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BUYERS GUIDE

Please use this information as a guide only

In order to purchase property in Spain you will need:

A Spanish bank account (compulsory when purchasing property in Spain) and to be able to make an initial deposit of up to 6500 euros (approx £4000) although the average is 3000 € this is a holding deposit whilst the funds are arranged. Don´t forget this deposit is normally non-refundable but this is sometimes negotiable.

The Purchase Contract
This is the private contract between vendor and purchaser and is binding on both parties. It is usually drawn up between 2 and 3 weeks after the holding deposit has been put down. It should specify the name(s) of the purchaser(s), the completion date and the terms and conditions governing the sale. At this point the balance of the deposit (usually 10% of the purchase price) has to be paid.

Signing of the Deed
This is done in front of the Notary in Spain by yourself or someone with power of attorney from you to sign on your behalf. Full payment is required before the title deed can be transferred into the name(s) of the owner(s). Spanish inheritance taxes are high, so it is advisable to include the names of any children who would inherit your property upon your demise. Some purchasers may decide that it is financially more beneficial to purchase the property through a company, and in this case the company name would appear on the title deed.

Off Plan Payment Structure

The majority of new developments follow a similar cost structure which is as follows:

2-4% (of property price) due as an initial reservation deposit
10/15% due upon signing of the contract (inclusive of initial reservation deposit)
25/30% divided into stage payments made over the two-year construction period
Balance, option to take on mortgage or final balance due

The initial reservation deposit secures the purchase of the property selected prior to the exchange of private purchase contracts and demonstrates that there you have a real intention to purchase. The deposit usually amounts to between £2000-£4000 and forms part of the 10/15% payment due upon signing of the contract. If at this stage the purchaser chooses not to continue any further with the purchase the initial reservation deposit is non-refundable and the property goes back onto the market at its original purchase price. The full purchase price is specified (note: prices are exclusive of 7% VAT (IVA)) and the overall cost structure is outlined with all payments fully detailed along with estimated delivery date.

Contract signing takes place approximately 4-6 weeks after the initial reservation, this can be conducted in person, via your lawyer with power of attorney or even on your own accord by fax. This document sets out the agreed terms and conditions of the transaction and sets out the date for final completion before the notary public.

Stage payments are divided over the construction period, usually resulting in 8-10 payments and may in some cases, be relative to progressive construction stages. (note: your investment is at risk if you default on any stage payments)

Upon delivery of the property, the purchaser has the option to:

Take a mortgage for the remaining 60%,
make part of the final payment and transfer the remaining amount to a mortgage.
Make the final payment in full.

Very often the new project management in conjunction with a particular bank in Spain arranges a mortgage which you can choose to contract. however, there is always the option to arrange your own mortgage, with several banks offering very competitive interest rates.