Thinking of buying a house in Spain?
Have you spent many wonderful holidays here and are thinking of staying longer periods in the future?
When thinking of the purchase, are you intimidated by the different language, customs, laws and regulations?
Not to worry, you are not the only one.
We have helped many foreign nationals like you, who are now proud owners of property in Spain, overcome these issues
Our country has so much to offer to people who wish for something beyond just a holiday, from digital nomads to anyone looking to buy a second home or just invest in property.
If you wish to know how to buy a home in Spain, we have compiled in this post all the information you need before you take the plunge:
- We have classified the information into three easy-to-understand stages
- We have thrown in an infographic and a video to visualise the process easily
- We have summarised the information in 10 Key Insights
Now you could buy that house in Spain on your own, with no intermediaries. You have all the information you need.
But please remember: even property tycoons work with local real estate lawyers.
Would you be willing to put a price on your peace of mind?
Now, let’s have a look at the steps you will take to buy that dream house in Spain:
Buying Property in Spain: Key Insights
- You can buy as a foreigner: no major differences from what a local should do
- Sound investment: buying in Spain still makes much sense financially
- Pitfalls: there could be some, but they are easy to eliminate when working with experts and making your due diligence
- Cost: you should foresee a 15% on top of the agreed price. We will guide you through the taxes upon purchase
- Golden Visa: if you wish to get a permanent visa, you can by buying a house for 500000 EUR or more
- Cash sales: We are afraid they are a No Go. Stick to a bank transfer. Mortgages are easy to get when you know where to go.
- Timeframe: You should be able to buy within a maximum of 4 months, but there are several ways to make that shorter
- Finding a house: whether you look for properties on a website or prefer to work with a real state agent, there is a wide range of options
- Newly-built houses vs. second -Hand ones: they are both available for you to find their advantages
- Working with a Lawyer: we can not encourage you enough to work with a professional who will take you swiftly through the process by doing the job of several intermediaries.
We have anticipated all your questions on how to buy property in Spain so that you get all the answers in one go:
1. Can I buy a house in Spain as a foreigner?
YES, wherever you are from.
You just need a NIE number (ID number for Foreigners), and anyone can get it.
1.1. EU citizens
- They need a temporary NIE for just the purchase, not later on.
- For those who plan to reside in Spain, a permanent NIE is required.
1.2. Non-EU citizens
- Resident NIE number: if you live in Spain for more than 183 days a year
- Non-Resident NIE: if you wish to buy a property in Spain but not live there
The NIE is easy to obtain, but the process can take a long time, so we advise you to do this through a lawyer.
Pro Tip: It is also advisable to open a Spanish Bank account to prove you have the economic means, even if you will not be a resident.
We recommend using the services of a bank that offers special services for foreigners and has the right experience:
- Santander is the biggest bank in Spain and deals with these sorts of transactions every day all around Spain.
- La Caixa Bank allows you to open a special non-resident bank account, which is very advantageous.
- Sabadell Bank and BBVA are also some of the favourites in the expat communities.
We would be happy to get you in touch with the local branches of some of these banks and introduce you to the right people as our clients to make this step as smooth as possible.
2. Is it wise to buy a property in Spain?
Other than proof of your impeccable taste, buying in Spain continues to be a sound financial decision.
Prices have increased steadily since 2016. The cost of buying property in Spain, according to Eurostat, will increase by 2% as opposed to other European countries where prices fluctuate.
For example, a 200 square meters apartment in a condo in a coastal village in Cadiz can easily go from 480,000 EUR to 700,000 EUR in two years if you refresh it with 20,000 EUR worth of work (real case).
So we can safely say Spain is still a safe bet due to the huge constant demand.
Furthermore, If you buy a property for 500K+ EUR, you can opt for a Golden Visa; click to read our blog post on Golden Visa in Spain.
3. What are the pitfalls of buying a property in Spain?
3.1 Possible scams
It is easy to avoid scams when you follow the best practices.
