Once you have chosen the property you wish to purchase, the first step is to agree and secure the price by means of a Reservation Contract (The buyer, vendor and agent all sign this document). Upon signing this contract a holding deposit should be placed with your lawyer whilst all the necessary checks are carried out on the property.
If you do not already have a bi-lingual Spanish registered lawyer, Garratt Homes can introduce you to one for a free preliminary consultation.
Should your lawyers discover any irregularities with the potential purchase your holding deposit will be returned in full. (Your lawyers will check that the property is ‘as advertised’, with all its build and plot metres duly registered, that the vendors hold and can convey full legal title, the property is free from debt, there are no sitting tenants etc.etc.).
Once and only when your appointed lawyers have certified that the property is all in order should you proceed to the next step. A Private Purchase Contract is signed with the vendor and it is standard practice to make non-refundable 10% payment at this time.
Upon signing the PPC, a Notary date is set where the remainder of the money will be paid and the Title deeds are signed. This takes place before the Public Notary and in Spain the Notary holds these Title deeds in their offices. You will be issued with a copy on the day and will receive an official copy shortly afterwards. The property must then be registered in the Registro de la Propiedad (Property Registry) as a matter of public record. This will usually take a couple of months. From the date of the signing you will be responsible for the Rates, Utilities and Community fees (if applicable). Organizing these last few details is normally a job best done by your lawyer, who will arrange to have all these matters paid through direct debit if you so require.
Six weeks is a normal period of time from Reservation contract to completion at the Notary. However, the process can be made quicker or slower to suit the needs of each party and is open to negotiation.
There are of course, costs associated with the purchase of property in Andalucia, Spain. These can vary between 8% and 12% depending on the type of property and its price:
- New build property Tax 10% IVA ( VAT on the purchase of a brand new property )
- ITP Transfer tax on the purchase of a resale property starts at :
8% for property up to 400,000€.
9% for property up to 700,000€.
10% for property over 700,000€.
(Up to the first 400,000€ - 8% IVA is paid, then from 400,000 to 700,000€ - 9% is paid, and so on....)
- A further 1.5% AJD (Stamp duty) is payable for brand new property only – it does not apply to resale property.
- 1%, Standard lawyers conveyancing fee.
- 1% Notary and Property Registry fees.
- 1% Ancillary costs. Provision of funds for direct debits, house insurance etc.
There may be a mortgage element to your purchase. If this is the case, Garratt Homes can recommend the services of first class mortgage brokers or introduce you directly to the banks with the most favourable financing to suit your needs. There are associated costs with obtaining a Mortgage, normally around 2% of the loan value.
Should you require further information on available financing or the requirements in Spain for obtaining a mortgage, please don’t hesitate to contact Garratt Homes.
When transferring funds to Spain, it is advisable to use the services of a Foreign Exchange broker. They will considerably reduce the cost of transferring funds by obtaining a far better exchange rate than those on offer by the high street banks. Please contact Garratt Homes for further details on recommended the currency brokers.