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THE AIPP / RICS / RDEGUIDE TO BUYING A PROPERTY IN SPAIN
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
03 Why this guide?
04 Who are the AIPP?
05 Who are RICS?
06 Who are the RDE?
07 Frank and Diane want to buy abroad 08 The property search Property portals, search engines, print, high street agencies, propertyfinders.WhybuythroughaRICS/AIPPmember.
12 Spain’s variety environment Thecountryside,smalltownsandvillages,cities,seaside, urbanisationsandresorts
14 Where in Spain? CostaVerde,Catalonia,CostaBlanca,CostaCálida, theSouthernCoast,theBalearicandCanaryIslands
16 Planning to view Howtoview.Shouldyoutakeaninspectiontrip?
17 Team Frank and Diane Lawyer,gestor,currencyspecialist,gettingamortgage
Contents19 Viewings Allowingforbuyingcosts,checklist,whattolookfor
20 Buying the property Thereservationagreement,obtainingyourNIEnumber,eight thingsyourlawyermustcheck. 23 Preliminary sales contract (arras) Payingfromataxhaven,delayingthesale
24 Contract of sale (escritura) TheNotary,powerofattorney,rentedproperties
26 Registering ownership
27 Inheritance
28 Contributing authors
29 APPENDIX ONE Applying for Registry information
31 APPENDIXTWO The costs of buying property in Spain
33 APPENDIX THREE Related links
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
We are going to tell a simple but exciting story, about a couple who buy a house in Spain.
Ourcouple,FrankandDiane,havedreamedaboutthishomeforalongtime.Theyhavetalkedaboutit,planneditandsavedforit.Buttheyareworried.AftertheirmainhomeintheUKthiswillbethemostexpensivethingtheyeverbuyandtheyintendtodoitright.Theyhaveheardaboutpeoplewhohadthesamedreamanditallwentwrong,whoendeduplosingmoneyorevenhavingtheirhomesdemolishedbecausetheyweredeclaredunsafeorillegal.Thisisthestoryofhownoneofthosethingshappentoourcouple.
Butitcouldhavedone.WewillfollowFrankandDianeastheygothroughtheprocessesofbuyingahomeinSpain.AlongthewaywewilllearnthedifferencesbetweentheSpanishregionsandenvironments,fromthewetandwildcoastofGaliciatothedesertsofAlmanzora.WewillinvestigatetheprocessesofSpanishpropertybuyingandshowyouhowtobuysafely.WearebasingFrankandDiane’sexperiencesonthethousandsof
peoplethatweattheAIPP,RICSandRDEhavemetandadvisedoverthepasttenyears.FrankandDianearenotspecificpeople,buttheyhavethesamedreamsandfacethesamechallengesasthetensofthousandsofrealpeoplewhowouldliketobuyabroad.WewillfollowthemfromtheirlivingroomsomewhereintheUnitedKingdom,togettingthekeysandsettlingdownintheirvillaonaSpanishseaside.AlthoughFrankandDianeareBritish,theycouldjustaseasilybe
LarsandLottefromBelgium,MaxandMiafromGermanyorShirleyandSheilafromAustralia.Thedangersareallthesamewhenfolks“leavetheirbrainsbehindattheairport”andtherewardsarethesamewhentheydoitright.Wehopeyouwilldownloadthisguideandkeepithandy.Feelfreeto
printitoffandpackitinyoursuitcase.IfyouhaveafriendthinkingofbuyinginSpain,pleasesenditontothem.Weknowitisimmenselyrewardingtodeeplysavouranothernationthroughimmersionintheircultureasfacilitatedbypropertyownership,andwehopethatthisguidehelpsyoutomakeawonderful–andsafe–startonyourjourney.
Why this guide?
©CopyrightAIPP/RICSSpain/RegistradoresdeEspana
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
TheAssociationofInternationalPropertyProfessionals(AIPP)isanot-for-profitorganisation,setupin2006,operatingintheinternationalpropertymarketandisbasedinLondon.TheAIPPnowhasover350corporatemembersin28countriesaroundtheworldincludingestateagents,developers,lawyers,banks,FX,media,technical,advisory&otherinternationalpropertyprofessionals.
The AIPP focuses on two key things:
1. Championing & delivering buyer education and protection through our free buying guides & seminars backed by the AIPP’s Code of Conduct, Arbitration and Dispute Resolution Services. Allofourservicesarefreetopropertybuyers.TheAIPPpresentedtheindustryWhitePapertoUKMembersofParliamentintheHouseofCommonsinNovember2014,withcallsforanAPPG(AllPartyParliamentaryGroup)fortheinternationalpropertyindustry.TheAIPPisalsoaTrusteeoftheInternationalPropertyEthics&StandardsCoalition.
2. Guiding the international property industry to best practice. The AIPP,withitspartners,isnowbringingtothetradeasignificantnewdigitalinitiativetotransformhowdevelopers,agentsandbuyerscantransactamoresecurepropertysale.
Thesaleofpropertyisusuallyan(officially)unregulatedactivityinforeigncountries(itisintheUKtoo,althoughRICSBlueBookisaimingtoimprovestandardshere),yettouchesuponsignificantfinancial,tax,estateplanningandotherownershipissues.Ifyouareatallunsureabouthowtonavigatethemanyissuesthispresentsthenpleasedocontactanindependentfinancialadviser.TheAIPPisnotregulatedtogivefinancialadviceand,accordingly,wedonotseektodosohere.YoucanfindoutmoreabouttheAIPPatwww.aipp.org.uk,which
includesatwo-minutevideoonwhatwedo,free,forbuyers.Dotaketheopportunitytoresearchandconnectwithourmembersinyourcountryofchoice.Unfortunately,wecannotassistmembersofthepublicwithissues
arisingwithnon-AIPPmembers.Membersarelistedonourwebsitewithcurrentmemberstobefoundonourhomepagethroughthesimplesearchfacility.Acoupleofquicktipsbeforeyouread-on:doensureyouuseatruly
independentlawyertohandleanypurchaseyoumakeandyoumayalsobenefitfromreadingourfreegeneralbuyingguide‘How to Buy Overseas Property Safely’andour‘Guide to UK Pension Changes & Buying a Foreign Property’.Youcandownloadthesefreeofchargefromourhomepage.
Who are the AIPP?
Peter Robinson, Managing Director, AIPP
TheAssociationofInternationalPropertyProfessionals
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
Confidence through professional standards.
TheRoyalInstitutionofCharteredSurveyors(RICS)promotesandenforcesthehighestprofessionalqualificationsandstandardsinthedevelopmentandmanagementofland,realestate,constructionandinfrastructure.Ournamepromisestheconsistentdeliveryofstandards–bringingconfidencetothemarketsweserve.Weaccredit118,000professionals,andanyindividualorfirm
registeredwithRICSissubjecttoourqualityassurance.Theirexpertisecoversvaluationandresidential/commercialpropertypractice;propertyfinanceandinvestment;projectmanagement,planninganddevelopment;quantitysurveying;facilitiesmanagement.Fromenvironmentalassessmentstorealestatetransactions,
ifourmembersareinvolved,thesameprofessionalstandardsandethicsapply.Webelievethatstandardsunderpineffectivemarkets.Withupto
70%oftheworld’swealthboundupinlandandrealestate,oursectorisvitaltoeconomicdevelopment,helpingtosupportstable,sustainableinvestmentandgrowtharoundtheglobe.Withofficescoveringthemajorpoliticalandfinancialcentresinthe
world,weareideallyplacedtoinfluencepolicyandembedprofessionalstandards.Weworkatacross-governmentallevel,deliveringinternationalstandardsthatwillsupportasafeandvibrantmarketplaceinland,realestate,constructionandinfrastructure,forthebenefitofall.Weareproudofourreputationandsustainit,soclientswhowork
withaRICSprofessionalcanhaveconfidenceinthequalityandethicsoftheservicesprovided.
Alfredo Millá, Chairman of the Property Professional Group of RICS Spain
Who are RICS?TheRoyalInstitutionofCharteredSurveyors
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
The Colegio Nacional de Registradores de España, usually shortened to Registradores de España, is the Spanish Registrars Association.
Weareapublicandlegalbody,bringingtogetheralltheLandandCompaniesRegistrarsinSpain.Theseregistrarsarepublicofficersandlegalprofessionalsresponsibleformonitoringthelegalityofdocumentsauthorisedbynotaries,issuedbyjudgesandadministrativeauthoritiesorsignedbyindividuals,toensurethatonlycompletelyvaliddocumentscanberegistered.Tobearegistrar,itisnecessarytobeSpanish,withadegree
ordoctorateinlaw,andtopassacompetitiveexaminationonthecurrentlaw.TheessentialpurposeoftheLandRegistry,andthereforethebasic
functionofregistrars,istoensuresafetyinlegalrelationsconcerningpropertyrights.Bythepublicationofpropertyrightsthroughregistration,afterdebuggingdefectsallegedlyvitiatingthedeed,ifneeded,overallenforceabilityisachieved,makingtheserightsreachundisputedcategory.Onceregistered,noonecanclaimtoignoretheexistenceofthepropertyright,itscontentortheidentityofthepersontowhomitbelongs.TheAssociationwasfoundedin1886andbecameanofficial
professionalassociationinMay1934.Ouraims,apartfromcheckingmembershipandenforcinginternal
rules,aretocoordinatetheprofessionalactivitiesofregistrars,ensuringprofessionalethicsandtheproperexerciseoftheirfunctions,tocollaboratewithadvisorybodiesandpublicadministrationsonmatterswithinthecompetenceoftheregistrar,andtopromotethemodernisationoftheregistries.Topromotebestpracticesinregistrationmatters,withspecial
attentiontoconsumers,theAssociationalsoworksinternationally. Thatiswhywearepleasedtohelpinwritingthisguide.
Who are the RDE?The Spanish Registrars Association
Gonzalo Aguilera Anegón, Dean and President of the Spanish Land and Mercantile Registrars Association
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
Itis6.20onaTuesdayeveningintheUnitedKingdom.Sittingonthesofain theirhomeareFrankandDianeJones. ThecouplearewatchingAPlaceintheSunonChannel4,wherethepresenterisshowingacouplearoundavillainMojácar–somewhereFrankhadneverevenheardof.Theyhavewatchedtheshowbefore,butonthisparticulareveningtheyarelookingwithrathermoreinterestthanusualbecausetheyhavefinallydecidedthat nowisthetimetobuyahomeinSpain.Spreadoutonthecoffeetablearepiles
ofbooks,magazinesandnewspaperpropertysupplements,allaboutbuyingpropertyabroad.Sometheyhavebought foradviceandsomebecausetheylistproperties.TheyalsohaveDiane’siPadopenandhavebeenflickingthrough onlineproperties,lookingatmapsand
photosorproperties,evendronefootage.Theyhavegatheredalotofinformation,
becausetheywanttodoitright.Theyaredeterminedtheywillnotbethosepeoplewhorunintotroublewiththeiroverseaspropertypurchases.FrankandDianeareintheirmid-50sand
liveintheUK.Whyaretheythinkingaboutbuyingabroad?Althoughbothareworkingtheyalsobothhaveaneyeontheirretirement.Itwillnotbeanidleretirement;theyareasfitastheyeverwereand arefeelingadventurousaboutlife. Theirchildrenhavelefthometostart theirownfamiliesandFrankandDianeseeitastheirchancetoshineagain.Theywant toopenthemselvesuptonewexperiences,learnanewlanguage,meetnewpeople.WhybuyahomeinSpain?“Whynot?”
saysDiane.
Frank and Diane want to buy abroad
The World � Spain!
FrankandDianearefollowingalongtraditionofforeignersfallinginlovewiththeSpanishculture,lifestyle,environmentandweather.IthasbeenwrittenaboutpoeticallybyGeraldBrenanandLaurieLee,andhilariouslybyChrisStewartandPeterKerr.Readtheirbooksforatasteoftheexpatlifestyle.No-oneknowspreciselyhowmanyforeigners
liveinSpainbecausethelinebetweenlongholidayandsemi-permanentresidenceoftenbecomesblurredandmanypermanentresidentsdon’tinformtheauthoritiesoftheirpresence*.WhatwedoknowisthatBritonshavetraditionallybeenthebiggestforeignbuyersinSpain,witharound750,000BritsbeginningnewlivesinSpain.TheSpanishRegistrarsAssociationfoundthattheBritishmadeup16%ofpurchasesbyoverseasbuyersin2014(downfromnearly40%in2008).NextcametheFrenchwith10%andbuyersfromRussia,Germany,Belgium,SwedenandItalyallwithmorethan5%ofthemarket.Spainisstillattractingrecordnumbersof
tourists;65millioninternationaltouristarrivalsin2014setyetanotherrecord,againwithBritonsmakingupthebiggestcontingent.Itseconomymayhavesufferedinrecentyears,butSpainismorepopularthanever.
*When overseas residents don’t register with the authorities the government doesn’t allocate money to care for them in the health services, so it is vital for people living in Spain to register.
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
WhenFrankandDianeboughttheirUKhome20yearsagoithadbeenveryeasy.Achoiceoftwoorthreetownscloseenoughtoeachothers’workplaces,relativesandadecentschool,thebudgetdictatedbytheirdepositandearnings.Theyjustlookedthroughthelocalpaper,wentintoafewestateagentshopsandahandfulofviewingslatertheychoseahousetheybothloved.Everythingwassortedoutbythelawyersandestateagent.Niceandeasy.WiththeirSpanishproperty,thechoicesare
infinitelywider.Sotheirfirststepsaretoseewhattheycangetfortheirmoney,decidewhatsortoflifestyletheywouldlikeinSpain,andwhere.Theyhavebeentoldthattheyshouldbudget15%forbuyingexpenses.Ontheother
hand,theywouldhopetonegotiatealittlemoneyofftheaskingprice,sotheyhavedecidedtolookatpropertiesonorslightlybelowtheirbudget.