3.1.1. For Second-Hand properties
- Make sure the property is debt-free and the surface you are buying belongs to the right person by checking it on the Registry
- Read and understand all the clauses in the contracts
- Survey the property to avoid unsound structures o hidden defects. You can have a property Valuation done or a building survey, which is a deeper analysis.
3.1.2. For New properties
Understanding planning status: Check if the City Hall has granted permission to build.
While the ‘Nota Simple’ provides valuable details, it doesn’t include zoning and legality specifics. To get insights into zoning regulations, you’d need the local City Hall or urban planning office where the ‘Plan General de Ordenación Urbana’ (PGOU) is available.
The PGOU outlines the urban and land use planning. These documents classify the land into different categories such as developable, non-developable, etc based on their own set of regulations concerning building capacity, height restrictions, distances between buildings, and other factors.
If you’re looking at a property in an urban area, the PGOU will define the specifics of what can be built there and under what conditions.
Properties that have been built without adherence to the PGOU or without the necessary licenses can face serious legal consequences, including demolition orders.
- Check that the building company exists and that the project is properly registered with the land registry
- Demand commitment in writing that you will obtain a refund of your sums paid if the project is not finished, by bank guarantee or Insurance policy
- Obtain proof of any sum paid that is being kept according to the law in a separate bank account
- Do not sign anything you do not understand or they can not explain to you to your satisfaction
3.1.3. For both
- Check the Community of Owners document if the property is in a condo for pending works or debts
- Hiring a Real State Lawyer with proven credentials will protect you from the above and make your life much easier.
3.2 Properties Under Construction: The Purchase Agreement
Imagine paying for a house bit by bit as it gets built. If something goes wrong, you need to make sure you can get your money back. By law, builders need to have guarantees, like bank guarantees or insurance, so you’re not left out of pocket.
Pro Tip: Always consider getting advice from an independent real estate lawyer ( never the one recommended by the estate agent or developer) when dealing with these contracts.
You have some more related tips in this post on our blog. We were pioneers in helping thousands of clients recover off-plan amounts after the 2008 property bubble crash. You also have a related Q&A document here.
The Consumer and User Organization, as well as the Spanish Notary Public Professional organisation, advise that you present this sample contract to the seller to be used or, at the very least, use it as a reference.
We also recommended to request changes to any possibly detrimental clauses. Otherwise, should the developer decide to enforce them, you may have to go to court for these clauses to be declared null and void.
Remember that not only is the contract binding, but other provisions are also binding for the developer: brochures, advertising, quality reports, etc.
Key Takeaway: Investing in properties under construction comes with its risks. But with protections like the Spanish Law 57/68 in place that protect buyers who put down advance payments for properties under construction, Spain offers a secure environment for your purchase.
You should set aside 10-15% on top of the sale price:
- 3-5% for a state agent if you use one
- Registration Fee and legal Fees – differ from regions but can be up to 1%
- Property Transfer, for buying a second-hand property Tax: 6-10%
- Notary costs, land registration fee and Title Deed tax – 1-2,.5%
- Legal Fees- 1-2%
- Mortgage costs (valuation, etc.)
- VAT – 10% only on new homes unless you are under 32, in which case it is 5%
- Stamp Duty – all homes, 0.5 – 1,5% of the property’s price
- Bank transfer costs depend on the bank and country. Usually, they are not applicable within the EU
4. How much does it cost to buy a house in Spain?
How many times have you heard this expression when it comes to the value of a property?
|Palma de Mallorca
The most expensive city for buying a house in Spain in 2023 was San Sebastian, at 4,212 EUR/m2, followed by Barcelona and Madrid, at 3,579 €/m² and 3,576 €/m² respectively.
5. Can I live in Spain full-time if I buy a property?
You can now obtain a Golden Visa (Residence permit for two years to renew) to live and work in Spain.
