Buyer’s Guide

General Guide to Buying Property

The following is a general guide to the steps and costs involved when buying a property in Spain. Each purchase may have its own distinct circumstances (for example a ‘new build’ will be subject to a different tax regime) so this guidance should not be taken as a definitive list of the process and costs you may encounter for your own purchase.

STEPS OF THE PURCHASE PROCESS

  1. Apply for an NIE number: Numero de Identidad de Extranjeros. This number is mandatory for anyone who is not a Spanish National who wants to take part in an economic activity within Spain. The NIE number is a unique identification for monetary transactions, property purchases, tax payments etc. An NIE application can be made through a lawyer in Spain, in person at a Spanish National Police office or at a Spanish Consulate in your country of residence.
  2. Open a Spanish bank account: Although it is possible to make payments for buying property and paying taxes and fees from a foreign bank account, it is highly preferable to use a Spanish bank account. For the sake of simplicity, we recommend a bank with an office in Órgiva. There are branch offices of CaixaBank, Banco Santander and Caja Rural de Granada. They all open weekdays from 08.30 to 14.00 and have ATM services.
  3. Deposit contract, pre-agreement: This simple contract (Compra Venta or Sales Contract) sets out the fact that the seller wishes to sell and the buyer wishes to buy, the agreed conditions of the sale and a date for completion. The buyer pays a deposit at this time, usually 10% of the purchase price. The contract acts as a receipt for the deposit. The compulsory arrangement in Spain if the buyer backs out is that the buyer will lose their deposit. If the seller backs out, the seller pays double the deposit to the buyer.
  4. Completion: New deeds (Escritura) are drawn up by the Notary (Notario) – who is a government appointed independent witness and qualified lawyer. The transfer of the property to the new owner is certified at Notary´s office (Notaría) with sellers and buyers (or their legally appointed representataives) present in person. Immediately before the sale can proceed, the staff at the Notaría will have obtained proof of valid ownership by the sellers from the Land Registry (Registro de la Propriedad) and will not allow the transaction to take place until they are fully satisfied with the information received. They will also have proof that there are no outstanding debts or mortgages on the property.
  5. The following documents must be presented:
    i) Proof of identity of the seller and the buyer (or of their representative who must also show a valid power of attorney) in the form of a valid passport and an NIE.
    ii) Proof of the buyer’s payment in the form of proof of transfer from the buyer´s bank account. Under certain circumstances the notario may also ask for proof of receipt in the account of the seller.
  6. The new deed of ownership by the buyer (escritura) is agreed and signed in front of the notary who then also signs, stamps and seals it. Once the deeds have been signed, there is a period of (currently) 60 days during which Purchase Tax at a rate of 7% is paid to The Junta de Andalucia. Once the tax is paid the property should be registered in the name of the new owner at the Land Registry. Dharmo and Associates will advise on and supervise these various processes.

COSTS

There are costs additional to the purchase price when buying a property in Spain and it is suggested that an extra 10–12% should be added to account for these. These costs are listed below:

Estate Agent’s Fees

Estate agents can set their own fees and charge a commission, usually a percentage of the sale price.

Dharmo and Associates charge: a nominal 2% plus IVA(VAT) on the agreed sale price. However for more expensive properties we are usually prepared to negotiate a lower fee.

Notary Fees

Notary fees are set by Spanish law and can be anything between €300 – €1,200, depending on the complexity and price of the property. Notary fees are normally split equally between the seller and the buyer.

Property Registry Fees

Registry fees are also set by Spanish law and depending on the complexity of the deeds and the purchase price are usually €400 – €1,000.

Lawyer’s/Agent’s Fees

Dharmo and Associates carry out a check at the Land Registry before the deposit contract is drawn up. This check (the results of which are included in a document called a Nota Simple) makes sure that the seller has the right to sell the property, that the property is free of debts and that the description of the property as advertised to the buyer is accurate. From the Catastro (Valuation Office) we will also obtain information, maps and aerial photographs of the property showing boundaries and, if applicable, access. The cost of these processes and of the drawing up of the contract is usually included in the overall agent’s fee.

Property Transfer Tax (ITP)

This tax, on transfer of a property, is paid by the buyer. The rate in Andalucía from 2024 is currently 7% of the purchase price.

It is essential that, once the new deeds are available, new owners register their names on the electoral roll at the local Town Hall (Ayuntamiento). Essential services such as drinking water, irrigation water, council taxes, electricity and internet must be transferred to the name of the new owners.

Dharmo and Associates will help and advise with these matters. This service is included in our fee.