THE PURCHASING PROCESS
Congratulations, you found your perfect home but what happens now?
Holding deposit and option to purchase
Once you have agreed conditions and terms with the vendor it is important to pay a holding deposit to take the property off the market. This deposit varies between 6.000 and 12.000 euros depending on the price of the property. All the contracts will be drawn up by a lawyer specialised in property. You may already have had a lawyer recommended to you, otherwise Marbella Estates will be more than happy to recommend you to a reputable law firm. The lawyer will complete a legal search on the property. Once that is done an options contract is signed. This usually takes place within two weeks from the deposit being paid and the standard amount to pay is 10% of the total purchase price minus the deposit already paid. In this contract all the conditions of the purchase are established and a date for the final handover is set.
Completion at the Public Notary
Possession is given to the buyer of the property when the Spanish “escritura” is signed, this is your Spanish title deeds. As a buyer you pay the vendor the outstanding amount and keys to your new home are handed over to you.
Registration
When the Spanish title deeds are signed the notary will issue a document known as “copia simple” which your lawyer will present in the local land registry to register the property into your name. This process may take a few months, you are however the full owner from the moment the title deeds are signed. Your lawyer will also change contracts for electricity, water, telephone and yearly taxes into your name.
So how much does all this cost?
This depends if you buy a resale property or a new property from a developer but as a general rule always calculate with approximately 10%.
For a resale property you have to add the following costs on top of the purchase price:
- 7% property transfer tax (ITP)
- 1 – 1,5% plus 16% IVA (VAT) legal fees to your solicitor
- Notary fees amounts to somewhere between 400 euros and 1200 euros depending on the value of the property.
- Land registry is generally between 300 euros and 1000 euros depending on the value of the property.
For a new property bought from a developer you have to add the following costs on top of the purchase price:
- 7% IVA (VAT)
- 1% stamp duty (AJD)
- 1 – 1,5% plus 16% IVA (VAT) legal fees to your solicitor
- Notary fees amounts to somewhere between 400 euros and 1200 euros depending on the value of the property.
- Land registry is generally between 300 euros and 1000 euros depending on the value of the property.
If you are purchasing a plot of land 16% IVA (VAT) will be added instead of the 7% IVA (VAT) or the 7% property transfer tax which is applicable for dwellings only.
If the property that you are buying is under construction a, for you as a buyer, favourable payment plan is used. Usually you will pay 30% of the full price of the property to sign a contract. That money is bank guaranteed until the house is completed which is when you pay the outstanding 70%. A lot of investors and buyer favour this way of purchasing their property. For more information please contact the friendly property advisors at Marbella Estates.
In both cases there will be an extra cost from your mortgage provider in case you choose to finance your purchase through a bank. The cost for this varies between banks so please ask us at Marbella Estates where the best deals are at the moment. As a general rule the cost is between 0,75% and 1,25% of the amount of the mortgage plus a smaller fee in the notary and land registry to register the loan.