first of all check that they are a member of the local Collegio de Abogados. This is similar to the Law Societies that we have in the UK for England, Wales, Scotland and Northern Ireland. They operate on recognised fee scales and your transaction similarly, has the benefit of being insured. Although it might seem obvious, you should also make sure that your solicitor is able to converse comfortably with you in English.
For a purchase lawyers can typically charge up to 2% of the purchase price, but for less complex transactions, you can often get down closer to 1%, although a minimum fee of approximately €1,000, is likely to apply on purchases below €100k. Legal fees are subject to VAT at the rate of 21%.
Connecting water and gas to your new property, can be difficult, especially if you don’t speak the language. Your solicitor may offer to do this on your behalf, subject to charging an additional fee. It can be both complex and time consuming, especially in the case of repossessed properties. Our advice would be to leave it to your lawyer. It’s money well spent in our opinion.
To be able to buy in Spain each intended owner must have an NIE. This a number assigned to foreigners for fiscal purposes. It involves personally attending a local police station and some considerable form filling. Again, although your lawyer will charge an additional fee for this service, it potentially saves time, not to mention headaches.
What you need to know when buying in Spain
If you are unable to be present at the completion date, or even prefer the lawyer to obtain an NIE on your behalf, it’s perfectly normal to grant a Power of Attorney in their favour. It’s much simpler to arrange this in Spain, but the Power can be prepared and signed in the UK, if that makes things easier. The document is signed and witnessed by a Notary Public (many UK solicitors hold this additional qualification) and then sent to the Foreign and Commonwealth Office to be Apostillised. It is then passed back to your Spanish solicitor.
Buying in Spain, like many other countries, is more expensive than in the UK. Make sure that you factor all the costs into your budget. Here they are, firstly for a second hand property. Transfer Tax (Impuesto de Transmisiones Patrimoniales) at a rate of 8%, 9% or 10% depending on the purchase price, notary fees, Land Registry fees and Lawyer fees.
In case of buying a brand new property and under certain legal requirements, the Tax could be VAT at 10% plus 1.5% Stamp duty, instead of Transfer Tax as aforementioned, all the rest of costs remaining the same. In both cases, if you require a mortgage, this will typically add around 1.5/2% to the overall costs.
In order to reserve a property and effectively take it off the market, you will require to pay a reservation fee. Normally this is ranges from €3,000 to €6,000. Make sure before you proceed to this step, that you are 100% certain, as part or all of the deposit may be lost if you either don’t want to, or can’t complete.
Finally, don’t be afraid to ask questions. Not just to your lawyer, but also to your estate agent and mortgage broker. That way you can be 100% confident before buying.