- The price of the house must be 500,000 EUR or more
- you must apply for the visa AND buy the property within 50 days of the application
- the visa request should be submitted max 90 days before the date of travel to Spain
You can obtain more information on the Spanish Golden Visa in our blog post.
6. Is it possible buying a property in Spain with cash?
In Spain, cash transactions are limited by Law to a maximum amount of 15,000 EUR each.
It is imperative to make an international bank transfer.
6.1. Mortgages in Spain
It could make more financial sense for you, or perhaps you need to ask for a bank loan or mortgage.
Have a look at the possibilities Spanish banks can offer you:
- How much can I borrow? : 60 to 70 % of the price only if you do not live in Spain. You need a higher deposit when you are not a resident.
- When will I get the money? Spanish banks will not lend you money till you are the owner of the house. You need to include a clause in the Sale contract to be able to cancel the purchase if you can not obtain the bank loan.
- Should I take the first price I get? No, loan rates fluctuate, so we recommend talking to a few banks to get the best offer possible.
7. How long does it take to Buy a House in Spain?
Once you have your NIE, it will take you from 2 to 3 months to buy your house, once you have found it.
Unless you need a mortgage, in which case you can expect the whole process to take a few more weeks on top of that.
We have two tips for you that will make the process quicker:
1. Get a Non-Lucrative one-year Visa in only approximately three months if you can prove you have
- You already have 30,000 EUR in the bank, do not need to work or invest in Spain and have a minimum monthly income of 2400 EUR plus an additional 600 EUR for each member of your household.
- You have NO Criminal record, and/or you are not forbidden from entering the Schengen area.
- You are in Spain legally.
2. You have private health insurance.
- Start visiting banks once you start looking for a property to get preliminary offers from and make a shortlist.
8. How do I find a property in Spain?
You may use the services of a Real State agent or use the main Spanish property portals on the web and do the search yourself
For both flats and houses
Only for flats:
Some properties on these portals will be advertised by agencies, not individual owners.
When interacting with real estate agents, you may need to take a few things into account:
- They are governed by regulations and standards and ask for their credentials to ensure they have received the proper training and are covered by professional insurance.
- Contracts drafted by agents are structured to protect their interests. Appointing an independent lawyer ensures that your rights and interests are also safeguarded.
- Make sure they ask for a reasonable rate, between 3-5% of the price.
9. Where should I buy property in Spain?
This is really a question of personal preference and/or what you can afford:
- Prices are much higher on the coast, but so will the rent should you decide to become a landlord, as they increase over time. So you will soon recover your investment.
- Cities: You could think of buying in Valencia, Castellón, Alicante, Murcia, and Huelva as they are still cheaper than the rest of the main cities. And they are coastal.
- There are also plenty of charming properties in the countryside in many provinces like Granada, Cadiz, Cáceres, Badajoz, Ciudad Real.
Our expertise includes buying anywhere in Spain, but we specialise in Costa del Sol (Malaga) and Costa de la Luz (Cadiz).
Pro Tip: Look for properties not only in the most sought-out locations but also in upcoming areas. Hidden gems can still be found in Spain!
During The Sale Process
Once you found the right house, this is what you have to do, in chronological order:
1. Make an offer they can not refuse
In Spain, you will typically make an offer below the asking price and start a negotiation based on the house condition, the time the property has been on the market and seller time constraints, amongst others.
Your offer should be reasonable, but do not be afraid of sounding out the seller.
Property in Spain, unlike in other places like parts of the UK, seldom sells above the asking price.
2. Hire a lawyer, do not be shy
Let us do the nitty-gritty for you.
Your lawyer should have the correct credentials:
- Check their reputation both online and offline.
- Make sure they are registered with the local bar association (Colegio de Abogados).
- Obtain their registration number. Ours is on our website.
3. Make your due Diligence (literally)
- Review and Check the validity of papers in the Property registry.