Finding a property DianeisalittlemoretechsavvythanFrank, sosheislookingviatheinternetandheisgoingforthetraditionalmedia.
Property “portals”Propertyportalsdidn’tevenexistthelast timeFrankandDianeboughtahouse.Now,virtuallyallpropertiesappearonthem,ineverycountry.Portalsarenotestateagents,theyaremorelikeanonlinemagazinewhereindividualestateagentspaytolisttheir
The property search
Property Portals
Whatportalsdowellisshowingthepropertiesinauser-friendlywaywiththeverylatesttechnology.Theycanevenbeusedonthemove,toresearchpropertyforsaleinaSpanishvillage,forexample,whilesittinginthevillagesquare!Onhertabletdevice(iPad,Nexus,Hudl,etc)Dianeisabletobringupanonlinemapanddrawwithherfingeronthescreenaroundtheareainwhichsheisinterested;instantlyeverypropertywithinthatareaappearsonherscreen.Thebiggestportalsineachcountry–
RightmoveintheUK,SelogerinFrance,Immobilienscout24inGermany–eachhaveaninternationalsectionwithhundredsifnotthousandsofSpanishproperties.Dianealsodiscoverssomespecificallyoverseaspropertyportalssuchaswww.aplaceinthesun.comandSpainspecialistssuchaswww.kyero.com.ThereareportalsaimedatSpanishbuyersbutwithlistingstranslatedintoEnglishtoo,suchas www.idealista.com/en,andiftheyarenotinEnglish,suchaswww.pisos.com,herbrowser(Chrome,Safari,etc)hasasettingthatgivesheraninstanttranslationfromSpanishtoEnglish.Bytheendofhersearch,Dianehassaved50
propertiesinvariouspartsofSpainthatshehaskeptforacloserlook.
CRUNCH POINT: Onedownsidetoportalsisthedifficultyinknowingifapropertyisreallyforsale.Thereisa
tendencyamongsomeagentstolistattractive(orattractivelypriced)propertythatisnolongeravailable,toenticecustomerstotheirownwebsites.Mostportalsaredoingwhattheycantodiscourageagentsfromdoingit.Youmayalsoseethesamepropertylistedbydifferentagents.
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
properties.Tousetheportal,Dianegoestothewebsite,typesintothe‘Search’boxherchosenarea,typeofproperty(villa,apartment,farmhouse,landetc),minimumandmaximumbudgetandnumberofbedrooms.Instantlytheportallistsallthepropertiesthatmatchhercriteria,fromarangeofdifferentagents.Shecanthenflickthroughthemandsave
toherowndedicatedlistanyshewantstotakeacloserlookatlater.ShealsoprintsthedetailsoftheonesshelikestoshowthemtoFrank.Withacoupleofthepropertiesshelikesmostofall,Dianeclicksonthecontactdetailstoseewhotheagentisandwhatelsetheyoffer.
Search EnginesPortalsarenottheonlyresourceonline. AfterafewsecondsofGoogling,Dianefindshundredsofestateagentwebsitesandonlinemagazinestolookat.Aswellasthese,shealsofindsherself
invitedtosignupforfreeguidesofferingadviceonbuyingpropertyinSpain.
CRUNCH POINT: This is a potential risk.Peoplewiththemoneytobuyapropertyabroadareatempting
targetforanyone,honestornot,tryingtosell“investments”.TherelaxationofUKpensionrulesin2015hasmadethoseover55evenmoretempting.Thefirststepingettingyoutopartwithyourmoneyoftensoundsinnocentenough–a“pensionreview”forexample,orafreedownloadableguide.Thevastmajorityoftheseareentirelyinnocentandoftenveryuseful;atworstyoumaygetasalescallfroman“investmentexpert”.Butwhengivingoutpersonaldetailsuseextremecare,especiallywhenitcomestofinancialdetails.
Six critical reasons to buy through an AIPP/RICS member
Sadly,thesecommentsaretypicalofthoseyouhearwhenbuyingpropertyinSpain.AIPPandRICSmembersareboundbyCodesofConducttoofferanhonestservice.AIPPManagingDirectorPeter Robinson answerssixcommonquestions:
1. Is buying a home in Spain difficult? Notatall!However,potentialheartache,timeandmoneycanbesavedbyjust‘startingright’.Mostpeoplepurchaseaforeignhomewiththeirspouseorpartnersoitisveryimportantthatyouarebothcompletelyinagreement,thatyouwantthesameoutcomes,samecountry,region,propertyandlifestyle.Takesomequietandreflectivetimetopondertheseissuesandperhapswritedown,separately,whatitisyoureallywantbeforeembarkingonyourjourneytogethertowardsapurchase.SelectingagoodagenttoworkwithisevenmoreimportantthanintheUKastheprocessofbuyingandthensupportfollowingapurchaseisdifferent.Itcantakemuchlonger(often6-18months)tofindtherightlocationandpropertyinSpainanditwillbeamorecomfortableprocessifyouragentisreputableandcanofferyoutheappropriate,expertguidance.BeingamemberoftheAIPP/RICSisagreatstart.
2. Any tips on budgeting? Ifyouhaveapropertyinyourhomecountryyouunderstandwhatitcoststobothbuyandownaproperty.ButwhilethesalespriceofyourSpanishpropertymaybeappealing,theactualcostofbuyingand
owningitmaybehigherthanyouthought.Forexample,whenjudgedagainstaUKor
Australianpropertybynumberofbedroomsorpersquaremetre,aSpanishpropertymaybeverywellpriced.Butyouneedtofactorinaround12%-15%forbuyingcosts,especiallywhenbuyingusingamortgage.Thesecostsneedtobepaidforincashandcovermainlylegal,notaryandlocaltaxes.Therunningcostsmustbecarefully
consideredtoo.Hotterweatherandtheeffectsofseaaircanmeanspendingmorecareandcashonyourproperty.Detachedvillaswithprivatepoolsneedmorecaretakingthananapartment,forexample,andtherewillbelocalmunicipaltaxestopaytoo.Itiswiththisinmindthatbuyersshouldconsidertherentalappealoftheirproperty,andindeedwhetherlocallawsallowthemtorenttheirpropertyout.Rentingoutyourpropertyevenforashorttimecanhelptooffsetorcompletelycoverthecostsofmaintenanceandownership.However,thisincomewillbesubjecttotaxationsodoyoursumscarefullyandcheckwiththeauthorities.
3. Could we save by not getting a lawyer?FewBritishpeoplewouldbuyapropertyintheUKwithoutappointinganindependentlegalrepresentative,andthesamegoesinmostcountries.Sowhytaketheriskwhenbuyingabroad?TheAIPPandRICSadviseappointingatrulyindependentlawyer(abogado)whoonlyhasyourbestinterestsatheart.Alawyerlinkedtotheagent/developersellingthepropertymaybe
“Thatcrack?Purelycosmetic.”“Youdon’tneedasurvey,no-onegetsthem.”“I’vegotamatewho’salawyer;he’lldoitmuchcheaperandquicker.”“Okay,ithasn’tgot‘official’permission,butthisisSpain!”“No,it’ssimpletogetutilitiesconnected,they’lldoitonyourfirstmorning.”
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
Magazines, newspapers, booksFrankishappierusingoldtechnologyandoverthecourseofaweekhasgatheredupapileofmagazinesandnewspapersupplements.Mostnationalnewspapersincludeapropertysupplement,especiallyattheweekends,andtherearealsomagazinesdevotedtooverseasproperty,suchasAPlaceintheSunintheUK,orglobaltitlessuchasAbode2.ManycountriesalsohavespecialistmagazinesdedicatedtoSpain,suchasLivingSpainintheUK.Allofthesecarryadverts(aswellasadviceandinformation)forpropertyinSpain.Frankhasalsobeentohislocallibraryand
orderedbooksonbuyingpropertyandretiringtoSpain.Lookingcloser,henoticeshoweverthatmanywerewrittenatleastadecadeago.
BUYING TIP Asafirststepintheirsearch,Frankhasboughttwoidenticalcopiesofapopular
overseaspropertymagazine.HekeepsoneforhimselfandgivesonetoDiane,andeachofthem,separately,circlespropertiesinthemagazineusingcolouredpens.ApropertyFranklovesgetsagreencircle,onehequitelikegetsorangeandapropertyhedislikesgetsred.Onlyafterfinishingcirclingalltheirpropertiesdotheyswapmagazinestoseewhattheotherreallylikes(andhates!).
Six critical reasons to buy through an AIPP/RICS member (cont...)
workingforthe‘deal’.Bewaretheterm‘solicitor’too.InEnglishitnormallymeansaqualifiedlawyerbuttranslatedfromSpanishitmayrefertosomeonewithoutanyformallegaltrainingbutwithabusiness‘advising’onpropertysales.YoucanfindabogadoswhoareAIPPorRICSmembersat www.aipp.org.ukandwww.ricsfirms.com.
4. What about a survey?YounormallygetasurveydoneonaUKproperty,sowhynotonaprospectiveSpanishhome?Manyrepossessedorunsoldhomesbuiltintheboomof2000to2007havelainempty.Unlessyourpropertycomeswithaspecificguaranteethatyourindependentlawyerverifies,thenAIPP/RICSrecommendyouhaveabuildingsurveycompleted.Ifyouarebuyinga“resale”property,previouslyownedandoccupied,asurveyiswellworthhavingtoo.Spanishbuildingregulationshaveimprovedimmeasurablyoverthelast20yearsorso,butevenmorerecentpropertiesmighthavebeenbuiltby‘cuttingcorners’andneedcheckingoverbyaprofessional.
5. What issues do permanent emigrators face?Relocationforshort/longperiodsoronapermanentbasisbringsdifferentconsiderations.SchoolstendtorequireapplicationsinJanuaryfortheautumnintake.Taxresidencyisabigsubjectandyoushouldtakespecialist,regulatedadvice.IfyouarereceivingapensionintheUKyouneedtoconsidertheupside/downsideofsterlingcurrencyfluctuationsintoeuros.Acurrencybroker(severalmembersarelistedontheAIPPwebsite)canhelpyoumanage
yourmoneyanddeliverbanktransfersthatcouldsignificantlyimprovewhatyoureceiveversusyourbankdefaultoption.HealthcareisfreelyavailabletoEUcitizensinmemberstatesbutyoushouldregisterwiththelocaldoctorandsatisfyyourselfthatyourSpanishlanguageskills,orthedoctor’sEnglish,aregoodenoughtobeunderstood,perhapsinanemergency.HospitalsvaryintheirabilitytounderstandEnglishandcanbehard-pressedtocopeifasignificantnumberofolderexpats(ofmanyforeignnationalities)liveclosebyandarefrequentusersoftheirservices.Planningeverydayconsiderationsaroundanup-to-datepassport,Europeandrivinglicenceandthelogisticsofmovinghousecontentsinalorryforapermanentmove,alsoneedcareandattention.
6. Planning for the future MakingalegallybindingwillinyourhomecountryandSpainisveryimportant.Inheritanceandsuccessionplanningmaybesobersubjectsbutyouwillneedtopaycarefulattentionifyouaretoleavetoyourfamily/beneficiariesallthatyouintended.On17August2015,EuropeanUnionlegislationon‘forcedheirship’changedaccordingtoregulationnumber650/2012.AnypersonthenowningpropertyinaparticipatingEUstate(whohastakenappropriateactionbeforetheirdeath),canchoosebetweenthelawofthecountryoftheirhabitualresidence,orthelawoftheirnationalitytogovernthedevolutionoftheirEUestate.Betweenyourhomecountry,SpainandtheEuropeanUnion,rulescanchangefrequently,sogettingproper,up-to-dateandregulatedtaxadviceisessential.
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
On the high streetWhenevertheygotoSpain,FrankandDianeenjoylookingatestateagentwindows.It’sagoodplacetostart,becauseevenwiththegrowthofportalsandtheweb,goodpremisesisanearlyindicationofarespectableagent.Alocal,trainedandexperiencedagent
shouldbeeveryhomebuyer’sbestfriend.Althoughpaidbytheseller,itisthebuyertheyneedtoimpressandtheyshouldbepricingpropertyfairly,buttosell.Theywillbeabletoofferguidanceonallaspectsofthearea,thepropertyandthebuyingprocesses.Manywillstayintouchandhelpbuyerslongafterthesale–thisisaspecialisedmarketwherewordofmouthrecommendationgoesalongway!YoursafestbetistobuythroughanAIPP
and/orRICSmember,astheyaretrained,vettedandhavesigneduptoacodeofconduct.ToseeAIPPandRICSmembersworkinginSpain,consulttheirwebsitesatwww.aipp.org.ukandwww.ricsfirms.com.
BUYING TIP Spainhasprofessionalorganisationsforestateagents,bothatlocallyandnationally.Bestknown
nationallyareAPI(AgentesdelaPropiedadInmobiliaria,www.consejocoapis.org)andGIPE(GestoresIntermediarioenPromocionesdeEdificaciones,www.gipe.es/en).APIandGIPEmembersshouldbetrained,butensurethattheagentyouchooseisstillamember(orwaseveramember)bylookingattheorganisations’websites.Frankispuzzledtoseethesamepropertyon
rivalagents’websites.Therecouldbeseveralexplanationsforthis.Thesellermaybetryinghisluckwithtwoormoreagents,justastheydoinothercountries.Theagenciescouldbeteamingup–whichmakessenseinSpain,whereoverseasbuyersoftensearchacrossawiderangeoflocationsandispossibleduetotherelativelyhighcommissions.Anotherpossibilityisthattheagentislistingpropertyheisunauthorisedtosell,tomakehiswebsitelookmoreenticing–magicallythepropertywillhavebeensoldwhenyouasktoviewit!Rememberthatjustbecauseanagentis
fromyourcountryorspeaksyourlanguagewell,youshouldnotabandonallcaution.
