Buying a house in Spain as a foreigner can seem a long and complicated process, but it shouldn’t be like that. As this a really important procedure, knowing the right steps to take will be essential to enjoy a successful purchase. In this article you are about to find a detailed list of all the steps any expat should take, some important considerations, and all the taxes and costs associated with the buying process. Keep on reading as you will discover some invaluable legal tips and pitfalls to avoid!
Let’s start by defining the whole duration of the process, as it is crucial to understand timings beforehand.
The process of purchasing a property can be divided into three different steps, each with varying lengths.
First of all, you must find your dream home. That is, the house that fits your requirements and the one you finally select.
Depending on how picky you are (and there is reason enough to be picky here ), this can take from 3 months to even a whole year.
Take your time.
Make sure to find the right city or town, and then not only analyze the house and all its inner characteristics, but also its surroundings and how close you will be to places such as public transport, shopping malls, or even your preferred leisure spaces.
Once you have found YOUR house, the actual purchasing process starts.
This can take from 2 to 3 months until you get your keys.
Nevertheless, in the vast majority of cases, this journey will be extended (and thus creating the last and third step), if you apply for a mortgage.
If that is the case, you must add a few extra weeks, as the bank will take some time to check and prepare all the details that are related.
Our recommendation is to always plan in advance and play with certain margins. The process can take up to 3 months, but it is better to give yourself enough time to avoid stressing out if any inconvenience appears (which usually will).
Steps to buy a property in Spain
Now that we have a clear picture in mind regarding the duration and main parts of the process, let’s see the nuances of each part.
What is next is a step-by-step checklist that will get you through all the different steps you will have to go through until finally obtaining your new home in the Spanish territory.
1. Get your NIE
Obtaining the NIE number is the first step, and in fact one of the most important ones.
The NIE is the ID number you are granted as a foreigner, and it is essential for any kind of economic activity or financial transaction (like buying the property), as well as for registering as the owner of the house.
Applying for this number is quite straightforward, and you can do it from abroad (at the Spanish embassy while still in your country of origin) or directly in Spain.
There are different types of NIEs, and depending on your plans you will go after one of the following options:
- You must obtain a non-resident NIE if you will purchase the property but won’t live in Spain (that is, just visiting the country for that reason) and you are a non-EU citizen.
- A resident NIE if you are going to be in the country for over 183 days per year (and purchase the property during that time), no matter if you are EU or non-EU.
- And, if you are from the EU but will just be in the country for the duration of the purchase, you can get a temporary NIE.
Our recommendation is to hire an immigration lawyer to obtain your NIE fast and easily; as sometimes it won’t be granted unless you properly justify the reason why you are applying for one; and obtaining an appointment with the immigration office can be a nearly impossible task.
2. Open a bank account
Even though this is not 100% necessary, having your bank account in Spain will speed the process up and make the transaction easier in all its different steps.
This bank account will be required to pay the notary fees and all the other associated costs.
And usually having the money abroad means important delays and extra complications.
Once you have your NIE you can directly open an account at your preferred institution.
You can access here a complete guide on how to open a bank account as a resident or non-resident.
3. Negotiation time
Now that you already found your dream house, it is time to agree on a price with the seller.
You may find this part of the process especially tedious, as Spanish sellers really like to negotiate and push prices up (against your buyer interest).
That is when relying on a real estate agent is more beneficial, as she will make the process faster and even negotiate on your behalf.
An important piece of advice before jumping into this stage of the process would be to really understand what is the “real” market price of the property.
Jumping into the negotiation with an amount you consider appropriate may get you to pay more than you should.
That is why, ideally, you will first check and compare the property price using different valuation sites.
Here are the main ones from which you can get an approximate price online:
Make sure to check in several platforms, and then compare and compute an average of the different prices obtained.
4. Start looking for a mortgage
Now that you have a general but more precise idea of the total price, it’s time to start looking for a mortgage in case you need one.
At this stage, we suggest you start comparing and choosing the lending institution you will finally hire.
Understand the different types of interest rates, and which plan among those offered is the one you will finally aim for (as conditions may vary drastically).
If you make your decision at this stage, the process will be much smoother later on.
Bear in mind that if you are a non-resident you must pay an extra 15% deposit compared to residents.
Do you have any doubt? Ask anything to our lawyers here and get an instant answer:
5. Reservation contract
Once you have agreed on a price with the seller, the next step is to sign what’s called a reservation contract or “contrato de reserva”.
This document basically mentions that you actually agreed on the price, and is used to confirm that the property will be taken out of any online platform in which is advertised (they stop listing it) and the seller or real estate agent must stop offering it to new buyers.
The reservation contract is usually used for those transactions in which there is an intermediary person, as a direct negotiation between buyer and seller would not actually require one.
6. Deposit agreement
Now we move to a really important contract, the deposit agreement or “contrato de arras”.
This is the private purchase contract in which you demonstrate a real commitment to buying the house at the agreed price.
In order to make this contract valid, you will have to pay a certain amount of money to confirm your buying intention to the seller (which will of course be taken out from the final payment); and she receives that money confirming that she will buy to you.