- Obtain the certificate from the Community of Owners to ensure no outstanding debts on communal services and maintenance are associated with the property.
- Review Utility bills to check there are no outstanding payments.
- Get the “Nota simple” from the register stating that the house has no unpaid taxes.
- Get the energy classification certificate by appointing an expert.
- Appoint a qualified surveyor to carry out the technical inspection and issue a report.
- Consult the local City Hall or urban planning office where the ‘Plan General de Ordenación Urbana’ (PGOU) is available for specifics on the urban framework to make sure the house is built in compliance with local regulations.
- Obtain the First Occupancy License (Licencia de Primera Ocupación) for new properties, whereby the town hall certifies the property’s fitness for occupation.
You will need most of these documents to get a loan at the bank.
4. Sign the Deposit Contract or ARRAS
This is a preliminary agreement whereby you make a deposit of 10% of the price and agree when the sale will be finalised (usually three months). This contract is binding to both parties, so do not enter it if you are not sure about buying the property:
- The seller will have to pay you double the amount you paid if he changes his mind
- You will lose that 10% if you change yours
- The payment conditions will be defined here ( price, distribution of costs, payment method and amount of deposit)
- We recommend you include a Technical Inspection clause to protect yourself against building defects and ensure transparency. This clause should specify the terms, responsibilities, and potential consequences if the property doesn’t meet the stipulated conditions. By including such a clause, both parties have a clear understanding of the inspection’s significance and the steps to follow if any issues arise.
- Your advance payment will be deposited in a special bank account separate from other funds
This contract is not mandatory, but it is advisable. Your lawyer will draft it or supervise / negotiate the provided version.
5. Sit down with the Notary to sign the Sale Contract
This is the time to present the result of the Due Diligence. A meticulous assessment should be carried out by the notary of all of the documents.
You will need to present the following:
- The “Nota Simple” from the register states there are no charges on the property, details of previous owners, etc.
- The ITE or technical inspection.
- The Property Deed or Escritura Publica.
- Property tax (IBI) proof.
- The FIPRE – Loan Pre-Contractual Information Sheet: Upon loan approval and before moving on to draft the notarial deed, the bank provides the buyer with the FIPRE. This document outlines the essential terms of the mortgage and ensures the buyer understands the forthcoming commitment. FIPRE offers a comprehensive view of the mortgage details, including the loan amount, interest rate, fees, potential risks, and other key agreement terms. It’s designed to ensure transparency and protect the borrower from unforeseen surprises.
Pro TIP: having an attorney skilled in property sales and mortgage loans becomes indispensable to avoid abusive clauses in mortgage transactions.
We emphatically recommend hiring a lawyer as you will need to double and triple check the following points:
- The house has no town-planning issues.
- The house has no technical problems.
- The house has no charges like previous mortgages or debts. You will become responsible for debts up to 3 years before the purchase.
- The wording of the sales contract works in your favour.
All the parts involved need to attend the signature of the sale: seller, buyer, bank, real state agent and lawyer will sit at the table.
The Notary’s involvement makes the deal official and provides an official record of the property transaction in order to register the property in the buyer’s name in the Land registry.
The notary also ensures that the transaction is legally sound, but bear in mind the notary does not represent the interests of the buyer or seller. This is why having a lawyer becomes indispensable.
After The Sale
1. Register the property at the Property Registry
Once the notary has done their job, you need to make sure your new property is registered.
Sometimes, the Notary office will register the property for you if they include these services.
The registry entry works only on your favour preventing other parties from eventually claiming the ownership of the property.
Nevertheless, we recommend your lawyer does this for you as it is a pivotal process where unexpected issues may arise:
- Review and Preparation: Before submitting the deed to the Land Registry, the attorney double-checks all details to ensure they are accurate. This includes verifying the names of the parties, property description, boundaries, and any other crucial data.
- Payment of Associated Fees: Registration incurs fees, the amount of which depends on the property’s value and other factors. The attorney calculates these fees, makes the necessary payments, and ensures all receipts are retained for records.
