Buyers Guide To Rural Property Sales In Andalucia - Andalucia Country Property

Guide To buying a property in Andalucia

General Process And Proceedures

This is general buyers guide for those of you looking for a property for sale in Andalucia. Whilst we have researched this information thoroughly I would strongly advise that you confirm all details with a qualified Spànish lawyer as purchase details and laws are constantly changingFirstly before we go into detail about the process of buying a property here in Spain let me just set your mind at rest in regards to the possible horror stories you may have heard in the press and seen on British television. Buying a Spanish country property is a very straightforward and safe process and with a few subtle differences the process is very similar to the U.K. As long as you use a qualified Spanish lawyer to protect your interests at all times then there should never be any problems. The golden rule is never sign any documents or part with any money without employing the services of a Spanish lawyer (abogado). Just like a solicitor in the U.K. the abogado is there to protect your interests and will make absolutely sure that the whole buying process runs smoothly and safely!

Preparation (Prior to your viewing trip)

Set your budget limit and stick to it. If you require a mortgage talk to your Estate Agent in Spain who will be happy to explain how the system works here and will also be able to introduce you to a reputable mortgage broker to discuss all your requirements. If you are planning to finance the purchase using a mortgage please be aware that in general the most you will be able to borrow is 70% of the property valuation. This figure is revised for Spanish residents to a figure of 80% but here in Spain there is no such thing as a 100% mortgage! It is important to have clear understanding from the outset the real costs you will face when you buy property in Spain. It is equally important to be clear about the ongoing costs you will face as a property. If you underestimate either of these costs you run the risk of getting into financial difficulty. Bear in mind that the actual cost will depend on your particular circumstances and will vary depending on the declared value on the escritura and if you require a mortgage.

To be on the safe side we advise that you allow for an extra 12% above and beyond the sale price of the property. These taxes and costs are broken down as follows and are approximate percentages allowing for declared values and variable service costs. The figures relate to a re-sale property only as new developments will vary depending on the agreed conditions.

PURCHASE COSTS

• 7% IVA for first 400,000 Euros and then 8% on the extra above this figure. (New legislation applies from July 2010)
• 1%(Variable) AJD (Stamp Duty)
• 1% Lawyers Fees
• 0.5% Notary Fees
• 0.5% Property Registration Fees

Mortgage Costs

If you choose to buy with a mortgage then this will incur several additional costs. First there will be the property valuation that the mortgage provider will require before granting the mortgage. This is paid for the by the buyer and can cost around 500 Euros. Then there will be the costs of the mortgage itself. This varies according to the provider, and even according to the particular branch. However there is usually some kind of opening fee of around 1% of the value of the mortgage. Finally a mortgage will increase the Notary expenses.

The cost of property ownership in Spain

There will of course be costs associated with owning a property in Spain. Some of these will be maintenance costs, such as cleaning, repairing, reforming, utility bills, rubbish collection, and so on. These will be determined by the size and type of the property you buy. Obviously a large villa with a garden and pool will require much more effort and cost to maintain than a small apartment.

Apart from the general maintenance costs referred to above, there are a number of costs in the form of taxes and fees that property owners in Spain face.

Property Ownership Tax (Impuesto Sobre Bienes Inmuebles - IBI)

A local tax on the ownership of property in Spain, irrespective of whether the owner is a resident or not. Calculated on the basis of the valor catastral (an administrative value that is usually lower than the market value, sometimes considerably so) set by the town hall the tax rate goes from 0.4% - 1.1% of the valor catastral depending on the Spanish region.

Annual Wealth Tax (Impuesto Sobre Patrimonio)

Both residents and non-residents have to pay an annual wealth tax on the net wealth they own on 31st December of each year. For non-residents this tax only applies to assets located in Spain. Non-residents who only own property in Spain (and no other types of assets) can expect to pay a wealth tax based on the value of the Escritura Publica or the valor catastral, or a value assigned by the tax administration for the purposes of other taxes - whichever being highest. The tax rate varies between 0.2 and 2.5%.

Decide on the area best suited for you!

Select the province and general area you feel will suit you and do some homework prior to your viewing trip. There are many excellent sources of information now available using websites, magazines and books. Talk to agents who will be happy to answer any questions or general queries you might have. If you have work, school or special health requirements speak to your Estate Agent who will be happy to advise you on the pros and cons of your areas of interest. Here is a list of questions that might be helpful when considering your new home and its location. These questions are especially important when considering relocating to the Spanish countryside.

1. How near do you require the nearest Airport?
2. If you require work, which area will best suit based on your skills?
3. Do you have children of a school age? If so are they to go to a Spanish or international school where English is spoken? Where is the nearest School?
4. If you have special medical needs, how far from the nearest hospital or medical centre are you prepared to live?
5. If you require public transport and are not intending to drive here in Spain what areas would best suit you?
6. How far are you willing to be from the coast and beaches?
7. What amenities in the local area are important to you?

Contact your agent and make an appointment

Once you have decided on your budget and the area you feel will best suit your requirements you will need to contact an Estate Agency. Make sure the Agency you select is fully licensed and qualified to give you a professional service. We would recommend that you only use an Agency that is a member of a professional body and therefore is accountable for its levels of service and business integrity. Simply Andalucia are full overseas members of the “National Association of Estate Agents” in the U.K. Remember the more notice the Agent has of your visit and the more information you supply of your requirements the better he can prepare for you.

What to bring with you!

