Foreign home ownership: steps to follow when buying in Spain

Paul Urrutia Subinas

Partner, LEIALTA

Steps to follow to buy a flat in Spain as a foreigner

Are you thinking of buying a home in Spain as a foreign owner? Not sure what procedures to follow or how to begin? According to a report from the Association of Property and Commercial Registrars of Spain, the purchase of Spanish houses by foreigners, especially in tourist hotspots, was the source of 10.73% of all sales in the third quarter of 2020. Consequently, there are many foreigners who choose to buy first or second residences in our country, but some are unsure of the paperwork involved in order to buy an apartment in Spain as a foreigner in a safe and legal way.

Steps to follow in order to buy a home in Spain as a foreigner.

If you have visited Spain and fallen for the charms of the Spanish way of life and sunshine, these are the steps you should take in order to buy a house in Spain as a foreign homeowner:

Research and compare: As can be expected, the first step is to look and compare. There are many websites that offer properties currently on the market, where you can find flats, apartments or houses for sale, such as idealista.com; pisos.com, fotocasa or Milanuncios. It is important to compare prices and exercise caution when prices appear too low or if very few (or no) photos are posted.

Visit the property. As obvious this may sound, it is a wise idea. By seeing the house, you can also check its orientation, the amount of daylight it receives, how much noise can be expected from the street or from neighbours, what the communications are like and what amenities are nearby. Furthermore, a trusted surveyor should be engaged to check for structural issues that the house may have which may reduce the asking price or may involve paying for building work.

Register for a NIE. NIE is the abbreviation of Número de Identidad de Extranjero, i.e. Identification Number for Foreigners. This is needed for proving your identity when buying a property, paying taxes and carrying out other related paperwork. The NIE number can be requested at a Spanish police station or at the Spanish embassy in your country.

Check the ownership, description, and fees of the house. Once you have chosen the house to buy, you should check who the owner is, whether the property has any loans attached to it and how the property is described (the floor area and built area, etc.), and whether easement of access, or fees, or mortgages are involved.

Negotiate the price and sale conditions. Make sure that the sale purchase agreement includes the date of sale, identifies who pays the costs involved and which Notary Public has been chosen to oversee the deal. It is wise to seek legal advice from a law firm specializing in real estate.

Sign an earnest money agreement (contrato de arras). Sometimes a private agreement, known as an earnest money contract, is signed prior to meeting with the Notary Public. This is a contract in which the seller and the buyer agree on the sale and the buyer gives the seller a deposit of roughly 10% of the sale price.

Sign the sale purchase agreement. Both seller and buyer must meet at the Notary Public’s office to sign the contract. This is when the buyer hands over the rest of the money owed (or the bank will if a mortgage has been agreed).

Pay costs and taxes arising from the sale purchase agreement. Buying a property in Spain as a foreigner involves similar costs and taxes as those levied on Spanish homeowners. These include:

  • VAT or Property Transfer Tax (ITP) depending on whether it is a first or second transfer of assets.
  • Municipal capital gains tax, which will be paid by the seller.
  • Stamp Duty, which is sometimes waived;
  • Notary fees to complete the sale. These duties are set in accordance with a pricing scale that can be checked at the Notary Public’s office to find out what the fee for a particular property will be.
  • Property Registry fee to file the details of the sale. These fees are also set in accordance with a pricing scale that can be checked at the Registry office prior to purchasing a property.
  • Agency fees for handling paperwork concerning registering the property and filing the sale purchase agreement correctly. In Spain, there is no obligation to involve an agent when purchasing property, but doing so saves time, despite it being an added cost.

Filing the sale purchase agreement. The deed of sale is registered at the Property Registry so that the home ownership is filed under your name.

As detailed above, buying a home in Spain as a foreigner involves procedures that take time and assistance should be sought from a Spanish advisory service who can provide support throughout the process and can undertake some of the paperwork on your behalf.

Leialta website: https://www.leialta.com/en/

Blog for doing business in Spain: https://www.leialta.com/en/blog-for-doing-business-in-spain/