Property findersAnotheroptionistoemploytheservicesofa“propertyfinder”.Theyaremostpopularwithexpatriateexecutiveswhoareshortoftime,butreceivearelocationbudgetfromtheiremployer.Propertyfindersareusuallyexpatsthemselvesandsoareabletoofferasupportive“handholding”roletonewarrivals.Thebenefitsincludebeingthebusybuyer’sfriendontheground,siftingthroughpropertyandhelpingtonegotiatepricesfromapositionoflocalknowledge.Intheorytheycouldpaybacktheirownfeesbygettingyouacheaperpriceandsavingyoutimeandeffort.However,thisisanunregulatedactivityand
youneedtobesurethatapropertyfindergenuinelyhascontactsandknowledgeinyourchosenareaandpricerange.
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
ForFrankandDiane,asformanypeople,buyinginSpainisaboutmorethanwarmweather.Itisthechancetoreassesstheirlivesandtheirpriorities.WhattheywanttodoinlifewilldeterminewhattheywantfromtheirSpanishproperty.Dotheywishtotakeonthechallengeof
livinginanentirelynewculturewherealmostno-onespeaksEnglish,orwouldtheypreferthesafetynetoffellowoverseasresidentsnearby?Dotheywantsomelandtoenjoyamorerurallifestyle?Couldtheycopewithlookingafterchickensandolivetrees,orwouldtheyreallyprefertojustrelaxbythegolfcourseandpool?Eveniftheywouldliketo,couldtheymeetthosechallenges,physically?Ifbuyinginretirement,dotheyhaveaplanforwhentheybecomemorefrail?Howaretheywithextremeheat?WilltheybeabletolearnSpanish;theycouldfeelveryisolatedinruralareasorsmalltownsiftheycannot.WilltheybespendinglongenoughinSpaintomaintaintheirowngardenandpool?Willtheyeverwanttorentthepropertyout?Ontheotherhand,cantheyaffordtobuythestress-freepropertieswhereeverythingisdoneforthem?Thesedecisionswilldeterminethesortof
environmentwheretheychoosetobuy.Hereareafewoptionsforthemtothinkabout.
Living in the countrysideSpainhasaround95peoplepersquarekilometre.TheUKhas265,Belgium370andtheNetherlandsnearly500.SofornewarrivalsfromnorthernEurope,Spainisbigger,emptier,hotterandfarmoremountainous. Gojustafewmilesinlandfromthecoast andit’snotunusualtoseefarmersridingdonkeysandshepherdstendingflocks. Thisisthe‘campo’,thecountryside. Peoplearejustaswarmandfriendlyas onthecoasts(maybemoreso),butthey areunlikelytospeakEnglish.Livinginthecampocertainlyhasits
attractions–thequiet,thespace,thebeautybothofthecountrysideandthefarmhouses,andallatamuchlowerpricethanyouwouldnormallypayforBritishruralproperties.Iflookingtobuyinthecountrysideyouneedtopaycloseattentiontowhereutilitysupplieswillcomefromandhoweasyaccesswillbein
weatherextremes.Historically,therehavebeenproblemsoverplanningandownershipofruralpropertiessoalwaystakeextracaretogetagood,experiencedlawyer.Bealittlecautiousifyourlawyerisrecommendedbyyourestateagent;mostareentirelyreputablebutinasmallcommunitytheycouldbecloselyconnectedsociallyorbyfamilyandbemoreloyaltotheagentwhoregularlysendstheworkthantothe‘oneoff’housebuyer.Certainly,youshouldnotusethesamelawyerastheseller.
Towns and villages50yearsago,thevastmajorityofSpaniardslivedinvillagesandsmalltowns.Fromthe1970stothe1990smorethan10millionmovedprovinces.Manyoftheyoungerpeoplemovedtothecoastslookingforbetterpaidworkinthetouristtradewhilemillionsmoremovedtothecities.Sincethen,however,inthesouthandeastespecially,expatsfromBritain,northernEuropeandevenfurtherafieldhavearrivedseekinganewlifestyleandrevivingvillagelife.Schoolshavereopened,villagefiestasbegunagainandlocalpeoplehavecashedinonoldpropertiesandland. Inthenorthernprovinces,therearestill entireabandonedvillagesforsale,while inAndalusiathepicturesque“whitevillages”havebeengreatfavouritesamong Britishbuyers.IfFrankandDianechoosetoliveinasmall
town,whetheronthecoastortheinterior,theywillhaveahugechoice.Theycouldlivein
Spain’s varied environment
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
atownlikeTorrevieja,inAlicante,withalargeBritishpopulationthathascreateditsowninstitutionssuchasweekendcarbootsales,andstartedthesameclubsandsocietiesasat‘home’.Ortheycouldoptforatownintheinteriorwithhardlyanyforeignresidents–butwithrichtraditionsandfiestasbasedaroundtheCatholicfaithortheruralwayoflife.TheymightnotfindmuchEnglishspoken,butwillbeabletoimmersethemselvesmorefullyinoneoftheworld’sgreatlanguagesandcivilisations.
The citiesBudgetflightstoMadrid,Barcelona,Alicante,Málaga,PalmadeMallorcaandsomanySpanishcitieshavemadetheideaofaweekendboltholeveryappealing.Whilecityapartmentsareoftenhighlyexpensive,andcitiescanbepollutedandnoisy,Spainhasinvestedheavilyinthosethingsthatbringintourists,suchastransportinfrastructure,museums,theartsandculture.Comparedtomanycountries’cities,Spain’sareclean,safeandwell-managed,withextremelygoodshoppingbothinstreetmarketsandhigh-endinternationalbrands.Andofcourse,thecafécultureintapasbarsandstreetcafésisunsurpassed.Therental
potentialforapropertyinthecitycanbe verytemptingtoo.
The seaside Mostoverseasbuyerscomefortheseaside.Itisn’tjustthechancetoswiminit,thecoastalstripalsohasthefacilitiesandinfrastructure–airports,golfcourses,nightlife,internationalschools,attractiveproperty,English-speakingprofessionals–aswellascoolingseabreezesandaready-madeexpatsociallife.Pricesare,ofcourse,moreexpensive,butyoumightnotnecessarilyneedaseaviewandmanyoftheseasideadvantagescanbehadafewmilesinland.Spainisblessedwithtwowonderfulislandgroups,theBalearicsintheMediterraneanandtheCanariesfurthersouthofftheNorthAfricancoast(whichmakesthemwarmallyear).
UrbanisationThewordurbanisationmaynotsoundveryenticing,buttherearesoundreasonsforexpatstochoosethem.Essentiallytheyarehousingdevelopmentsbuiltoutsidetownsandvillageswheretheownersformthemselvesintoacommunityandmanage thedevelopmentamongstthemselves. Thebenefitsofbuyingonanurbanisation
include:farlessriskofbuyingan‘illegal’property,theyareagoodwaytomeetthelocals(theSpanisharejustaslikelytobuyonanurbanisationasforeignersare),andyoucanhaveasayinhowyoururbanisationis runifyouchoosetogetaplaceonthemanagementcommittee(indeedyoumayhavetowhetheryoulikeitornot!).
Resort propertyThisisundoubtedlythestress-freeoption(solongasmoneyisn’tshort).BuyonaresortandFrankandDianewon’thavetoworryaboutcleaningthecommunalpool,wateringthegarden,maintainingtheroadsorfindingrentalguests.Dependingontheresorttheychoose,ofcourse,theyarelikelytobelivingamongawiderangeofforeignownersaswellasSpanish.Therewillbesocialandsportsactivitiesonsite,oftenincludingbeachclubs,golfcourses,tenniscourts,gymsandspas.Thedownsidesincludetheexpensive
managementandmaintenancefees,thesomewhatartificialnatureofsomeresorts,thecontroloverhowyoucandecorateyourhomeoutside(thiscanbethecasewithurbanisationstoo),thefactthatmanyofyourneighboursmaybeanendlesschurnofholidaymakers.
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
Costa VerdeNorthernandsouthernSpainhaveverydifferentclimates.Thenorth-west,stickingoutintotheBayofBiscayandtheAtlanticandknownasGreenSpainorCostaVerdecomprisesGalicia,Asturias,CantabriaandtheBasqueCountry.Itisgreenerbecauseitiswetter,withmountainsthatarestillhometo(afew)wolvesandbears,leadingdowntolushmeadowsandforestsandontofishingvillagesonthecoastthatstretchessome800kilometresfromFrancetonorthernPortugal.Howwetisit?It’swetterthanWales,with1,545mmofrainonSantiagodeCompostelacomparedto1,150mmonCardiff.TheCostaVerdeismuchlesstouristythantheothercoasts,butthatismoredowntotheunpredictableweatherthananylackofbeauty.Thereisa goodchoiceofruralpropertyhereatreasonableprices.
Catalonia and the North EastThemostwell-knowncityisBarcelona,themostfamouscoasttheCostaBravawithresortssuchasBlanes,LloretandTossadeMar.Itisagreen,ruggedandmountainouscoastwithsandybays.Althoughitattractedlargenumbersofpackagetouristsintheearlydays,ithasmadeaconcertedattempttogoupmarketinrecentdecadesandpricesherearerelativelyexpensive.Climate-wise,theweatherisperfectfor
summers,butcangetchillyinthewinter.IndeedanyonelookingforwinterwarmthshouldheadsouthofValencia.
The Costa BlancaSouthofValenciatheweatherwarmsupallyearandthemostpopularexpatareasstart.IthasaclimatejudgedbytheWorldHealthOrganisationtobethehealthiestintheworld,withwarmthallyearbuttemperedbyMediterraneanbreezes.CostaBlancaNorthisgreener,moremountainousandwithsmaller,quieterresortsandexpat-friendlytownslikeDéniaandJávea.Inland,theJalónValleyispopularwithoverseasbuyers.WhenyoumovesouthofBenidormtheCostaBlancaSouthisflatteranddryer.Whileithassufferedfromoverdevelopment,itisalsocheapertobuyinresortssuchasTorreviejaandOrihuelaCosta.ThehistoriccityofAlicantesitssouthofBenidormandtheCostaBlanca’sbeautifulinteriorincludesodditiessuchasthepalmforestofElche.Year-roundgolfisaspeciality.
Costa Cálida and Costa AlmeríaSpainbecomesmorearidasyouheadsouthfromtheCostaBlanca,includinganactualdesertatAlmanzora.However,itisalsoamajoragriculturalsuppliertoo,especiallyinMurciainthenorthernsectionandinlandtothesouthofAlmeriacity.SouthofMurcia,withinAndalusia,Almeriawasarelativelyquietandpoorprovinceuntilthetouristsandnewresidentsarrived,pricedoutoftheneighbouringcostas.InMurciatherearewell-knownresortsaroundtheMarMenor,inthenorthinwhatiscalledtheCostaCálida,andfurthersouth,MojácarandRoquetasdel
Where in Spain?Spain’s Regions
1. Andalusia2. Aragón3. Asturias4. Cantabria5. CastillayLeón6. Castilla-LaMancha7. Cataluña8. Extremadura9. Galicia10. IslasBaleares11. IslasCanarias12. LaRioja13.Madrid14. Murcia15 Navarra16. PaísVasco17. ComunidadValenciana
Costa Verde Costa Blanca
SpainismadeupofAutonomousCommunities(“autonomies”)whichfurtherdivideintoprovinces.ForbuyerslikeFrankandDiane,thedifferencesmaybeofonlypassinginterest,butprocedurescanvarybetweenregions,forexample,ingettinganNIEnumber,andtherearesmalldifferencesinlawsbetweenautonomieswhichyourlawyershouldbeawareof.Languagestoo,canvary:Catalonia,Valencia,theBasqueCountryandtheBalearicshavetheirownlanguages,sowhileDiane’srudimentaryCastilianSpanishwillallowhertobeunderstood,thelocallanguagesaremoreincommonuse.
1
9 3 4 16 15212
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
MarontheCostaAlmería.Intheyearsuptothefinancialcrisistheseareassawamajorpropertyconstructionboom.
The Southern CoastThesouthofSpainincludesthewell-knownCostadelSolinthemiddle,thelessfamousCostaTropicaltotheeastandCostadelaLuzrunninguptoPortugal.WithresortslikeAlmuñecar,Nerja,
Torremolinos,Fuengirola,Mijas,MarbellaandEsteponaitistheclassicSpanishproperty-buyingdestination.TheBritisharestillthebiggestbuyershere,buttherearealsolargenumbersofRussians,Belgians,GermansandScandinavianstoo,attractedbytheunrivalledopportunitiesforfun,withgolfandwatersportsfortheenergetic,alongwithgreatshoppingandrestaurants.Hotinsummer,warminwinter,openallyear,ifyouwantyoucanliveherelikeinEssexorRotterdamwithsunshine;yettraveljustafewmilesinlandandyou’restraightbackinoldSpain,withitsroughruraltraditionsandgrandhistoryincitieslikeGranada,Málaga,Córdoba,Seville,JerezandCádiz.
The Balearic IslandsMallorca,MenorcaandIbiza(andthetinyislandofFormentera,offIbiza)formtheBalearicIslandsintheMediterranean. OnMallorca,themadnessofresortslikeMagalufsitsalongsideclassyseasidevillagesandresortswheretheSpanishroyalfamilyspendsitssummersandthelikes ofRichardBransonhavehomes.Ithassomethingforeveryone,includingthebeautiful(andexpensive)cityofPalma, artycommunitieslikeDeiàandValldemossaalongthenortherncoastandthemorefamily-orientedresortsoftheeastcoast. Aswellasvillasandholidayapartments,beautifulandhistoriccity-centreapartmentsandconvertedfarmhousesintheinterior arealsopopular.MenorcaisespeciallypopularwithBritish
families.Itisquieter,moreeasy-goingandlessexpensivethanitsneighbours,buttravellingthereislesseasyinwinter.NoproblemsgettingtoIbizaallyear,wherethepartyneverstops.Althoughitmaybeknown
foritshedonisticlifestyle,Ibiza’sattractionsalsoincluderollingpine-coveredhillsandhiddencoves.PropertyisamongthemostexpensiveinSpain.
