Procedure for buying a property in Spain
Contents of this page:
>> Resale Property>> New Property
>> Currency Fluctuation
We act as an estate agent, and we will do our best to help you find the property of your dreams. Once we have found that property, you will enter into a contract with the owner of that property.
Resale Property
If the property is a resale (i.e. previously owned) your contract will be with the current occupant/owner. With a resale property, a deposit of 3000 euros will secure the property, the balance being paid on completion, normally after two months, or sooner if both parties are in agreement to bring the completion date forward. There is no gazumping in Spain, as after accepting your deposit, the seller is legally obliged to sell you the house at the agreed price. Normally, 5% of the contract price will have to be paid by you to the tax office in case the seller forgets to pay his capital gains tax! This is NOT an extra 5%; it merely means that you pay only 95% of the contract price to the seller, and he has to fill out the forms with the tax office to get the other 5% less his capital gains tax. If this sounds complicated then don't worry: your solicitor will look after all this for you.
New Property
If the property is new, then your contract will be with the company who is building the property. We deal with many builders and all of them have slightly different terms as to when they would like to receive their staged payments. These terms can be varied a little to suit the individual circumstances of the purchaser if these changes are agreed when the contract is drawn up. All the builders will, however, be expecting to receive payments along the following guidelines.
The initial deposit payment required to hold a property whilst contracts
are drawn up is between 3000 and 4500 euros (£2000 to £3000).
This non-returnable deposit will mean that the builder will: -
a) Withdraw the property from sale to anyone else for a period of up to
a two weeks, and
b) The price of the property will be frozen, and will not rise should
the builder increase his prices. The value of this deposit will come off
the final payment.
Within two weeks the builder will expect a payment of 25% of the total cost with a further 25% to be paid within the two months. The third payment of 25% will usually be due when the walls are finished and the roof is about to be built. The final payment will be when the property is completed.
One possible problem that could occur with a contract requiring large amounts of money to be paid at dates far into the future is that whilst the UK remains outside the Euro, there could be a change in the currency rate that means those future payments will be more expensive in pounds sterling than you currently expect (they could also be cheaper). There are ways to prevent this problem. One way would be an early transfer of funds into a Euro account (either in Spain or in the UK) thereby making your money immune to currency fluctuations. Another method would be to book your £/euro transfer at today's exchange rate. We will be happy to arrange a completely free consultation for you with an expert from Halewood International Foreign Exchange Ltd, who will be able to advise you of the options you have and explain the procedures involved.
Some builders ask for 40% of the final cost within the first two weeks, but as stated above, they can be flexible.
The initial deposit of between 3000 and 4500 euros will need to be paid in cash or with a Visa card. As a last resort Romero properties will accept payment by cheque, as this payment method is a lengthy and complicated one.
To find out about how Spanish consumer legislation protects you should be making staged payments, please visit our Question and Answers on buying a property by clicking here.
To find out about getting a mortgage click here.