- Submission of the Deed: The attorney presents the notarised deed (escritura pública) to the Land Registry. This deed is the official document that reflects the details of the property transaction.
- Monitoring the Registration Process: The Land Registry might take some time to process the registration. During this period, the attorney monitors the progress, addressing any potential queries or issues that the registry might raise.
- Addressing Potential Discrepancies: If the Land Registry identifies discrepancies between the presented deed and their records, or if there are pre-existing encumbrances or annotations, the attorney addresses and resolves these to ensure smooth registration.
- Obtaining the Updated Land Registry Extract (Nota Simple): Once the registration process is complete, the attorney obtains an updated Land Registry Extract (or Nota Simple). This document provides a summary of the property’s current registration status, including the new ownership details.
- Informing the Client: After successful registration, the attorney informs the buyer of the completion, providing them with all relevant documentation, including the updated Nota Simple and receipts for payments made.
2. Pay the Taxes
In the 30 days after the purchase, you will have to fill the forms and pay this tax:
- Property Transfer Tax (ITP)• When buying a second-hand property, residents and non-residents must pay the ITP, a tax that varies by region in Spain. Rates typically range between 6% to 10% of the property’s purchase price, but it’s essential to check the specific rate for the region where the property is located.
- Stamp Duty (Actos Jurídicos Documentados). For new or second-hand properties, residents and non-residents. From 0,5-1,5% of the property price
Then you have till the end of the current year to pay the following:
- Non-Resident Income Tax (Impuesto sobre la Renta de No Residentes – IRNR) If a person owns a property in Spain, they’re subject to the IRNR, which taxes the potential income from the property, even if it’s not rented out. The rate is typically 24% for non-EU/EEA residents and 19% for EU/EEA residents. It’s applied to a specific percentage of the property’s cadastral value.
- Annual Property Tax (Impuesto sobre Bienes Inmuebles – IBI) Residents and Non-Residents: Both groups must pay this local tax based on the cadastral value of the property. The rate varies by municipality but typically ranges between 0.4% to 1.1%.
3. Transfer utility bills
You will have to notify all utility providers (electricity, gas, water providers) about the new ownership, transfer the account names, verify account names, provide the required documents, etc. We can do this for you.
4. Take a home insurance
It is not mandatory, but we strongly recommend you take a building or fire insurance at the very least for peace of mind. You will be obliged anyway if you ask for a bank loan.
5. Appoint a tax representative
If you do not live in Spain, you are better off with someone looking after your financial obligations here. Amongst those obligations, you will find the payment of the below two taxes every year:
- Non-Resident Income Tax.
- Annual Property Tax.
6. Be on the lookout for technical issues during the first months
- Second-hand properties: You can claim against hidden defects the first six months after purchase.
- New properties: there is a 1-year guarantee for minor defects, three years for installations, and 10 for the building guarantee. For electric devices and conditionings, there is a 2-year guarantee from the time of their connection.
We are here to help you fulfil your dream
It is closer than you think. Put your fears to rest, and let us do everything for you. We offer you the following essential services:
- Personalised Legal Counsel: We will provide advice tailored to your specific situation, ensuring that your interests are adequately protected.
- Negotiation: We can help negotiate terms, conditions, and prices to get you the best deal possible.
- Clarification: Legal jargon can be confusing. Your lawyer can help translate the complexities of the contract, ensuring you fully understand every aspect of the deal.
- Protection: While a notary is impartial, a lawyer is your advocate, ensuring that your rights and interests are always the priority.
- Multilingual assistance: Forget the challenges of the language barriers or the extra cost of professional translators. A multilingual lawyer will help you navigate the intricacies of property transactions and the nuances of a different language.
Spain offers a secure environment when buying property. We will make the process of how to buy a house in Spain smooth and your transactions bullet-proof.
We are waiting for you in sunny Spain, see you soon!