The Canary IslandsTheCanaries,sittingoffthecoastofMorocco,arewarm,butnotespeciallyhot,allyear.Buyhereandyoucangetfourseasonsofenjoyment(orrental).Theyarecomprisedofsevenislands:Tenerife,Lanzarote,Fuerteventura,GranCanaria,LaPalma,LaGomeraandElHierro.Eachisdifferent,somesandy,somemorevolcanic,otherswithvibrantnightlifeandcheapholidayapartments,othersquieter.Buyinghererequirescarefulconsiderationaseachislandissodifferent–it’snotlikebuyingintheCostadelSol,whichhasabitofeverything.TheCanaryIslandsmaybeknownfortheirinexpensive,year-roundholidayvibe,buttheyalsohavegreatnaturalbeauty,deepgorges,bananaplantationsandSpain’shighestmountain.
Costa Almería
Balearic Islands
Canary Islands
Costa del Sol
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
A trip to SpainFrankandDianedecidetomaketheirownwaytoSpain.Theycallafewoftheagentsintheirchosenareaandtakeadviceonhowmanypropertiestheycanviewinaday.Oneagentinparticularseemsverypushy.“Don’tworryaboutanyotheragentsinthearea,”shesays,“weallpoolourpropertiesanyway,soIcanshowyouthemall.Infactwecandoitallforyou,wehavelawyers,ourownin-housesurveyor.Youcanevenstayinoursubsidisedguesthouse!”Agentsdoindeedoftenshareproperties,butyoushouldneverusean“in-house”lawyer.Frankdecidestosteerclearofthisagent.
CRUNCH POINT Take Control!Hereisthecruxoftheproblemfor
ForeignpeoplebuyingpropertyinSpain:thelegalsystemisdifferent,thelanguageisdifferent,theprofessionalcultureisdifferent.VitallegalandplanningdocumentswillbeinSpanish.ProfessionalswhoserolesFrankandDianethinktheyunderstandmaybehardertofind,whiletheyaresuddenlyexpectedtounderstandwhata‘gestor’or a‘notary’does.Itcanfeellikecostsare
mountingupallthetime,whileattheback oftheirmindtheyarerememberingthenewsreportsofpeoplelosingtheirlifesavingsorhavingtheirhomesbulldozed!Andtheyarenotdoingthisfromthe
comfortoftheirownhome,withfriendstoconsultwith,butinSpain,probablyfromahotel,withtheclocktickingbecausetheyhaveflightshomescheduled.Thisiswhatisknownasbeingoutofyour
comfortzoneandexplainsexactlywhysomanypeoplemakemistakes.Subconsciously,buyersarelookingforsomeonetotrust,buttheonlypeopletheyaretalkingtoaretryingtosellthemanexpensiveproduct,aproperty.Nowonderpeopledroptheirguard!
BUYING TIP FrankandDianeneedtogetbackincontrol.Theyshoulddothisbeforetheyevenleavethe
UKbypreparingforeacheventualityandrecognisingpotentialproblemsinadvance.Firsttheyneedateamofpeoplebehindthem.SowhileDianeischeckingflightprices,Frankisorganising“TeamFrank&Diane”.Forastarttheymustalwaystakeindependentlegaladvice.
Planning to viewInspection trips vs. going it alone
CRUNCH POINT: Withsomuchplanningalreadydone,Frankiskeentogetontheinternetandbookflights.
ButthenDianeseesanadvert:“Inspectiontrips,just€49!!”AninspectiontripisashortbreakinSpain
subsidisedbytheagent,whowillbeyourtourguideonthetripwhiletryingtosellyouaproperty.Inthelastbuyingpropertyboomtenyears
ago,entirejetswerebeingcharteredbydeveloperstobringBritonsoverfortwoorthreedaysasacaptiveaudience,whilecommission-desperateagentsblastedthemwithhard-selltechniques.Theygainedsuchabadreputationthatthesedaysinspectiontripstendtobecalledsomethingdifferent–“discoveryvisits”or“viewingtrips”perhaps.Theadvantagetothehouse-hunter,however,wasacheaptriptoalocationtheymightlike,withexpert(ifbiased)guidancetothelocalareaandnoneedtoworryaboutbookinghotelsorcars.Thedaysofthosekindsofmassinspection
tripmaybeover,butmostagentswillhelppotentialclientsinotherways.Forexample,theagentmaygivethemafreenightinaresort,orpromisetorepaythecostofflightsiftheydoagreetobuy.Thereisnothingwrongwithtakinganinspectiontrip,butyouneedtobeawarethatyouarenotstayingwithfriends,butwithanagentwhowon’tearnacentfromthetripunlessyoubuyaproperty.
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
LawyerThelawyerisyourmostimportantteammember.Itissensibletoensurethatthey areonyoursideandhavenofinancialconnectionwiththeestateagentordeveloper.Thiscanbeeasiersaidthandoneintheexcitedflushofmakinganofferonahome.Whatwillyoudowhentheagenttellsyouaboutthebrilliantlawyertheyalwaysworkwith?Manyagentswillindeedbeabletorecommendagood,fairandreasonablypricedlawyerwhospecialisesinproperty,sowhynotusethem?Ifyoudo,however,doaskformorethanonerecommendationandasktoseequalificationsandreferences.Onewayaroundtheissueistoengagethe
lawyerinadvance.Feesvarydependingontheservicesprovided,butareunlikelytobelessthan1–1.5%ofthepropertyvalue,plusVAT.Younormallyonlystartpayingwhentheystartworkingforyou,perhapsongettingyouridentitynumber(NIE)andopeningabankaccount(whichshouldalsobedonebeforefindingaproperty).Youwouldtypicallypayupto€1,000atthispoint;therestbystages.FrankandDianecanfindspecialist
Spanishpropertylawyersinanyofthemagazines,booksandwebsitestheyvisit.
WithaBritish-basedlawyertheyshouldfirstcheckthattheyarequalified,reliableandhaveexperienceoperatinginSpain.Mostimportantisthattheyareconscientious,astheywillbetakingthebuyer’splaceinthenegotiationsand“duediligence”.CantheybetrustedtoaskallthequestionsFrankandDianedon’tknowtoask?FrankchecksthattheUK-basedlawyersareregisteredwiththeappropriateLawSocietyintheUK–eventhoughtheworkinSpainwon’tberegulatedbythem–andthattheyarequalifiedaslawyers,“abogados”,inSpain.Theyshouldalsobespecialistsininternationaltransactions.Agoodplacetostartwhenlookingfor
alawyeristheAIPPwebsiteortheRICSwebsite.ThereyouwillfindlistedseveralSpanish-specialistpropertylawyersasmembers–basedbothintheUKandSpain.
Currency (“FX”) specialistWhentransferringlargeorregularamountsofmoneyabroadthebestmethodisviaaspecialistcurrencybroker.Theywillgiveyouabetterrateofexchangethanusingoneofthemoreobvioussuchasyourdebitcard,highstreetbankorairportcurrencyshop.
Team Frank and Diane
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
Ontheotherhand,ifthepoundstrengthensto€1.40bycompletionthenthehousewouldhaveonlycost£98,570hadtheyboughttheeurosatthelastmoment,andtheyhavelostout.Frank,beingmoreofarisktaker,wasratherlookingforwardtotrackingtheexchangerateastheprocessmovedon,butDianeconvinceshimtoplaysafe.Buyingaforwardcontractmeanstheyknowexactlywhatitwillcost.Andthegoodthingis,theydidn’tneedto
paythemoneywhensettingtherate,onlywhenactuallycompletingonthepurchase.
BUYING TIP GestorThisrolegoesbacktothedays
whenmanypeoplewereilliterate,andneededarepresentativetodealwithbureaucracy.Nowtheyarehelpfulnotonly indealingwithbureaucraticaspectsoflife,likeavoidingendlessqueuing,butalsoin, forexample,organisingtheconnectionofutilitieswhenyouhaveboughttheproperty.Alawyercouldalsoassistwiththis.
Howmuch?Around3or4%ontheexchangerateandusuallywithnotransferfees.Ona£100,000propertyanFXfirmshouldsaveyouseveralthousandpounds.FrankandDianefindtheprocessisquite
simple:theygotothewebsiteofoneofthecurrencybrokers(theyareregulatedbytheFCAandassafeasabank)andareinvitedtosetupatradingaccount.Thentheydecidewhethertomakea“forwardcontract”,whichsetsthepriceoftheeurosnomatterwhentheyareactuallytransferringthefunds.Theadvantageofthisisindeterminingexactlywhattheywillpayfortheirproperty.Exchangerateschangeeverysecond,andwithoutaforwardcontracttheywouldneverknowexactlywhatitwouldcostuntilthedayofpurchase.FrankandDianehavesetabudgetof£100,000andagreetobuyeurosat€1.38,whichtheyknowtheycanafford.Iftheypurchasefor€138,000butbythetimetheycompletethepoundhasdroppedto€1.36,thentofind€138,000wouldhavecostthemanextra£1,470,perhapstakingthepropertyoutoftheirreach.Buyinginadvancehassavedthemthatrisk.
Getting a mortgage
Manybuyerswillfinancetheirhousepurchasewithamortgage.Themortgageproviderwillnormallyrequirethefollowingdocumentation:• Incometaxdeclarationforthepasttwoyears• Bankstatementsfromthepastyear.• Payrollorotherproofofincomeforthe pastsixmonths.• Alistofmortgageloansalreadyheld.• Astatementofyourassetsandliabilities, confirmedbyanaccountant.• Acopyofyourpassport.
Whenlookingforamortgageloan,consider:• Thebankwillinsistthatthepropertybe registeredinyourname.Thecontractof sale,receiptoffundsandconstitutionofthe mortgagewillhappensimultaneously,soan agentfromthebankwillbepresentatthe signingofthedeedsandwillforwardthe moneytotheseller.• Mortgagesaregenerally“adhesion”(takeit orleaveit)contractswhichincludegeneral conditions.Yourlawyershouldensurethat yourmortgagetakesintoaccountconsumer protectionlegislation.• Thepropertymayalreadyhaveamortgage onitsignedbythesellerordeveloper.Ifso, thebuyermustensurethatheorshewill notbesubrogatedtothismortgageloan (i.e.becomeresponsibleforit). Ifthebuyerdoessubrogatehimselftotheloanreceivedbythesellerordeveloper:• Heshouldrequirethesellertoshowa certificateissuedbythecreditorbank, statingtheoutstandingbalancedue.• Hecanaskthecreditorbankforamore favourableinterestrateandtermfor payment,andiftheyrefusetodoso,may requestanotherbankorentitytoimprove suchconditions.Thenthenewentitypays thecurrentholderofthemortgagethe outstandingsumandmovesintoitsplace asacreditor.Suchoperationsarevirtually free,beingtaxexempt,withnotary,registry andbankfeesstrictlylimitedbylaw.
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
ChecklistFrankandDianehaveflowntoSpain.Theyknowwhattheywant:avillaontheCostaBlanca.Theyknowtheirbudget:£100,000,whichwiththeirforwardcurrencyarrangementisguaranteedtobuythem€138,000.Outofthistheymustpayasmuchas13%extraforbuyingcostsandtax,and2%moreiftheyaregoingtogetamortgage,whichismadeupofthefollowing:
Taxes (VAT/ITP): 10%Notary fees: 1%Registration of property: 1%Stamp duty: 1%
Andincasetheyneedamortgage,theywillhaveanextracost:
Other fees (gestoria, Registry, property valuation, notary) 0.8%Mortgage stamp duty: 1%Bank mortgage commission: 0.25%
Themostsignificantoftheseistax,whichissubjecttochangedependingonthepoliticaloreconomiccircumstances.FrankandDianedecidetolookatproperty
ofupto€140,000andhopetonegotiatethepricedowntoamorecomfortable€120,000.Theyarestayinginahotelandhave
checkedthattheyhaveaccesstotheirphoneandtheinternetsotheycancontacttheirlawyerquickly.Whentheyneedit,theycaneasilyandcheaplysendmoneyforadeposit,ortopayalocalsurveyor.Theyhavearrangedasmanyviewingsas
possible,butwithplentyoftimeforrelaxinganddiscussingwhattheyhaveseen.Theyhaveborneinmindthedistancesandlocalterrainwhenconsideringhowmanyhousestheycancomfortablyviewinthetime.Theyhaveinstructedtheestateagentsnottoshowthemanypropertyoutsidetheirpricerange.Theyhaveareliablecamerasotheycantakeplentyofphotosandpossiblyavideo(onwhichtheycouldrecordtheirownverbalfirstimpressionstoo),anotebooktowritedownanyextrainformationtheestateagentsgivethem,orquestionstheywillneedanswering.Lastly,theyhaveachecklistofinformationrequirements.
BUYING TIP Frankhascreatedhisownscoringsystemforeachproperty.Thishastheadvantageof
listingthosecriteriathathehasjudgedmostimportant.Allofthisinformationwillbeorganisedintoafiletorereadatthehotel.Now,let’sseesomehouses!