When you find the perfect property and decide you would like to proceed with the purchase you will be asked to make a “Reservation Deposit” by the Agent through your Lawyer. This is standard procedure here in Spain and allows the property to be legally withdrawn from the sales market for a given period whilst the lawyer does contracts and searches. The standard deposit required will be in the region of 6,000 Euros. We advise that prior to your viewing trip you have access here in Spain to this money. Clients often use traveler’s cheques or increasingly use credit cards with prior authorization to cover the required amount. Please also have your passport with you, as the lawyer will require this for the contract.

Viewing

On arrival in Spain you will be met by your Estate Agent and taken to view a selection of properties that have been carefully selected to meet your requirements. We believe that viewing property in Spain should be an enjoyable, exciting and stress free experience. Your agent is here to help you and answer any questions that you have. Simply Andalucia prides itself on showing property rather than selling it. We are here to make sure you find the right property for you!

What happens when I find the ideal property?

1. Once you have found the right property and you wish to proceed with the purchase the process is very straightforward.
2. The first thing you will require is a fully qualified Spanish Lawyer, we can introduce you to one of several reputable lawyers or you are of course free to use your own lawyer should you have one available.
3. The lawyer will firstly draw up a reservation contract and take a deposit from you to remove the property from the sales market. This contract will be signed by the vendor of the property stating he agrees to reserve the property for a given period of time. This period is usually two working weeks allowing the lawyer to do all legal searches on the property and prepare a binding sales contract. Please be aware that this reservation deposit is usually non-refundable subject to the vendor’s property paperwork being fully in order! Should you require any special clauses inserted, i.e. “subject to a mortgage offer” then you must ask the lawyer if the vendor will agree to these extra terms. Should you decide not to proceed for any other reason the money will be kept by the vendor.
4. The vendor will now be asked to supply all required paperwork for the lawyer and he will then commence a thorough search on the property just as a solicitor would do in the U.K.

Paperwork required from the vendor

1. The title deed of the property
2. Receipt of payment of the real estate tax for the last year
3. Receipt of payment of the tax on the increased value of Urban Land
4. Certificate that any community charges (if applicable) have been paid up to date
5. Latest copies of domestic bills so that you can take over the services such as electricity and water

Lawyers Searches

1. The property is fully registered on the title deeds (Escritura).
2. The vendor is the owner of the property.
3. The property is free of all debts and embargoes.
4. The property has full rights of access.

Often on Spanish property there are anomalies on the paperwork. This is nothing to be concerned about as your lawyer can usually arrange for the necessary changes required to bring the property into line. He will of course advise you if there is a serious or insurmountable problem. In these instances full deposit monies will be returned and the sale will be aborted.

Prior to contracts being signed

1. Open a Spanish Bank Account
2. At this stage prior to signing your full contracts it will usually be necessary for you to open a Spanish bank account. This will be required for the purpose of transferring necessary monies. Your lawyer or estate agent will be happy to assist. Many banks here on the Costa del Sol have multilingual staff.
3. Currency

Due to the fluctuations of foreign currency against the Euros many clients decide to fix their exchange rate with a currency broker. Simply Andalucia will be happy to advise on this matter or alternatively use our direct service on the home page of this website and talk to a representative directly via e mail or telephone call.

N.I.E Number

This is a unique fiscal number required for the registration of your title deeds. The process of obtaining one is very straightforward and your lawyer or Estate Agent will arrange this with you.

Power of Attorney

Many clients decide that they would prefer to avoid the expense and time involved in traveling to Spain for the signing of private contracts and completions. Creating a “Power of Attorney” allows your lawyer full legal permissions to sign any required paperwork on your behalf. This power should be a once only power appertaining to the purchase of the property and is signed in front of a Spanish Notary by yourselves.

Private sales contract (Compra Venta)

Prior to completion

Your lawyer will contact you prior to completion to agree the date and time of completion. At this point he will advise on the transfers of monies required. Should the transfer be via a currency broker you must contact them and make sure that the funds are sent to your bank account in Spain. Please allow a minimum of seven working days for the transfer to arrive in Spain. You don’t want a panic on the day of completion waiting for the funds! If your lawyer has a power of attorney to sign on your behalf he will require full permissions to access your bank account to withdraw the necessary funds.

Completing on your property

The process will then be as follows:

1. The Notary will ask for proof of identification of all present (you will need your passport or Spanish Residencia card).
2. The Notary will have a previously prepared copy of the sales contract with information from your lawyer. The Notary will go through the document line by line and ask all parties in turn if they are correct and if they wish to proceed. Your lawyer will be present throughout to explain anything you do not understand.
3. At this stage if all parties confirm they are ready to complete the buyer will pay the vendor all outstanding monies owed on the purchase.
4. The vendor and the buyers will now sign in front of the Notary the sales contract. The Notary will then stamp and sign the document and the sale is completed.
5. All keys to the property are handed to the new owner.
6. A copy of the transaction is immediately faxed through to the appropriate land registry confirming the transfer of ownership.
7. Your lawyer will pay all outstanding taxes due on the sale.

Congratulations you now own a property in Spain.

After Completion

As part of his service your lawyer will have arranged the following:

1. All utilities to be transferred into your name with direct debits where necessary from your bank account.
2. Registration with the local council of your details for payment of Spanish equivalent of council tax know here as I.B.I.( Impuesto Sobre Bienes Inmuebles)
3. The receipt of your full title deeds (Escritura)

After Sales Support

Simply Andalucia know the value and importance of a good after sales service and we will be here to help and support wherever necessary and whenever necessary.

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