There are two main variables you must pay with when it comes to the deposit agreement:
- The amount of money you pay with it, which usually is € 6.000 (even though you can negotiate and reduce/increase that sum).
- The duration of the contract. Here we recommend you always agree on 90 days, so you have enough time to make the proper decision when hiring a mortgage (as banks won’t take you seriously until they see this contract).
But that is not all. There are some negative consequences in case of non-compliance:
- If you back out after paying this contrato de arras, you will lose that money.
- And if it is the seller the one that now does not want to continue with the process, she must pay back that same amount multiplied by 2.
7. Official valuation
The next step would be to get an official valuation for your mortgage.
Why is this so important?
Because the total amount the bank will lend you will be based on the results of this valuation (the official value).
Then, ideally, the price found is the same you agreed to pay to the seller, or even higher.
If valuation ends up resulting in a lower price, the bank will just lend you 50 or 60% of the money evaluated, and you will pay the difference.
Who is in charge of this official valuation?
Usually, the bank will suggest or offer its own valuation specialists, even though you can always hire one from your end.
8. Preparing the required documents
Before going to the notary, you will have to prepare all the required documents and make sure the property does not suffer from any defect.
A lawyer is really useful and recommended at this stage (just to make sure you are not buying a property that has some hidden debts or similar issues), as well as an architect who can properly evaluation the whole situation.
Which are the documents you will need?
- The so-called “nota simple”. This document provides all the details about the property, like past owners, its classification (if it is a residential or commercial property), if it has any debts or mortgages, etc.
- The ITE (“inspección técnica de edificios”), confirming that the building or house is structurally ok.
- You must also check if the property had any debt/s for the last years, since once you become the owner you will become liable for the debts up to the past 3 years.
- The property deed (“escritura pública”).
9. Going to the notary and signing the title deeds
One of the final steps in the process.
On your first visit to the notary, she will write up the property deed and the agreement with the seller, and witness it.
This part is crucial for you, as the notary will help you fully understand all the contract conditions so you can know what you are actually signing and agreeing on with the seller.
Then, you will visit the notary for the official signing of the sale deed, the last step before the property is fully yours.
Who will attend?
Basically, all the parts involved within the transaction: the buyer, seller, bank representative who will hand in the check with the money for the purchase, the real estate agent and lawyer in case there are any, and the notary.
After that, you will finally get your keys, but that won’t still be the end.
10. Register the property
Finally, you will have to register your new house in the property registry (which required paying the corresponding taxes as we will see below).
Basically with this process, you will identify yourself as the new owner, which requires paying the property transfer tax and stamp duty to the regional government.
Also, you will be transferring the ownership of the different public services; such as gas, water, and electricity.
Costs & taxes when buying a house in Spain
What are all the costs and taxes associated with the purchasing process?
This is crucial, and you should have a clear answer to really understand the total amount you will actually end up paying.
On top of the purchasing price, when buying a property in Spain you will also have to pay:
- ITP (property transfer tax) on if the property is second-hand. The exact percentage varies from region to region.
- IVA (value-added tax) for new homes. That is a flat 10% (no matter the region in which the property is located in). But if you are under 32 and the property will be your usual residency, then the amount is reduced to just 5%.
- The different notary fees.
- Stamp duty and property registration fees (on the national register of the property), which is 1.5%.
- House valuation (even though you may not end up paying it, the bank may charge it to you).
- Lawyer fees in case you hire one, which tends to be 1% on the purchase price (even though it depends on the complexity of the transaction).
Hence, you will usually pay an extra 10-12% on top of the selling price.
Buy a house and get the Residency in Spain
Why?
Because if you invest a minimum of € 500.000 in Spanish real estate, you are automatically granted a golden visa, a residence permit for 2 years (with the possibility to renew) that allows you to live and work in the country.
Off of the main upsides of this visa is that you don’t need to stay in the country for a long period of time throughout the year in order to renew.
Just visiting Spain once will be enough.
You can access all the details and requirements for this investor residence permit here.
Best properties for sale in Spain
Where can you find the best property deals?
There are several platforms that offer the main house listings in the country.
Among them, the most frequently used are:
There is no one listing better than the other.
In the end, you should devote enough time to find the property that suits your needs, and even visit local real estate companies in person so you can assess all your opportunities.
Crucial advice when buying a house
Through this article, we have seen some suggestions and recommendations that will surely help you out.
Nevertheless, there is one extra tip that will end up being crucial, especially if you are a foreigner who does not speak the language.
The real estate process can become risky sometimes, and you can get into serious legal trouble if you skip some parts.
That is why you should really hire a lawyer to help you out and guide you step by step.
Not only will you gain legal security and certainty, but also you will be able to formalize any procedure while abroad (you don’t really need to be in Spain for the vast majority of the steps) just by giving power of attorney to your lawyer.
At Immigration Spain, our real estate department is ready to help you out and assist you throughout the whole process.
Get in touch with our lawyers and let us guide you step by step:
