Spain is a beautiful country with warm weather, gorgeous beaches and coastlines, vibrant culture, friendly people, and overall great quality of life. With Spain being this attractive, it’s no wonder that over 683,000 foreigners were registered as permanent residents in 2021 alone.
It seems the Spanish government does want more foreigners to buy Spanish property.
But here’s the thing:
There’s quite a bit of bureaucracy you might face when buying property as a foreigner.
So, it’s important to have a plan before taking on the buying process.
This article will guide you through the entire real estate purchasing process, from setting the budget to updating the information at the Land Registry. By the end of this article, you’ll know how to buy your dream home in Spain.
Table of contents
- Set Yourself a Budget
- Find Out About the Costs and Taxes
- Get Your NIE
- Pick the Best Location
- Consider Getting an Estate Agent
- Hire a Solicitor or Gestoria
- Find Your Dream House
- Make Your Reservation and Submit Your Letter of Intent
- Have the Property Surveyed
- Complete Your Purchase
1. Set Yourself a Budget
Buying a house is a major decision that could set you back hundreds of thousands and even millions of euros, especially if you’re looking for very particular must-have features. Setting yourself a budget is necessary to ensure you do find your dream house but don’t also break the bank in the process.
Therefore, you should decide how much you’re willing to invest in your Spanish dream home and stick with that price. Note that while house prices did dive because of the pandemic, they have just recently returned to pre-pandemic levels. Some places, like the Canary Islands, Balearic Islands, and Melilla have seen price increases of up to 6.7%.
To set the budget, you’ll need to understand the costs and taxes associated with a real estate purchase in Spain. On the one hand, you’ll need to pay several kinds of taxes and fees in addition to the house price. On the other hand, depending on how you’re planning to finance the purchase, you might need to have the down payment for a bank loan ready.
So, ensure you’ve made sufficient preparations before taking any further steps. Take a look at the next step to find out about the taxes and costs to consider when setting your budget.
2. Find Out About the Costs and Taxes
As mentioned, you’ll have to pay several taxes and extra costs when buying a house in Spain.
Here’s a quick table of the extra costs that you can expect to pay:
|Taxes and Costs||Amount||Paid By||Part of Buying Price|
|Nota Simple||€10 to €70 + VAT||Buyer||No|
|Registry Fee||0.5% to 1.5%||Buyer||No|
|Notary Fee||0.5% to 1%||Varies||Varies|
|Property Transfer Tax||6% to 10%||Buyer||No|
|Surveyor costs||€500 to €3000||Varies||Varies|
|Solicitor Fee||1% to 1.5%||Buyer||No|
|Agent Commission Fee||3% to 7%||Seller||Varies|
|Mortgage costs||€500 + 1%||Buyer||No|
If you’re a foreign buyer planning to buy a house in Spain, you will first need to pay for a Spanish Non-Resident Number (NIE). The NIE is a prerequisite for running any legal errands and things like signing up for utilities.
You will also need to get the nota simple, which Spanish lenders always want to see before approving a mortgage.
Upon purchasing a house, you will need to pay a registry fee, a.k.a stamp duty, or AJD in Spanish. This is paid to the Spanish Land Registry when you are registering your ownership of the house.
You also have to pay a notary fee to make the contract of sale a public deed.
VAT applies if you buy a new home, while the property transfer tax applies when buying a resale property. Depending on that, either of the two will have to be paid but never both at the same time.
If you want to have your prospective purchase inspected for defects, you may have to pay for surveyor costs.
You should also consider hiring a lawyer, or solicitor, for advice and to handle the legal side of the process. In that case, you’ll have to pay the solicitor fee.
House sellers usually contact an estate agent to help connect their property to buyers. While this fee is usually paid for by the seller, there may be some cases where this fee is already included in the sales price.
Finally, if you’re planning to finance your house purchase through a Spanish mortgage, you will need to pay extra costs for a mortgage valuation.
This is just a summary of the taxes and costs you’ll be facing along the line. If you want a more detailed explanation about the extra costs and taxes, take a look at our article on Property Taxes and Costs in Spain as a Foreigner.
3. Get Your NIE
As just briefly covered, a foreigner buying a house in Spain is going to need an NIE or Non-Resident Number.
The NIE is a tax identification number given by Spanish authorities to foreigners or expats. This number helps the authorities track your financial and official activities while in the country.
If you have your NIE ready, you’ll be able to finish the purchase without further delay. You’ll also be able to open a Spanish bank account, get a contract for an internet connection, and much more.
You can consult this guide for more information about getting an NIE number in Spain.
4. Pick the Best Location
Now that you’ve established your budget with the extra costs in mind, it’s time to choose where you want your dream house to be. Spain has a lot of great locations to choose from so it may be hard to narrow down your options.
To give you some idea of where to start looking, here are a few examples:
If you’re looking for a warmer climate, sandy beaches, and quieter surroundings, you may want to buy a house in Costa Blanca in Alicante, Costa del Sol in Malaga, or the Balearic Islands.