What to look for? FrankandDianeknowthatwhateverisstatedonalatercontract,thesellermustprovidewhatislistedontheinitialsalesinformation,includingallservicesandfacilities.Sowhenconductingaviewing,theycheckthatthepropertymatcheswhatislistedonthedetailsintermsofqualityofmaterials,stateofrepair,views,thelocalneighbourhood,noise,accesstotransportation,etc.Theybringanyissuestotheattentionoftheselleroragentshowingthemthehouseand,iftheyarenotconvincedbytheagent’sexplanations,theymayreturnaccompaniedbyaprofessionalarchitectorsurveyortoinspectitandgetavaluationtocorrectit.Anycompanysellingorpromotinghousing
shouldmakethefollowinginformationavailabletothepublic:
1. Thetradename,companyname,address.2. Whereappropriate,thedetailsofthe seller/ownerenteredintheCompanies Registry.(Orjustaskforthesimplenote, “NotaSimple”,oftheproperty–which containsalltheinformation).3. Amapshowingthelocationoftheproperty andideallyafloorplan.4. Apropertydescription,showingitsgross overallareaandideallyitsinternalusable area(seebox,right)and,where appropriate,ageneraldescriptionofthe buildinginwhichitislocated,thecommon areasandancillaryservices.5. Energyperformancecertificate(CEE), listingmaterialsusedinconstruction includingacousticandthermalinsulation, buildingandcommonareas,and ancillaryservices.Makesurethatitis stampedasbeingregisteredwiththe RegionalAuthorityasonlythenwillitbe acceptedbytheRegistrar.Thecertificateis validforuptotenyears.Ithastobe
ViewingsSurface area
Thesurfaceareasofpropertymaybelistedinseveralways:• Grossfloorarea/constructedarea (superficieconstruida) Thisspecifiestheouterareaofthebuilding anddefinesalltheenclosedspace,including allbuiltspaces,partitions,wallsand facilities.• Usefularea(superficieútil) Thisalsospecifiestheouterarea,butonly thebuiltspacesthatmaybeusedbythe inhabitants.Itdoesnotincludethepartitions, structureandfacilities.
Ifthedwellingispartofacondominium,thereisathirdconceptofsurface:• Grossfloorareaincludingcommonelements(superficieconstruidacon repercusión de elementos comunes) Thisisthegrossfloorareaofeachflatofthe condominium,plustheproportionatepartof thegrossfloorareaofallpublicareasofthe samebuilding.Thesearecalculated accordingtosharessetbythestatutesofthe home-owners.Itincludesallthespacesof theapartmentplusapartofthecommon areas(entrancehall,staircase,broomcloset andmachineroom,elevatorshaft,etc.)of thebuildinginwhichitislocated.
providedbythevendoranditisnormally attachedtothetitledeed(escritura).6. Instructionsontheuseandmaintenance ofanyfacilitiesthatrequirespecial knowledge,andtheevacuationofthe buildinginanemergency.Aso-calledBook oftheBuilding(LibrodelEdificio)mustbe givenbythebuildertotheagent,withall thisinformation,tobepassedonbyevery sellertoanewowner.Insomeregionsthe bookmustbeatthedisposalofanynew owner,inpossessionofanotary,orinthe LandRegistryinwhosejurisdictionthe propertyislocated.7. Identificationdetailsoftheregistrationof thepropertyintheLandRegistry,or astatementofnotbeingenrolledinit.
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
AsEuropeanUnionmembers,theBritishhavethesamerighttobuyinSpainastheSpanishdo,althoughwithafewrestrictions.However,therearesignificantlegaldifferencesinthesalesprocessesbetweencountries,suchaspropertylaw,urbanplanningandcoastallaw,buildingregulation,taxlaw,moneylaunderingregulations,mortgageregulationsandconsumerrights.Whatfollowstherefore,isjustageneraloverview.LikeFrankandDiane,youshouldalways
getindependentlegaladvicebeforeattemptingtobuypropertyinSpain.
Reservation agreement. FrankandDianehavefoundtheproperty theylike.Theiragentnowtakesthemtoalocalbartocelebrateandexplainswhatwillhappennext.Firstlytheyaregivenadocumenttosign
andaskedtopay€5,000asdeposit,becausetheagentssaysthereareotherpeoplelookingatthehouse.Indeed,itcouldwellbebeingmarketedbyotheragentstoo,whomustbeinformedthattheownerhasagreedandstoppedallviewings.MostlegaldocumentswillbeinSpanish–
thatbeingthelegallanguageofthecountry–soatranslationmustbegivenandboth
signedbytheownerandthebuyeror theirrepresentatives.
CRUNCH POINT: Frankfeelsuncomfortablesigningthiscontract,andinsiststhattheywillconsult
theirlawyerfirst.Hedoesn’twanttobecommittingtobuythepropertybeforeanylegalcheckshavebeencompleted.Itmakesforaslightlyawkwardcelebrationbut,asFranksaystoDianewhiletheagentisn’tlistening–betterthatthanspendingyearsregrettingit.Assoonastheygetbacktotheirhotel,Franksendsacopyoftheagreement totheirindependentlawyer.Frank’slawyercallshimbackandexplains
thatafterreadingitthrough,hecanconfirmthatthisissimplya“reservationagreement”totakethespecifiedpropertyoffthemarketfor,usually,15-30days,atthestatedprice. Itisquitenormaltopayadepositofbetween€3,000and€10,000,whichwillbetakenoffthefinalpurchaseprice.ByFrankandDianemakingtheagreementsubjecttopreliminarylegalchecks,mortgageloanavailabilityonthepropertyandabuildingsurvey,thedepositshouldbereturnedifthereareproblems.Estateagentsareunderstandablykeentogetoverseasbuyers–whoarepronetogetting
Buying the propertySpeedy Spain
CRUNCH POINT: TherearemanywaysofbuyingpropertyinSpain.Thetypeofcontractwilldependonthetypeof
property,whethernewbuildorresale,thenationalityofthebuyer(understandably,sellersaremorekeentogetabindingdepositfromanoverseasbuyer),thespeedwithwhichthebuyerswantmattersconcluded,andhowmuchtheytrusttheseller.IfalltheduediligencecanbecompletedquicklyitispossibletobuyapropertyinSpaininadayortwo,butneverattempttobuyquicklyifitmeansskimpingonyourlegalprotection.Inthisguidewedescribetheusualprocessesforaforeign(UK)couplebuyingaresaleproperty.
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
Obtaining your NIE
ExpatriateslivinginSpainwillusuallyalreadyhaveanNIE,asyouneedoneformanytransactions;certainlyanythingthatinvolvespayingtax.PropertybuyersarrivingfromoutsideSpain,however,willneedtogetone.NIEstandsfornúmerodeidentificacióndeextranjeroandisessentialforbuyingproperty,obtainingmortgagesandgettingutilitiesconnected.SinceFrankandDianearebuyingthepropertyjointlytheyeachneedanNIE.Itisnotcomplicatedtoget,butitcan
takefromonedaytosixweeks.Sinceyouneedittosigntheescritura,youwillneedtoapplyatanearlystageinthebuyingprocess.Itisoftenthefirstthingyoudoafteragreeingonaproperty,andoftentheestateagentwillhelp,takingyoudowntotheimmigrationortaxofficeandensuringyouhaveallthecorrectdocumentation.Mostpeopleapplyinpersonbutyoucan
alsoapplyviaaSpanishembassyorconsulatebyfollowingthislink:http://tinyurl.com/pvf2un3.Youcanapplythrougharepresentative,orbypost.
Howyoumayapplycanvarybetweenregions.Toapplyinpersonyougotoanimmigrationoffice(oficinadeextranjeros)withinaspeciallydesignatedpolicestation.
Youmusttakethefollowingdocuments:• Originalandonecopyofyourcurrent passport.Ifyouprovideonlyonecopy, itshouldbenotarised• Officialform(EX-15)filledout.
Whenyouhavepaidthesmallfeeyouwillbegivenadatetocomebackandcollectit(orthereisaprocessforarepresentativetocollectitforyou).YouwillalsoneedtheNIEtoopena
bankaccount.Moneylaunderingregulationslimithowmuchyoucanpayincashandsetoutthechoiceofpaymentmethodsaspartofthesaleagreement.Paymentwillnormallybebybanktransferorbankcheque,soitissensibletoopenaSpanishbankaccountandtransferfundsfromtheUK.
coldfeetwhentheyreturnhome–tosignandpayupwhilethere.Anditdoessecurethepropertyforthecouple.However,iftheydidn’tbelieveanybodyelsewasimminentlytryingtobuyit,andwerenotentirely100%surethemselves,whatwouldbetheadvantageinpayingup?Itisasignificantamountofmoneytoloseiftheylaterpullout.However,FrankandDianedecidethatthey
will“lockin”theirdecisionsotheysigntheagreementandpaythe€5,000.Nowtheyarefinallyreadytocelebrate!Thenextday,withtheirlawyerorestate
agenttheygototheimmigrationofficetostarttheprocessofobtainingtheirNIEnumber(seebox,right).Theyhavealsogivenadown-paymentto
theirlawyer,whostartsthesearchprocesstoensurethatthepropertyislegallytheseller’stosell(andifitisjointlyowned,getconfirmationthatalltheownershaveagreedtosell),hasnodebtsorsalerestrictionsonitandhasplanningpermission.Atthisstage,iftherearelegalproblemsnotmentionedinthesaleparticularstheywillbeentitledtobackoutandgettheirdepositrepaid.Thiswouldnothavebeenpossiblehadthey,assomeagentswillattempttogetbuyersto,signedapreliminarysalescontractinsteadofareservationagreement.
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
Eight things your lawyer will be checking
1. Whoownstheproperty,andtherefore whohastherighttosellit.2. Iftherearedebtsagainstit.For example,amortgageorcourt judgement.3. Iftherearesittingtenantsinthe property.4. Ifitissubjecttoanyspecialrulessuch assubsidisedhousing.5. Incaseofanurbanisation,whetherthe sellerisup-to-datewiththecommunity fees.6. Iftheannualrealestatetax(theformer “contribuciónurbana”)hasbeenpaid.
Ifithasnotbeenpaidwithinthelast fiveyears,thenewownerwillbe responsibleforpayment.7. Forneworoff-planhomes,ifinsurance isinplacetocoveranydamagethat mayresultfromstructuraldefectsof thebuilding.8. ForSubsidisedHousing(VPO),or AppraisedPriceHousing(VPT),ifthere isanyprohibitionagainstsellingitor anyrightsoffirstrefusalfrom theauthorities.
Yourlawyerwillgetallthisinformation fromtheLandRegistry.Abuyercould alsogettheinformationherself,ortheseller,estateagentoradministrative managercoulddoitforyou.Eitherway,donothandoveranymoneyotherthanareservationdepositorsignanycontractotherthanareservationagreementuntilyouhavecheckedthisinformation. See Appendix One for further information on applying for information from the Spanish Land Registry
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
Paying from a Tax Haven
Ifyourmoneycomesfromaterritoryconsideredasataxhaven,youmustinformandexplaintheprojectedinvestmenttotheSpanishGovernmentatleastsixmonthsinadvance,usingformDP2.Oncethepurchasehasbeenformalised,youinformtheSpanishTaxOfficeifthemoneycomesfromataxhaven,oriftheamountexceeds€3,005,060,whatevertheprovenanceoftheinvestedcapitalmightbe.
asdescribedinthebuildingsurveyreport.Theyandtheowner(ortheirrepresentatives)thensignthecontract–thereisnonotaryatthisstage.Theyalsoarrangeforthepaymentof10%ofthepricetobetransferred.
BUYING TIP GiventhatFrankandDianearedefiniteaboutbuyingtheproperty,
itmightbeintheirintereststopayashigh adepositaspossible,todissuadethesellerfrombackingout.Ontheotherhand,ifthesellerisanon-residentandthemoneyisnotprotected,youneedtoknowthattheywill notdisappearwithyourmoney,leavingthemortgagecompanytoreclaimtheproperty.Thepaymentmethodwillalsobeagreed
betweenparties.Itwillusuallybeabanktransferorabankchequeshowingthenameofthepartyreceivingthemoney.Thepartiesmaysignacontratoprivadodecompraventawhichcreatesabindingagreementandsetsforacompletiondateaswellasthetermsandconditionsofthesale(price,wayofpayments,contractualdeadline…).Ifthesellerbreachesthatagreement,thepurchasermaytaketheoptionoffulfillingtheagreementormaychoosetowithdrawfromthesaleandclaimfordamagesincurred.Thedifferencewiththecontratodearrasistheoptiontoenforcecomplianceofthepurchaseagreementbeforeapplyingforcompensation.
Beforethe15-30dayssetoutonthereservationagreementhaverunout,FrankandDianewillsignthesalescontractthatcommitsthemtobuyingthepropertyandthesellertosellittothem.Thereareseveralwaysofdoingthis,forexamplewithapreliminarysalescontract(contratoprivadodecompraventa)oradownpaymentcontract(contratodepagayseñal).However,formanyoverseasbuyersitwillbeadepositcontract(contratodearras),whichissometimestranslatedasthe‘earnestmoneycontract’).Thearras/earnestmoneycontractisa
privatelegalagreementwhichreservestherighttopurchasethepropertyatasetprice atasettimetableandpenalisesthebuyer orselleriftheybreaktheagreement.• Itsetsouttheexactdetailsofthe housingtobesold–location,owner, basicfeaturesandknown encumbrances.Ifthereisfurniture included,itwillalsohaveadetailedlist ofthoseitems,ideallywithphotos.• Itshouldalsofixthefinalprice,payment methodandthemaximumtimefor completingthesale.• Itwillmentiontheamountthathasbeen alreadydeliveredasadeposit,specifying thatthemoneyisonaccountofthesale andwillbedeductedfromthefinalprice whenthedeedisconstituted.Usuallyit willrangebetween10%and20%ofthe finalprice.Ideallyitwillbeheldinan escrowaccount,butwhoeverisholding it,themoneyshouldnotbetransferred totheowneruntilthedayofsale. Althoughthepartiescanagreenotto includetheseconditions,thelaw establishescertainpenaltiesforeither partywhobreachesit:• Ifitisthebuyerwhobreachesthe agreement,heorshewilllosethe amountalreadypaid.• Ifthesellerisinbreachtheymust returnthedepositDOUBLED.
FrankandDiane’slawyergoesoverthecontractwiththem,withatranslation, andtheyagreethatthepropertyanditsdescription,location,price,boundariesandsoonareexactlyastheyhadexpectedandare
Preliminary sales contract (the arras)
Delaying the sale
Supposethecouplewanttobuy,butarenotreadytocommittoafinalcontractdate?Therearemechanismsfordelayingtheprocess.Thecontractfor‘booking’housingisacontractofsale,butoneinwhichthebuyerandsellerpostponethesale.Itstermswillvarybetweenexistinghousesandoff-plansales.Foroffplan,ifthehousewillnotbereadyintime,orindeedconstructionnotevenstarted,thesellermustprovidesomeguaranteesforrepaymentoftheadvancedsums,plusthestatutoryinterest. Notethefollowinghowever:
- Thespecificationofthepropertyisfixedand neitherthesellernorthebuyermaychangeit exceptbymutualagreement.Some developerswilltrytoofferadifferent property.- Thepriceisalsofixedandthebuyeris obligedtopaythissum.Iftheydecidenotto completeonthepurchasetheywillloseany moneytheyhavealreadypaid.
Forexistinghomes,thisisquiteacommonproblemforbuyersandcanincludethefollowingscenarios,inbothofwhichthereisasalecontract,andboththesellerandthebuyerareobligedtodeliverthehouseandtheprice:
- Thebuyerwantstobuybutdoesnothavethe money.Ifthebuyeriswaitingforfinanceit maybebettertobookthecontract,while waitingtogetthemortgageloan.- Thebuyerhasthemoney,butthesigningof thecontractisdelayedforsomereason.
IfFrankandDianewanttimetothinkagainortoobtainfunding,whilemakingsurethatthesellerwillnotsell“their”housetoathirdparty,theycouldconsidersigningthecontractbutaskingforaconditionthatthesalewillbedelayeduntiltheyhavereceivedfinancing.Thenifthebankrefusesthemortgageloan,thesalewillbecancelled,withorwithoutcompensationtotheseller,asthepartieshaveagreed.
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
Thedateforsigningtheescritura,completingtheprocess,hasbeensetbytheagentsandlawyerswhensigningthearras.Itissignedinfrontofthenotary.[seebox,below]itcouldhavebeendonebyPowerofAttorney,butFrankandDianewouldratherbetherefortheprocess.Thepaymentprocesshasbeenagreed(abankguaranteedchequefromtheirSpanishbank)andFrankhasdrawn upalistoffinalarrangements.ThelawyeraccompaniesFrankandDiane
tothenotary.Asbuyerstheyhavetheright tochoosethenotaryandhaveleftittotheirlawyertochooseone.Signingtheescritura–fullnameescritura
pública–involvestheformalhandoverofthepropertythroughthedeliveryofitskeysand
paymentofthepurchasepricebalance,eitherfromthebuyerorthemortgagecompany/bank.Afterthispoint,neithersidecanturnback.Theprivateagreementbetweenthepartieswillbedeclaredasapublicchangeofownershipwithsignedpublicdeeds.Foroff-plansales,peopleusuallygo
throughaprivatecontracttoformalisethedeliveryofstagepaymentsandtheobligationtobuildanddeliverthehousing.Importantly,eveniftheysignaprivatecontract,eitherpartymayrequesttheothertoproceedtoconverttheprivatecontractintoapublicdeed,andiftheotherpartyrefuses,mayseekjudicialintervention.ToregisterthepurchaseattheLandRegistryitwillalways
The sale contract (escritura)
The Notary
What is a notary? Are they like a solicitor?TheSpanishnotary(notario)isapubliclyappointedofficialandverydifferentfromaBritishsolicitor.Theirjobistotakeaprivatecontractand,bywitnessingit,turnitintoapublicdeed,adocumentprovingtoeveryonethatyouaretheowner.Thatmakesitquiteaprestigiousjobinthelocalcommunity.Theirjobistoprepareandwritethe
deed,ensureitsprovisionsarelegal,ensurethatthepartiesunderstandthecontractandinformthemoftheirtaxliabilitiesarisingfromthesigningofthedeed.Allthisisfromanimpartialandprofessionalviewpoint:theSpanishnotaryisnotanadvisorandwillnottellyouwhatisbetterforyoutodo,butensurethatthelawisenforced.Thenotarywillkeeptheoriginalofthedeed,issuingyouwithasmanylicensedcopiesasyoumayaskfor,eachwiththesamevalidity.
Are they absolutely necessary?Youcouldkeepthechangeofownershipasaprivatecontract,whichshouldbe
enforceableincourt.However,foroverseasbuyersitistheonlysafewayofestablishingtitle,providingthehigheststandardoflegalsecurity.Itisalsoessentialifyouarefinancingthroughamortgage.
Who pays the notary, and how much?Thepurchaserpaysmostofthefeesandalsogetstochoosethenotary.Feesareusuallyfrom0.1%ofthevalueonthedeedsforexpensivepropertyandupto0.4%forcheaperproperty.Eachcopyofthedeeds(copiasimple)costsafeweurostoo.
What is the process?Ontheappointeddayallthepartiesattendthenotary’soffice,whichcangetquitecrowded.Thenotarycheckstheidentityofthosepresentandreadsoutthedeeds.Ifyoudon’tspeakSpanishyoushould
takeatranslatoralongtoreadthedeedinEnglishandaskquestionsonyourbehalfifnecessary.ManynotariesinthemainBritish-buyingareaswillspeakEnglishanyway,ormayinsistthatyou
haveatranslatorpresent.Ifrequested,thedeedwillcomealreadytranslatedwiththetextintwocolumns,oneforeachlanguage.Eachpartywillthenbegiventhedeedtosign.Thenotarywillconfirmthatpaymenthasbeenmadeandthekeyswillbehandedover.ThebuyerwillbegivenacopyofthedeedsandtheirlawyerwillfaxnotificationtotheLandRegistry.Laterthelawyerwillcollecttheoriginaldeeds.
Can we use a British notary? BritonsbuyingfromotherBritonscouldconsiderusingaBritishnotary(whoisalsonotasolicitor).UsingtheCROBECOsystemcreatedbyEuropeanLandRegistryAssociation(ELRA),aBritishnotarymayelectronicallyconnectwithaSpanishadministrativemanager(gestor),whowillprovidethenecessaryinformationandthedocumentationrequiredbySpanishlawtoachieveregistration.Forfurtherinformation,pleasevisitthewebsiteofELRAatwww.elra.eu/elra-european-land-registry-association
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
Rented properties
Therearespecialrulesforpropertythatisrentedoutatthetimeofthesale.
Asageneralrule,thetenanthastherighttoreplacethepurchaserintheeventofthelandlordwishingtosell.Theseaspectsofrentedpropertydependuponthetenancyagreementandcanbecomplex.Anindependentlawyerfamiliarwithlandlordandtenantlawshouldbeengaged.
Ifthepropertyyouarebuyingisrentedout,yourlawyermustdealwiththisissuebeforeyoupartwithanymoney.
Power of attorney
ItcanbeinconvenientforoverseasbuyerstoreturntoSpaineachtimeadocumentneedssigning,somanywillgrantPowerofAttorneytotheirrepresentative–perhapstheirlawyeroragestoriftheyhaveone.Thisauthorisestheattorneytosignonthebuyer’sbehalf.Boththebuyerandwhoeverisgettingthe
PowerofAttorneywillgotothenotary’soffice,provewhotheyareandexplainthetermsandlimitationsofthepowerofattorney.YoucanalsoorganisetogetPowerofAttorneyinSpainbygoingbeforeanotaryintheUK;youcanfindthemthroughanysolicitor’sofficeorviathiswebsitewww.facultyoffice.org.uk/notary/. YoucanalsoappointPowerofAttorneyviatheSpanishconsulatesinManchesterorLondon.Theprocesswillcostaround£250intheUK butmuchlessinSpain.
benecessarytograntthepublicdeed.Thepublicdeedisadocumentauthorised
bythenotary,reflectingthewilloftheparties,listingtheiridentitiesandresponsibilitiesandincludingtheseonthedocumentastheyintended,butalsoinaccordancewithlegalrequirements.Itwarnsthepartiesabouttheobligationsanddutiesarisingfromtheagreedcontractforeachofthem.Thenotarywitnessestheauthenticityof
thedocument,sothat,whateverthebuyer,theseller,orwhereappropriate,themortgagelender,declaresbeforethenotaryisincludedinthedeed.Thisservesasproofforeveryoneandneitherpartycandenythestatementscontainedwithinit.Notarisedrecordsarethehighestlegalstandardofevidenceamongparties.Theexecutionofthedeediseffectivelythe
deliveryoftheproperty,andthebalanceofthepurchasepricewillnormallybedeliveredtothesellerinthepresenceofthenotary.Thenotarymustidentifyinthedeedtheprice,statingifitisreceivedbeforeoratthetimeofexecutionofthedeed,theamountandpaymentmethods–i.e.bankchequemadeouttothesellerorpayabletothebearer,banktransfer,directdebit.Ifthepricehasbeenpaidpriortothetimeofexecutionofthedeed,thenotaryshallstate
thedateordatesonwhichitwasmade andthepaymentmethodusedineach.Beforeauthorisingthedeedthenotary
willasktheLandRegistryforasimplenotestatingtheownershipandchargesoftheestate.Immediatelyafterithasbeensigned,ifthepartiesrequestit,thenotarywilllettheRegistryknowthatthedeedhasbeenauthorised.Thispreventsthebuyerfrombeingaffectedbyanylienorchargethatthesellermayagreeoncethecontractisconcluded,butwhicharepresentedtotheRegistrybeforethepurchasedeedisgranted.
Home sweet home!ThehousenowbelongstoFrankandDiane.Theyaregiventhekeysatthenotary’sofficeanddrivetotheirnewvilla,pausingonly atasupermarkettobuyabottleortwoofsomethingcoldandsparklingwithwhich toraiseatoast.Therearestillthingstodoandtocheck–
ensuringthatelectricityandwaterareconnected,forexample,andthateveryaspectofthepropertyisastheyexpected.Butnow,withinsixweeksoffirstsettingeyesontheproperty,FrankandDianeareabletositontheverandaoftheirnewSpanishvilla,lookoutovertheirCostaBlancaview,waveafriendly“hola”totheneighboursandlookforwardtoawonderfulnewstageintheirlife.
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
Thelegalprocesseshavenotquitefinishedyet,however.Withtheescriturasignedandthetaxespaid,thefinalstepistheregistrationofFrankandDiane’srightsattheLandRegistry.
Who manages the registration?ToregisterpropertyrightsintheLandRegistry,thefollowingdocumentsmustbepresentedatthelocalRegistryOffice:• Acertifiedcopyofthedeedofsale.• Printedtaxself-assessmentform, showingpaymentoftaxesatabank.• Themostrecentpropertyownershiptax (IBI),oracadastralcertificateshowing thecadastralreferenceoftheproperty. Thesedocumentsshouldbeincorporated intothedeedanditscopies.• Proofofsubmissionofacopyofthedeed tothelocaltaxauthorityforthepurposes oftheMunicipalTaxonIncreaseinValue ofLandofUrbanNature(plusvalía).
ThehousingauthoritiesfromtheAutonomymayalsorequirethesellertodeliveracertificateofhabitability,provingthatthepropertymeetsallthetechnicalrequirementsforhabitation.Resaleproperties,aslongastheyhavethesuppliescontractinplace,willnotneedtoshowtheselicences.Thepresentationofthesedocuments
totheLandRegistrycanbedonedirectlybythebuyer,anagency,thenotary,thelawyer oragestor.Howeveryouchoosetodothis,oncethese
documentsareattheRegistry,registrationmustbecompletedwithin15workingdays.Otherwisetherewillbea30%reductioninfees.Theregistrarwillverifythattheagreementhasbeenmadewithfulllegaleffectandthepropertyrightsofthebuyer willberecordedattheLandRegistry.Iftheregistrarseesthatthedocumentshavedefectspreventingtheirregistrationthey willnotifythefilerofthedocumentand theattestingnotary.Defectsnotedbytheregistrarmaybe
corrected,orifyoudonotagreewiththeregistrar,youmayrequestasecondopinionfromanotherregistrarwhomayreplacethefirst.ThecorrespondingappealmaybesubmittedtotheDirectorateGeneralof
RegistriesandNotaries,oryoumaydirectlychallengeitbeforetheCourtofFirstInstanceinthecapitaloftherelevantprovince.Thisregistrationisnecessaryforthebuyer’s
newlyacquiredrighttobefullyprotected:• Youwillbeconsideredtheonlytrue ownerunlessjudgedotherwise.• Youareprotectedagainstcreditorsof theseller.• Youareprotectedfromhiddencharges againsttheproperty.• Youmayobtainjudicialprotectionof yourrights.• Onceyouhaveregisteredyourrights,no onecaneffectivelyacquireanyrights overyourhomewithoutfirstobtaining yourconsent.• Youcanobtainamortgageloanto financethepurchaseofhousing.Onlyif thebuyerregistershisorherrightof ownershipmaythebankregisterthe mortgagethatguaranteesrepayment.
Thechangeofownershipwillbenotifiedtothecadastresotheywillknowthatthepropertytaxeswillnowbepaidbythebuyer.Forallthesereasonsitisessential,aswe
havealreadyexplained,tocheckifthereisanyseizure,mortgageorotherchargeinregistrationhistoryofthehouseorthelandonwhichitistobeerected,andtobuyonlyfromthepersonlistedasitsownerintheLandRegistry.Itisalsoessential,onceyouhavesignedthedeed,tocompletetheregistrationofyourrightsintheRegistry.
Registering ownership
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
FrankandDianewillgoontoenjoylongandhappylivesinSpain.ButintheeventofthedeathofourcoupleinSpain,itwillbetheirnationalityatthetimeofdeaththatgovernsrulesofinheritanceandsuccession. IftheyhaveretainedBritishcitizenship,forexample,thenEnglishorScottishlaw(dependingonwhichpartofBritaintheylive)willdeterminewhoshouldinheritiftheyhavenotwrittenawill,orhowitwillbeinterpreted iftheyhave,andhowinheritanceissettled. Iftheydiewithoutawilltheirestatewillbetaxedatthefullrate.Rulescanvaryprofoundlybetween
countries.EnglishLaw,forexample,allowsyoutodowhatyoulikewithyourassets.ButifyourassetscompriseonlySpanishpropertythenunderEnglishlawitistheSpanishlawthatmustbeapplied,andSpanishlawlimitsyourfreedomwhengrantingawill.Aportionofyourassetsmustbelefttocertainrelatives(legítima).Spanishlawwillalsobeappliedif,atthetimeofdeath,youhaveacquiredSpanishcitizenship.
Writingawillyoushouldconsider:• YoumaydraftyourwillinSpain, accordingtoSpanishlaw,usuallysigning beforeanotary.• Youmayalternativelydraftyourwill accordingtoEnglishlaw,butinthiscase youmustconsidertwocases:• Awilldrawnupbymechanicalmeans andsignedinthepresenceoftwo witnessmustbesubmittedtothe competentjudicialauthorityinBritainfor thegrantofprobate,withoutwhichthe willcannotbeexecuted,northeresulting propertyrightsregisteredatthe LandRegistry;• InaccordancewithEnglishlaw,youcan grantawillwhichrefersonlytoyour propertiesinSpain,andyoumaydoso withaSpanishnotaryorinthemanner prescribedbyEnglishlaw.Inthatcase, Spanishlawwillgovernthedistribution ofinheritances.
InheritancePROPERTY TAXES
BuyingapropertyinSpainmeanspayingpropertytaxesatthetimeofcompletion,whicharebasedonthesalepriceasstatedinthedeedofsale.However,ifthesalepriceisjudgedtobelowerthantherealvaluethenthetaxoffice(Hacienda)willsubmitanadditionalbillforthedifference.
- IfthebuyerisnotaSpanishresident,the sellerwillwithhold3%ofthepriceand giveittothetaxauthorities.- IfthesellerisnotaSpanishresident,the buyerwillwithholdthecapitalgainstax ontheincreaseinvalueofurbanland– formerlyknownasplusvalía.
Howmuchtaxispayablewilldependonwhetherthepurchaseisaprimaryresidence,abrandnewpropertyboughtdirectlyfromthedeveloper,orisaresale.
New homes: ThebuyerpaysValueAddedTax(IVA)totheseller.Atthetimeofwriting(July2015)thisis10%onresidentialproperty.IntheCanaryIslandsitis7%,andcalledtheGeneralIndirectCanarianTax(IGIC).ThebuyerpaysIVAalongwiththe
purchasepriceandthesellersendsitontothetaxauthority.ThebuyeralsopaysStampDutyTax(AJD)of0.5%ofthevaluedeclaredonthedeed(unlesssetatadifferentratebytherelevantAutonomy).Thiswillbeself-assessedonanofficialformandpaidintothetaxofficeviaacooperatingbank.
Resale homes: ThebuyerofaresalepaysTransferTax(ITP)ratherthanIVA,atarateof6%ofthevaluedeclaredinthedeed,butagaincanbesetadifferentratebythe
Autonomy.Itisalsopaidviaaself-assessmentformatacooperatingbank.
Deed of loan: StampDutyTax(AJD)ispayableat0.5%ofthetotalamountofthemortgageliability.Thisisnottheamountactuallyreceivedfromthebank,butthequantityguaranteedforrepaymentofprincipal,interestandcostsofenforcement.TheAutonomymaysetdifferenttaxrates.Ifyoubuysubsidizedhousing(VPO),taxratesaregenerallylower.
Paying property taxesTopaypropertytaxesyouobtainprintedself-assessmentforms,calculatetheamount,payittotherelevantentityandgivetheformnotifyingthatyouhavemadepaymenttothetaxoffice.Yourlawyerwillnormallypaythepropertytax,butitcouldbedonebythepurchaser,byanagencyorbythenotarywhohasdraftedthedeed. Abuyerpayingpersonallyneedstoknow:
1. Wheretosubmittheself-assessment formforITPorAJD.Forpropertyin provincialcapitalsitispaidtothe DelegationofFinanceofthe AutonomousCommunity.Forproperty outsidetheprovincialcapitalitgoesto theDistrictLiquidationOffice,which takesintheLandRegistry.2. PaymentofPropertyTransferTaxand StampDutyTaxmustbemadewithin30 workingdaysfromthedateofexecution ofthedeed.Delayswillleadtoasurtax beingimposed.3. Paymentofthosetaxesisrequiredfor youtotakeouttheregistrationofrights acquiredintheLandRegistry.
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
Francisco Molina BalaguerFrancisco was born in Valencia and graduated with a Law degree from the University of Valencia in 1998. He has been a Land Registrar since 2002 and a partner in the International Relations Department of the Spanish Registrars Associationsince2012.HewasappointedDelegatetotheAssociationofficeinBrusselsinJanuary2014.Heistheauthor of several articles on tax and inheritance matters published in the Bulletin of the Spanish Registrars Association, and presented a paper at the IPRA (International Property Registries Association) conference in Amsterdam in 2012.
Christopher NyeFollowing a Bachelor of Arts from Leeds Beckett University and a career in cruise ships and hospitality management, ChriswasqualifiedbytheNationalCouncilfortheTrainingofJournalistsin2003. He has written on tourism, emigration and international property for The Times, BBC, A Place in the Sun, World of Expats and the Overseas Guides Company, where he is Investment Editor. A former resident and newspaper columnist in Mallorca, Chris has been Staff Writer for Everything Spain magazine, Features Writer for Living Spain magazine and Editor of Overseas Property Professional. Chris co-wrote Channel 4’s Guide to Buying in Spain.
Peter RobinsonPeter was formerly an agent in Spain where he also privately bought and sold property. Active in a variety of roles in theinternationalpropertyandfinancialservicesindustryintheUK,Spainandaroundtheworldsince2001,Peterhas worked extensively with property developers to improve how they bring their projects to market. Peter now heads the AIPP – Association of International Property Professionals – based in London.
Contributing Authors
César González Zarza, MRICSBachelors degree in Law from the University of Deusto, Spain;
Masters Degree in Urban Planning law from ULPGC; Executive Masters Degree in Town Planning from Garrigues School of Law, Madrid; Bar Association of Canary Islands and practising lawyer/solicitor;Member of ACADUR (Urban Planning Association of Canary Islands);MRICS nº 1297328CBRE, Representative Canary Islands
J M Anthony Fisher, MRICSBritish, and a chartered surveyor since 1977, Anthony’s career in property includes living
and working in England, France and Spain. Much of this career has been related to property management, more recently to the valuation and inspection of residential property. Anthony has served on various committees and working parties of professional associations, latterly in RICS España. He has written various articles in English on aspects of property in Spain for journals of the RICS.
Alfredo Millá, MRICSFounder and CEO of Sonneil. Before setting up Sonneil, Alfredo led the marketing and selling of properties to foreign clients at Banco Sabadell and Caja Mediterráneo real estate agencies for seven years. Prior to that, he worked as a strategic consultant. He holds a degree in Business Administration and Management and an MBA from ESADE Business School and the Advanced Management Program (AMP) at IESE (Munich and Barcelona). He is also member of the Board of Directors of RICS in Spain and Chairman of the Residential Property Professional Group.
Campbell D Ferguson, FRICSRICS registered valuer and expert witness to UKcourts.Owner/
Director of Survey Spain SL and organiser of the Survey Spain Network of Chartered Surveyors.
Survey Spain has been carrying out building/structural surveys and valuation surveys since 2003.
Originally from Glasgow, Campbell has been working in Spain for 16 years and surveying/valuing/marketing/appraising properties for 47 years.
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
APPENDIX ONE
Applying for Registry information• Youoryourlawyercanapplyatanyof theRegistriesofSpaininperson,byfax, mailoremail.• Youcanalsoapplyviathewebsiteof theAssociationofRegistrarsofSpain www.registradores.org.Toreceivea “simplenote”inEnglish,usethenew portalforinternationalusers www.buyingahouse.registradores.org.
Aftercompletinganenquiryform,yourapplicationwillberedirectedtotheappropriateLandRegistry.Onceissuedandtranslated,thenotewillbedeliveredbyemailandyoucanpaywithanymajorcreditcard.TofindoutwhichLandRegistry’s
jurisdictionthepropertyisin,asktheConsumers’ServiceoftheAssociationofRegistrars,onfreephone900101141,atwww.registradores.orgorviaemailtoconsultas@registradores.org.Thesameway,youcanalsofindoutLandRegistryaddresses,phoneandfaxnumbers,emailaddressesandaskaboutanyotherregistrationmatter.
Theregistrationinformationmaybe obtainedas:• A“simplenote”,whichcontainsa descriptionofthehousing,itslocation, surface,appurtenances,itsshareinthe condominium,anyadministrative regimethatcouldaffectit(ifitisa publichousing),mortgagesthatmay remainonit,interestandcosts,liens, seizures,easements,anydisputesover ownership,fiscalconditionsand,in general,anythingaffectingthe homeownership.• Certificationondomainandcharges, whichmaybeofabroadercontentthan thesimplenote,andcouldbeused incourt.
ThemainpurposeoftheLandRegistryistopublishandprotectlegalentitlements.Whenitprovidesadescriptionoftheproperty,ittakesitfromthecatastroandfromdescriptionsoftheparties,whichmayormaynotbeup-to-date.TheCatastro(alsooftenspelledasCadastre),istheofficialinstitutioninchargeofgivingagraphicdescription.You
canchecktheaccuracyofthecatastroviatheirwebsiteatwww.sedecatastro.gob.es,orwithaRICSsurveyor.Youmayalsorequesttheregistrartoprovide
awrittenreportontheregistrationstatusoftheproperty,oraskhimorherforverbaladvice.Landregistrarsarerequiredtoverballyreportonmattersrelatingtotheregistrationstatusofproperties,andsuchlegaladviceisfreeofcharge.RegistrationinformationisprovidedinaccordancewiththeprovisionsoftheLawonProtectionofPersonalData.Inadditiontocheckingthehousing
situationintheRegister,thesellermustprovideyouwithcertainadditionaldocuments:• Forresalehomes,theauthorisedcopy ofthedeedinwhichtheacquisitionwas formalised.• Areceiptforthelastpaymentofthe PropertyTax.• Inthecaseofcondominiums,a certificateissuedbythepresidentor secretaryofthehomeowners associationstatingifthepropertyisup todateinthepaymentofcommunity fees.• Theformalstatement,onapublic document,thattherearenocurrent leasesontheproperty.
Non-EU foreignersForanytypeofpropertybeingboughtbyforeigners,legislationonnationaldefencecancomeintoplay.Instrategicareas,priorauthorisationbymilitaryauthoritiesisrequiredfornon-EUforeignerstoacquirehousing,whetherresidentsinSpainornot.ItappliesaroundCartagena,theStraitofGibraltar,CadizBay,Galicia,borderareaswithPortugalorFrance,theIslandsandCeutaandMelilla.Furthermore,itismandatorytoregisterthetransactionintheLandRegistry.
Off-plan property – urban and building regulationsExaminationofthephysicalandlegalsituationofthepropertyismoredifficultwhereithasnotbeenbuiltyet.Theonlydescriptionistheonetheagentshowsyou,anditwillonlybebuiltifthedeveloperfulfilshisobligationsin
accordancewiththecontract.Soforoff-planpropertydonotsigna
contractorpayanymoneywithoutfirstchecking:• Thedeveloperactuallyexistsandthe personsigningonitsbehalfisentitled todoso.Checkthatthesponsoring companyisregisteredattheCompanies Registry.Youmayobtaininformation abouttheregistrationofthecompany, itsadministrators,agentsandstatutes, throughacommercialregisterorwww. registradores.org.Thiscanbeobtained quicklyandeasilyovertheinternetwith acreditcardpayment.• Thelandonwhichthebuildingistobe erectedisregisteredinthenameofthe sponsoringcompanywithwhichyou signthecontract.• Theplannedpropertyhasbeen authorisedbythecouncilandgranteda licence.Thiscanbecheckedatthe LandRegistry,becauseifthe descriptionoftheplannedpropertyhas beenenteredintheRegistrythenthe licensemustalreadyhavebeenjustified totheregistrar.Ifthedescriptionofthe buildingisstillnotrecordedinthe RegistrythenyouwillneedtogotoCity Halltocheckifthesitehaspermission tobuild.
EachmunicipalityhasitsownurbandevelopmentplanthatwillagreewiththeplanningregulationsofitsAutonomousCommunity.Severalmunicipalitiesmaycreateajointplan,regulatingnewdevelopmentsoutsidetheurbangrid.Thisplanwilldeterminewhetheryouareabletobuildontheplot,andthepossibilityofbuildingandrenovatinginthefuture,or,ontheotherhand,theextremethreatofreceivingademolitionorder.Technicalofficesofthecouncilsshouldprovideyouwiththeinformationabouttheurbansituationandthechangesthatmayaffecttheplotinthefuture. Ifyouarerequiredtosignaprivatecontractbeforethebuildingisfullycompleted,andyouareaskedtopayanyamountonaccountoftheprice,youshouldconsider:• Ifthecontractincludesunfairterms,
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
whichwouldbeconsiderednullandvoid evenifthepurchaserhassignedthem. Thesecouldbetermsclaimingto allowthedevelopertomake subsequentchangestotheproject withoutthebuyer’sconsent,orwaiving therightofthebuyertochoosea notary,sayingthatthebuyerhastobear thecostsofpreparingthe documentation.• Wherepaymentsaremadetothe developer,youmayrequirethattheyare paidintoaspecialaccount,onlytobe spentonconstruction,andthat insuranceistakenoutoran endorsementmadetoensuretheir returnplus6%ifconstructionisnot carriedoutordeliveryisdelayed.Itis mandatoryforthedevelopertogivethe clientan“aval”fromabankwhich guaranteesthepaymentsiftheproject isnotcompleted.
Onceconstructioniscompletedbutbeforesigningthedeedofsale,youcaninsistthatthesellerprovesthattheworkhasbeencompletedasdescribedintheplan,andthatinsuranceisinplacetocoveranydefectsinconstruction.ThistoomaybecheckedbyaquerytotheLandRegistry,becausetoregisterthecompletionofthebuildingitmustreceiveacertificateoffinalcompletioninaccordancewiththeagreedplan.Thiswillhavebeensignedbythearchitectanddirectoroftheworkandwillincludetheinsurancecontractandatechnicalcertificateindicatingthedateofcompletionandsayingthatthebuildingfitsthelicense.Therefore,beforesigningthedeed,youmustverifythatthepromoterhasenteredthecompletionoftheworkintheLandRegistry.Inrecordingthecompletionofthebuilding
andregisteringconstructionalreadycompleted,youmustobtainatechnicalcertificateshowingthedateofcompletionandidentifyingthatthebuildingfitstheprojectforwhichitslicencewasgranted.Inanycase,youshouldrequirethesellerto
statethat,oncebuilt,theconstructionmeetsthetechnicalrequirementsfortheusetowhichitisintended(housing,commercial,
industrial,etc.),bydeliveringyouthefirstoccupationlicence,necessarytoconnecttoutilitysupplycompanies(water,electricity,telephone,etc.).Theselicensesshouldbedeliveredtothebuyeratthemomentofsigningthedeed.Withoutthem,youmayrefusetosign,astheyareessentialsinlaw.
Purchasing by the seashoreSpecialrulesapplyforlandalongtheseashore–whichcanincludeinlandwaters–andcontinueinlandasfarasaround100metres.Suchlandisdesignatedaswithinthepublicdomain.Youcanbuyahousealreadythere,andyouwillbeabletorenovatethehome,butwithoutextendingthesizeofthebuildingeitherhorizontallyorvertically.Tocheckifthehouseisonlandwithinthe
publicdomainyoumustgotoCoastalServiceortotheCityHall.SuchinformationwillalsoappearoninformationprovidedbytheLandRegistry.Fortheexecutionofthedeed,acertificatefromtheCoastalAuthoritymustbegiventothenotary,statingifthepropertyisonoradjacenttothepublicdomain,andanyrestrictionsarisingfromthat.Itisespeciallyvitaltotakelegaladvice
whenbuyingclosetotheseashore.
Purchasing an apartmentWhenyouarebuyingacondominiumyouacquirenotonlyyourpropertybutalsoashareofthegeneralbuilding,suchastheentrancehall,staircase,broomcloset,machineroom,elevatorshaft,etc.Yourshare–andhenceyourobligationtopaythecommonexpensesofthebuilding–correspondstoyourapartment.Theowneroftheapartmentmustpaysuch
expensesforthepreviouscalendaryearandtheunpaidpartofthecurrent,somakesurethesellerdeliversacertificatestatingwhethertherearedebts.Thesellermayaskyoutoexoneratehimorherfromthisobligation.Thisisquiteusual,butifyouagreeensureyouunderstandthefullextentofyourresponsibility.Askthesellertogiveyouacopyofthe
articlesofthecondominium,astheymayrestrictyouruseoftheapartments,theirdivisionorgrouping,andtheydeterminethe
commonpartsofthebuilding.IntheLandRegistryyoumayobtainacopyoftheclausesaffectingeventhosethatwerenotpartofthecondominiumatthetimethearticleswereapproved.
Purchasing rural landIfyouarethinkingofbuildingapropertyonruralland,bearthefollowingfactorsinmind:
• Thepricewillvarydependingonwhether itisdrylandneedingirrigation,ifitis plantedwithfruit,cereals,meadows, forests,etc.,andaccordingtothe Autonomyonwhichitislocated.• Checkwhetherthereisanyexisting buildingonthelandorifthereisthe possibilityofbuildinginthisarea, accordingtotheplanningrulesof theAutonomy.
Generally,rurallandcannotbeusedforresidentialdevelopment,unlesstheUrbanAuthorityrequalifiestheland:- itispossibletorenovateexisting buildings,eithertoliveinthemorto establisharuraltourismbusiness,butit isnotpossibletoaddnewbuildings.- itispossibletoerectnewbuildingsfor regularfarmingorhuntingactivity.- insomecases,youcanbuildsportsor culturalfacilities,orthoserelatingto environmentalcare.- eveninthoserarecaseswherenew residentialbuildingsmaybebuilt,the landmustbeofacertainsizeasdecided bytheAutonomy,toavoidthecreationof newvillageswithouttheproperchange ofuseorsufficientinfrastructureto supportthem.
Thepropertymustalsoholdthecorrectlicensefromthemunicipality.Theinterestedbuyer’slawyermustchecktheresidentialpotentialoftheland,byaskingforinformationattheCityHall.Ingeneral,informationfromLandRegistrywillalsostatewhethertheparcelissuitabletobebuiltornot.
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
APPENDIXTWO
The costs of buying property in SpainCosts directly generatedBuyingahomegeneratesmanycostsforthebuyerinadditiontotaxes,anditisnotalwaysobviouswhyyouarepayingthemortowhom,yettheyaddappreciablytothecosts.
Who do you pay?
• To the selleryoupaythepurchaseprice, lessanydepositalreadypaid.
• The estate agent ispaidbywhoever contractedthem,whichisgenerallythe seller.Theyareusuallyincludedinthe salepriceandsoareonlypaidifthesale ismade.
• The notary’sfeesaredivided,bylaw:the sellerpaysforauthorisationofthedeed andthebuyerpaysfortheissuingof copiesofthedeed.Thebuyermustpay allnotaryfeesonlyifexpresslyagreed withtheseller.FeesaresetbytheTariff andRegulatoryFee,butallowfor0.5% –1%ofthepricedeclaredinthedeeds.
• Ifyouarepayingfortheservicesofa gestoritisimportanttogettheoriginal invoiceissuedbythenotaryandthe registrar,andtheletterofpaymentof taxes,sothateachpartyknowshow muchtopayforeachoftheservices provided.
• The Land Registry.Thebuyerpaysthe leveloffeescorrespondingtothe registrationoftheirright,andifagreed, ofthosecorrespondingtotheregistration ofthemortgage.Registrationfeesare governedbyatariff,whichyoucan ascertainateachregistryoffice. Allowfor1%ofthevalueonthedeeds.
• Your lawyer. Theusualrangeoffeesfor your lawyer–abogado–willbeinthe €1,500to€3,000range,butthisreally dependsonthevalueandcomplexities attachedtoapropertypurchaseandfees canbeconsiderablymore.
• Mortgage costs. Thiswillincludea valuationofaround€500plusthe arrangementfee.Itwillalsoincreasethe notary’scostsasyouwillhavetosigna differenttitledeed.
• Bank costs.Youwillneedtowritea banker’schequeorpayforatransferof funds.Allow0.5%ofthefundstransferred.
Beforemakinganypaymentensureyoureceiveinvoicesbreakingdowneachelementofthebill,theIVA,theidentityandTaxIdentificationNumber(NIF)ofwhoeverhasissuedthem.Forthoseissuedbynotariesandregistrars,ifyoudisagreewithanyofthechargesyoumayappealagainstthemasspecifiedbytherulesthatlaiddownthetariff.
Other costs
Municipal Tax on Increase in Value of Land in Urban Nature: Formerlyknownas“plusvalía”,thisisalocalcapitalgainstaxbasedontheincreaseofthevalueofthelandsincethecurrentsellerboughtthepropertyandmustbepaidbytheseller.Theratedependsontheperiodofpossessionandthepopulationofthetownorcity.Buyersneedtobeawarethatifthesellerisnon-residentinSpain,ifthetaxisnotpaidthenthebuyerwillhavetopayit.
Property Ownership Tax (IBI): Formerlyknownasthecontribuciónurbana,thisisalocaltaxpaidannuallyandbasedonthecadastralvalue(valorcatastral)andaccordingwiththevalueofthelandandthebuilding,butusuallymuchlowerthantheactualmarketvalue.EachMunicipalitydecidestheratetobeapplied.
Wealth Tax (Patrimonio): Payableannually,basedonthevalueoftotalnetassetsasof31Decemberofeachyear,afterthefreeallowanceof€700,000.Fornon-residents,thiswillbebasedonthetotalvalueoftheirnetassetsinSpain.Theratevariesfrom0.24%to3.03%atthetimeofgoingtopress.Asthistaxisappliedindividually,ifthepropertyisownedbymorethanonepersoneachofthemwillbetaxedaccordingtohisorhershareoftheproperty.Income Tax for non-residents (IRNR, Renta de
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
No Residentes): • Iftheownerrentsthehousetheymust pay20%oftherent(24%ifthelesseeis anon-EUcitizen).
• Iftheownerusesthehouseheorshe pays20%ofthe1.1%ofthecadastral value(2%ofsuchvalueifithasnotbeen revisedsince1994).Fornon-EUcitizens, therateis24%again.
Income Tax for residents (IRPF, Renta de las Personas Físicas): AnypersonisconsideredtoberesidentinSpainifheorshelivesinSpainformorethan183dayspercalendaryear.Inthatcase,youhavetofileyourIncomeTaxannually,anddeclareallyourincomeregardlessofwheretheincomewasgenerated.
Estate Equity Income Tax (Ganancias Patrimoniales Inmobiliarias): Calculatedonthedifferencebetweenthepurchaseprice,plustaxesandexpenses,andsellingprice,minustaxesandexpenses,andapplyinganupdatecoefficientapprovedeachyearintheBudget.Allnon-residentsellerswillhavetopay20%ofsuchadifference,andarealsosubjecttoawithholdingtaxof3%ofthesalesprice,paidtothetaxoffice.Rubbish Collection Tax (Tasa de Recogida de
Basuras): Thisvariesaccordingtoeachpropertyandisusuallypaidonceortwiceayearataratesetbythelocalcouncil.
Water Supply and Sewerage Tax (Tasa de Abastecimiento de Agua y Alcantarillado): Payableataratesetbyeachcouncil,usuallyfourtimesayear,thisisworkedoutaccordingtowaterconsumptionincubicmetres.
Costs other than taxes
• community expenses: forcondominiums andurbanisations,assetandapproved bytheGeneralMeetingofOwners eachyear.
• gardening and cleaning services: the costsofcommunalgardensandpublic areasofcondominiumsareincludedin thecommunityexpenses(seeabove). Ifpayingfortheseservices yourself,however,theamountwill dependonwhetherthepeoplearepaid bythehourorarecontractedfullorpart time.Don’tforgetsocialsecurity contributionstoo,anadditiontothe monthlypayrollofaround40%ofthe salary.
• land telephone line and internet: Local
andnationalcompanieswilloffervarious dealsandpackages,whichcaninclude, inadditiontophoneandinternet connection,alsocabletelevision.Such servicesareusuallypaidmonthly.
• electricityispaidmonthly,withabasic ratepayablewhetherthepropertyis occupiedornot,andaminimumthatwill varyaccordingtotheestimateduse.
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THE AIPP / RICS / RDE GUIDE TO BUYING A PROPERTY IN SPAIN
APPENDIX THREE
Related linksAssociation of International Property Professionals (AIPP) - www.aipp.org.ukRoyal Institution of Chartered Surveyors (Spain) - www.rics.org/esColegio de Registradores de España (Spanish Registrars Association) - www.registradores.orgConsejo General del Notariado (General Council of Notaries) - www.notariado.orgAgencia Estatal de Administración Tributaria (Spanish Tax Offce) - www.aeat.esDirección General del Catastro (General Directorate for Cadastre) - www.catastro.minhac.esConfederación Española de Organizaciones de Amas de Casa, Consumidores y Usuarios (Spanish Consumers and Housewives) - www.ceaccu.orgOrganización de Consumidores y Usuarios (Consumers Organisation) - www.ocu.orgAsociación de Empresas Constructoras de Ámbito Nacional (Construction Companies and Infrastructure Commissioners) - www.seopan.esConfederación de Consumidores y Usuarios (Consumers Federation) - www.cecu.esAsociación Hipotecaria Española (Spanish Mortgage Association) - www.ahe.esAsociación de Promotores y Constructores de España (Spanish Developers and Constructors Association) - www.apce.esConsejo General de Gestores Administrativos Colegiados (Council of Gestors) - www.consejogestores.netConsejoGeneraldelosColegiosOficialesdeAgentesdelaPropiedadInmobiliaria de España (Estate Agents Council) - www.consejocoapis.orgBritish Embassy in Spain - http://ukinspain.fco.gov.uk/en
Autonomous CommunitiesAndalusia-www.juntadeandalucia.esAragón-www.aragob.esAsturias-www.princast.esCantabria-www.gobcantabria.esCastilla y León-www.jcyl.esCastilla-La Mancha -www.jccm.esCataluña-www.gencat.esCeuta-www.ciceuta.esExtremadura-www.juntaex.esGalicia-www.xunta.esIslas Baleares-www.caib.esIslas Canarias-www.gobiernodecanarias.orgLa Rioja-www.larioja.orgMadrid-www.madrid.orgMurcia-www.carm.esNavarra-www.navarra.esPaís Vasco -www.euskadi.netComunidad Valenciana-www.gva.esMelilla-www.camelilla.es
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