Procedure for buying a property in Spain.
We act as an estate agent, and we will do our best to help you find the property of your dreams. Once we have together found that property and you want to buy it, you will need to enter into a contract with the owner of that property. Such contract are very simple, but for peace of mind, we can help you find an English speaking solicitor who can advise you. It is important that the solicitor is Spanish as he (or she) will have do "searches" regarding the property at the land registry. It is possible to use a solicitor back in England, but they will simply ask a Spanish solicitor to do the work for them, and your bill will be twice as big to reflect this.
Resale Property
If the property is a resale (i.e. previously owned) your contract will be with the current occupant/owner. The amount of deposit that you are expected to pay varies around Spain. In Ibiza, a 10% deposit is normally required*. The property is normally still for sale until that deposit has been received. This can lead to some difficulty as normally it will take a few days for you to return home and a arrange the transfer of such a deposit.
It is a good idea to bring some cash with you when looking for property, as with a temporary deposit of €3000 (£2000), normally the vendor will agree to take the property of the market for long enough for you to arrange the transfer.
There is no gazumping in Spain, as, after accepting your deposit, the seller is legally obliged to sell you the house at the agreed price. If the vendor withdraws for the contract then he will have to return your deposit and match it with another payment for the same amount to you by way of compensation. If the buy (you) withdraw, then you loose your deposit. If the sale cannot proceed for technical reasons (like the search at the land registry or a survey resulting in problems that had not been declared to you) the sale can be declared void, and you receive back you deposit, with no compensation being paid by either party.
Normally, if the vendor is not a resident of Spain, 5% of the contract price will have to be paid by you to the tax office in case the seller forgets to pay his capital gains tax! This is NOT an extra 5%; it merely means that you pay only 95% of the contract price to the seller, and he has to fill out the forms with the tax office to get the other 5% less his capital gains tax. If this sounds complicated then don't worry: your solicitor will look after all this for you.
New Property
If the property is new, then your contract will be with the company who is building the property. We deal with many builders and all of them have slightly different terms as to when they would like to receive their staged payments. These terms can be varied a little to suit the individual circumstances of the purchaser if these changes are agreed when the contract is drawn up. All the builders will, however, be expecting to receive payments along the following guidelines.
The initial deposit payment required to hold a property whilst contracts are drawn up is between 3000 and 5000 euros (£2000 to £3000). This non-returnable deposit will mean that the builder will: -
a) Withdraw the property from sale to anyone else for a period of up to a two weeks, and
b) The price of the property will be frozen, and will not rise should the builder increase his prices. The value of this deposit will come off the final payment.
Typically, within two weeks the builder will expect a payment of 25% of the total cost with a further 25% to be paid within the two months. The third payment of 25% will usually be due when the walls are finished and the roof is about to be built. The final payment will be when the property is completed.
All builders have different payment schedules, but most a little bit flexible
Currency Fluctuations
One possible problem that could occur with a contract requiring large amounts of money to be paid at dates far into the future is that whilst the UK remains outside the Euro, there could be a change in the currency rate that means those future payments will be more expensive in pounds sterling than you currently expect (they could also be cheaper). There are ways to prevent this problem. One way would be an early transfer of funds into a Euro account (either in Spain or in the UK) thereby making your money immune to currency fluctuations. Another method would be to book your £/euro transfer at today's exchange rate. We will be happy to arrange a completely free consultation for you with an expert from Halewood International Foreign Exchange Ltd, who will be able to advise you of the options you have and explain the procedures involved.
The initial deposit of between 3000 and 5000 euros will need to be paid in cash or with a Euro check. It is possible to pay with a pound sterling check, although this may require an extra day to sort out. Sometimes, but not always, payment can also be made with a credit card (this may have to be done through a bank as a cash advance, will take a couple of working days to arrange and will not be allowed some card issuers). You can bring a traveler's cheque with you, but you will have to cash this yourself at one of the very banks that will process these cheque. Remember, bank are only open Monday to Friday MORNINGS ONLY.