If you prefer a slightly colder climate and closer to the mountains, you may want to look for houses near Granada or Seville.
And of course, it’s difficult to beat Barcelona and Madrid if you prefer an urban lifestyle.
For more information, take a look at our list of the 12 best places for buying a villa in Spain.
5. Consider Getting an Estate Agent
When looking to buy a holiday home or villa in Spain, you’ll most likely encounter estate agents. An estate agent can either be hired by the seller of a property or you as a buyer can hire an agent to find the right property for you.
In the first case, the estate agent is instructed by the property owner to look for potential buyers. Once they find an interested buyer and the property is sold, the agent gets a fee from the seller. Sometimes, instead of the seller paying the agent out of pocket, the price of the property may have been increased by this amount instead. This means that the buyer will indirectly end up paying the estate agent fee.
Alternatively, you can hire an estate agent yourself to look for a property with your best interests in mind. In this case, you’ll be paying the estate agent fee yourself. Good agents require higher fees but will ensure that any property they find will be according to your specifications and will give you the most bang for your buck.
6. Hire a Solicitor or Gestoria
If you want to make sure the agreement and purchase contract you’re entering into is legal and safe from fraud, you may want to hire a Spanish lawyer, or solicitor (abogado, in Spanish).
A solicitor will do the due diligence and give you legal advice regarding your property, contracts, documents, taxes, legal fees, permits, and any other legal requirements. While hiring an especially good solicitor may cost you a decent amount of money, it’s nothing compared to the security and the knowledge that your interests are under a watchful eye.
If you feel like getting a lawyer may be too costly, you may opt for the services of a gestoria instead. A gestor is one of those professions that’s uniquely Spanish and may not have a counterpart in the EU or UK.
Among other things, a gestor ensures your taxes are paid, collects and delivers deeds to the Land Registry for registration, registers you for local taxes and charges, as well as facilitates the transfer and payment of utilities.
In this article, you can find more information about gestorias in Spain.
7. Find Your Dream House
After approaching an estate agent or hiring one of your own, it’s time to start looking for your dream house. The agent is going to recommend different properties at this stage. Alternatively, you can also do some ad browsing on your own.
It’s a good idea to list the features you’re looking for in a house. This way, you can either give a copy of the list to the agent or use it as a guideline yourself.
To make sure the prospective new home is up to your standards, you will likely want to visit the property. If video tours aren’t available, then you may have to travel to Spain for viewings. Getting a personal view is often time-consuming but ultimately worth it if means you get exactly the house you’re looking for.
8. Make Your Reservation and Submit Your Letter of Intent
After finding the property you want to buy, it’s time to make the reservation agreement and pay the deposit. Entering into a reservation agreement and paying a deposit fee may be uncommon to buyers coming from some countries but it’s a common practice in Spain.
The reservation agreement gives you the right to purchase the property before the set deadline at the agreed price, both of which are fixed in the agreement. The property will not be sold to anyone else during this period.
As mentioned, reserving the property requires you to pay a reservation fee, which is usually between €3,000 and €6,000 or up to 10% of the purchase price. This deposit signifies your firm commitment to buying the property. It’s usually non-refundable, given that there are no legal obstacles from the seller’s side, but the sum is deductible from the agreed property price. That said, it’s a good idea to make sure the reservation agreement reflects these facts.
You or the seller may ask to sign a letter of intent at this time. A letter of intent makes an account of the current state of the parties’ negotiations and how they will proceed. Having a lawyer help you with this letter can help smoothen the whole process.
9. Have the Property Surveyed
After you’ve made a reservation, you may also want to have the property inspected. You will be able to do your own inspection during your viewing.
However, having a professional surveyor inspect the property ensures that you’ll be safe from hidden defects or ones that, while not being hidden, aren’t so obvious to the untrained eye. These can include low-quality plumbing, poor ventilation, weak structural integrity, and much more.
If you wish, you can even include this survey as part of your conditions for buying the property when submitting your letter of intent.
10. Complete Your Purchase
After all of the above is done, it’s time to close the deal by going to a notary and signing the sales contract. When the public deed of purchase has been certified by the notary, it’s time to pay the seller. If you’re financing the purchase with a loan, you’ll need to pay the down payment, which in Spain usually amounts to at least 20% of the purchase price.
Finally, all that’s left to do is to pay the applicable taxes, register your ownership, and update the information in the Spanish Land Registry. You can do this on your own, or with the help of your lawyer or gestor.
Congratulations! You’ve just successfully bought a house in Spain.
As a foreigner, buying property in Spain can be a challenging process. There are lots of factors to consider and just as many pitfalls to watch out for. Following this guide should help make your buying process hassle-free.
You can also contact our real estate experts at Majestico and we’ll help you every step of the way – from browsing villa ads to receiving the keys. Find out more about our services.