Everything you need to know about buying a house in Spain

Are you dreaming of a villa with a pool in Moraira, perhaps a cool apartment in Barcelona, or a charming townhouse in Andalucia? Well, you’re in luck because the Euro Weekly News has put together this in-depth guide on everything you need to know about buying a house in Spain – whether it be an investment or your new place of residence.

The thought of buying an investment property to spend the winter months or purchasing a home to start a new life in Spain are very exciting prospects. However, the Spanish real estate market has many quirks and it really pays to do your research, as well as seek the help and assistance of a trusted real estate agency in the location you are considering.

To get you started on your journey to finding out whether this is the right option for you, we have answered some of the most asked questions about purchasing a property in Spain, as well as detailing the fees you will need to pay, the documents you will need and information about deposits and mortgages.

What are the requirements for foreigners buying a house in Spain?

In legal terms, the only thing you need as a foreigner buying a house in Spain is your NIE certificate (Numero de Identificacion del extranjero). This is a number that is unique to each individual and is essential for carrying out transactions in Spain. You will need to apply and obtain your NIE number before anything else, as it will need to appear on all of the documents you sign.

Getting your NIE number is not complicated, but does require filling out forms and can take a while to process. If you are in any doubt about getting your NIE your real estate agent can do this with you, which will also speed up the process.

Another thing that is handy to have is a Spanish bank account. While this is not compulsory, it will make all of the formalities a lot easier because payments will be processed faster and this could probably even save you some commissions.

You should also note that once you are the owner of a property in Spain, you will need to appoint a tax representative if you are not a resident.

If you are looking to buy an investment property to rent out as a holiday home you will need to check the regulations, as each of Spain’s 17 regions has the power to set rules around foreign buyers purchasing property to let out. The most stringent rules are in the Balearic Islands, where only Spanish residents can apply for buy-to-let licenses, and Madrid, where new measures include only allowing stays of up to five days.

Can expats buy a house in Spain and do I need to be a resident?

Although buying a house in Spain might be more difficult than before, it is still a very welcoming country for foreign buyers and the rules for expats purchasing property are pretty straightforward.

A popular route is the Golden Visa programme for foreign property owners and buyers. Under the scheme, if you invest more than £500,000 in Spanish properties, you’ll get a residency visa. Golden Visas are primarily for retirees and holiday home buyers but are particularly popular with investors from outside the European Union.

There are many reputable companies and estate agencies that can help you to obtain your Golden Visa and guide you throughout the process.

What documents and paperwork do I need to buy a house in Spain? 

The relevant paperwork that you need includes:

• Liaison throughout the transaction with representatives of the Buyer and Notary. 
• The organisation of the Notary appointment and all paperwork related to the sale. 
• Translation at/of the Notary. 
• Deeds of the property. 
• Calculation and advice regarding Capital Gains Tax. 
• Preparation of utility contracts, community charges, and “Suma” invoices. 
• Your NIE and passport. 
• Fiscal representation throughout the whole process. 
• Calculation of 3 per cent retention. 

You should also make sure that you have seen the following documents before closing the deal on your new property:

• A paid-up receipt for the previous owner’s annual property tax (IBI). It is also wise to get a certificate from the town hall to prove that there are no unpaid rates from previous years.
• The cadastral certificate gives the exact boundaries and square metres of your land. This will be linked to the land register record by a cadastral reference number. The property and land descriptions contained in both records must match.
• The licence of first occupancy or habitation certificate issued by the town hall. You will need this document to connect to electricity and water companies. Developers cannot force you to complete without this licence.
• The receipt to prove all utility bills have been paid by the previous owner.
• If applicable, a certificate signed by the President of the Community of Property Owners (see Comunidad de Vecinos) stating that there are no outstanding debts. You should be aware that if you later find that there are such debts outstanding, as the new owner, you assume the debts for both the current and previous year.
• From 1 June 2013, all homes for sale or to let in Spain have been required by law to have an energy efficiency certificate. If you are considering buying a property, the seller is obliged to show you this certificate.

Upon completion, the public deed should contain an accurate description of the property and you should register the property in your name with the Land Registry as soon as possible. This will allow you to ensure full protection of your rights. The notary can even send advance notification to the Land Registry electronically once the public deed is signed.

I’ve found the house I want to buy, now what?

Once you’ve found a house you like, you’ll usually need to make an offer through the seller’s estate agent.

If the offer is accepted, then the buyer and seller sign a preliminary contract (contrato privado de compravento) and the buyer pays a deposit, typically 10 per cent of the purchase price.

Taxes and additional costs  

Taxation in Spain is a complex issue and the taxes associated with buying and selling property in Spain can and will differ from region to region.  Property taxes also vary depending on whether you are buying a brand-new property or a resale property.

There are no fixed fees for lawyers or estate agents. Buyers must pay the majority of the costs, which are generally as follows:

• Property transfer tax: 6–10 per cent (existing properties) / VAT (or IVA) at 10 per cent (new properties)
• Notary costs, title deed tax, and land registration fee: 1–2.5 per cent
• Legal fees: 1–2 per cent (including VAT)

The seller usually pays the estate agent fees in Spain. Estate agents usually charge their fees as a percentage, typically around 3 per cent of the final sale price.

Mortgages and deposits when buying a house in Spain

Generally, non-resident buyers in Spain can enjoy the same mortgage conditions as Spaniards, for example, up to 80 per cent cover in the case of a first home, and between 60 and 70 per cent in the case of a second home.

This means that you need to have a minimum of 20 per cent of the price of the available property, plus approximately 15 per cent extra on the cost of the property to pay taxes, lawyer’s fees, notary fees, etc. In addition, your debt cannot exceed 30-35 per cent of your income.

Other important information to note is that mortgages in Spain are usually taken out for a minimum of five years and a maximum of thirty, with a maximum age of 75 years for completing the mortgage.

Why it’s important to use an estate agency when buying a house in Spain

It’s really important to use a trusted and reputable estate agency to walk you through all of the processes and paperwork, and to make sure everything is above board. An estate agent can provide a wealth of information and experience about the region, assist you in your own language, and even help you find a property lawyer.

Take a look at our guides on purchasing property in various areas of Spain, the best estate agencies to help you and more.

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