Financial information
I THE PROCEDURE FOR BUYING A PROPERTY
Once you have chosen a property you would like to purchase Costa Real Estate will negotiate with the Seller in order to get the best possible price. When both Seller and Buyer have agreed on the price there are several ways to proceed, the most likely being:
1. Reserving the poperty by paying a sum of -usually- €3000, this way ensuring that the property is taken of the market. This sum is in most cases refundable, unless you pull out for no obvious reason.
2. Exchange of private contract of sale usually within 2 weeks after reserving the property. The private contract (Contrato de Arras), will include details such as the agreed purchase price, the amount already paid as reservation fee, and the date of final completion at the notary. At this stage your lawyer will have started his checks to make sure the property is free of outstanding mortgages or any form of debts. Of course, we will be more than happy to help you to find an experienced and reliable lawyer. If relevant your lawyer will arrange with the Seller the procedure for the cancelation of outstanding debts. At the signing of the private contract you will have to pay 10 per cent of the agreed purchase price, minus the reservation fee of €3000. From now on both Buyer and Seller are considered strongly committed to this deal and therefore the 10 per cent you paid is under no condition refundable. In reverse, if the Seller decides to pull out he will have to refund you your 10 per cent and pay an additional 10 per cent as a penalty.
3. Completion at the notary usually takes place 4 to 6 weeks after the exchange of private contracts. At the notary the public title deeds, (Escritura de compraventa), will be signed in the the presence of a notary, the final payments will be made and the Seller will hand you over the keys of the property.
II COSTS INVOLVED: FEES AND TAXES
When purchasing a property in Spain you should add some 8 to 10 % to the price of the property to cover expenses. The 8 % applies to ´cash buyers´ whereas people who need a mortgage will be confronted with higher expenses, around 10 %.
The fees:
- Legal fee: €1200 or 1 % of the purchase price, depending on whichever amount is higher, plus 16 % VAT
- Notary fee: €300 to €900 depending on the declared value of the property
- Property registry fee: 60 % of the notary fee
The taxes:
- For a re-sale property: Transfer tax (ITP): 6 % of the declared price
- For a new property: VAT (IVA): 7 % of the declared price, plus 1 % Stamp Duty
- For plots, commercial premises or garage spaces: VAT (IVA): 16 % of the declared price
Usually the Seller is responsible for paying the Capital Gain Tax, (Plus Valia), but in some cases it may be agreed, as part of the deal, that the Buyer will pay this tax.
Should you decide to finance your purchase (partially) with a mortgage, Costa Real Estate can assist you, or take care of the whole process, in obtaining one. Through the years we have built up good contacts with several banks and we will always check with several banks which banks offers the mortgage meeting your individual needs best.
Some facts about Spanish mortgages:
- Interest rates are annually fixed at Euribor (the interest rate fixed by the European Central Bank) + 0,5 to 0,75 %
- Residents can borrow up to 80 % of the valuated market value of the property whereas non-residents can borrow up to 70 %
- The mortgage period varies from 5 to 25 years, depending on your preference
To obtain a mortgage in case you are not self employed banks require:
- A copy of your passport
- A copy of your last three months pay slips
- A copy of your tax return
To obtain a mortgage in case you are self employed banks require:
- A copy of your tax returns for the last two years
- A copy of your VAT and income returns for the current year
IV BUILDING YOUR OWN HOUSE: COSTS AND EXPENSES
The advantage of building is that you can get exactly what you want, and safe money in the process. Depending on how much work and supervision you are prepared to put in, you can save from 10 % to more than 30 % of the finished product. It is something like buying off-plan, in that you do not finish paying for the house until construction is complete, 12 to 18 months after you start. Plus, you cut the developer´s profit, from 10 % upwards.
Building costs:
So many variations come into building costs that it is extremely difficult to calculate an average price that means anything. Nevertheless, this table gives you some idea of what to expect.
- Basic construction: € 600-700 a square metre
- Good construction: € 700-800 a square metre
- Quality construction: € 900 and up a square metre
Basic construction means walls of large solid building blocks with no cavities and the use of basic flooring and finishing materials.
Good construction at the top end of the price will include cavity walls and some higher quality finishing materials. No air-conditioning or central heating and no marble.
Quality construction the sky is the limit here. Keep in mind that the area of location is also an influence. For example, labour costs are higher in Marbella than in the interior.
Building expenses:
- Architect´s fee: 8 to 9 %. Official college says 6 %, so you can try to negotiate
- Aparejador (Building Engineer): 2.8 %. He supervises building construction
- Building licence: 4 to 5 % (varies from town to town)
- First occupation licence 0,5 %. This is issued when electricity and water are connected and the house is ready to inhabit
- Declaration of new construction: 0,5 %. To be paid when the house is registered for taxes