How to buy property in Spain
Six critical reasons to buy through an RICS member
Sadly, these comments are typical of those you hear when buying property in Spain. AIPP / RICS members are bound by Codes of Conduct to offer an honest service.
AIPP Managing Director Peter Robinson answers six common questions:
- Is buying a home in Spain difficult?
Not at all! However, potential heartache, time and money can be saved by just ‘starting right’. Most people purchase a foreign home with their spouse or partner so it is very important that you are both completely in agreement, that you want the same outcomes, same country, region,property and lifestyle. Take some quiet and reflective time to ponder these issues and perhaps write down, separately, what it is you really want before embarking on your journey together towards a purchase.
Selecting a good agent to work with is even more important than in the UK as the process of buying and then support following a purchase is different. It can take much longer (often 6-18 months) to find the right location and property in Spain and it will be a more comfortable process if your agent is reputable and can offer you the appropriate, expert guidance. Being a member of the AIPP/RICS is a great start.
- Any tips on budgeting?
If you have a property in your home country you understand what it costs to both buy and own a property. But while the salesprice of your Spanish property may be appealing, the actual cost of buying and owning it may be higher than you thought.
For example, when judged against a UK or Australian property by number of bedrooms or per square metre, a Spanish property may be very well priced. But you need to
factor in around 12% – 15% for buying costs, especially when buying using a mortgage.
These costs need to be paid for in cash and cover mainly legal, notary and local taxes.
The running costs must be carefully considered too. Hotter weather and the effects of sea air can mean spending more care and cash on your property. Detached villas with private pools need more caretaking than an apartment, for example, and there will be local municipal taxes to pay too. It is with this in mind that buyers should consider the rental appeal of their property, and indeed whether local laws allow them to rent their property out.
Renting out your property even for a short time can help to offset or completely cover the costs of maintenance and ownership.
However, this income will be subject to taxation so do your sums carefully and check with the authorities.
- Could we save by not getting a lawyer?
Few British people would buy a property in the UK without appointing an independent legal representative, and the same goes in most countries. So why take the risk when
buying abroad? The AIPP and RICS advise appointing a truly independent lawyer (abogado) who only has your best interests at heart. A lawyer linked to the agent/developer selling the property may be working for the ‘deal’. Beware the term ‘solicitor’ too. In English it normally means a qualified lawyer but translated from Spanish it may refer to someone without any formal legal training but with a business ‘advising’ on property sales. You can find abogados who are AIPP or RICS members at www.aipp.org.uk and www.ricsfirms.com.
- What about a survey?
You normally get a survey done on a UK property, so why not on a prospective Spanish home? Many repossessed or unsold homes built in the boom of 2000 to 2007 have lain empty. Unless your property comes with a specific guarantee that your independent lawyer verifies, then AIPP/RICS recommend you have a building survey completed. If you are buying a “resale” property, previously owned and occupied, a survey is well worth having too. Spanish building regulations have improved immeasurably over the last 20 years or so, but even more recent properties might have been built by ‘cutting corners’ and need checking over by a professional.
- What issues do permanent emigrators face?
Relocation for short / long periods or on a permanent basis brings different considerations. Schools tend to require applications in January for the autumn intake. Tax residency is a big subject and you should take specialist, regulated advice. If you are receiving a pension in the UK you need to consider the upside/downside of sterling currency fluctuations into euros. A currency broker (several members are listed on the AIPP website) can help you manage your money and deliver bank transfers that could significantly improve what you receive versus your bank default option. Healthcare is freely available to EU citizens in member states but you should register with the local doctor and satisfy yourself that your Spanish language skills, or the doctor’s English, are good enough to be understood, perhaps in an emergency. Hospitals vary in their ability to understand English and can be hard-pressed to cope if a significant number of older expats (of many foreign nationalities) live close by and are frequent users of their services. Planning everyday considerations around an up-to-date passport, European driving licence and the logistics of moving house contents in a lorry for a permanent move, also need care and attention.
- Planning for the future
Making a legally binding will in your home country and Spain is very important.
Inheritance and succession planning may be sober subjects but you will need to pay careful attention if you are to leave to your family/beneficiaries all that you intended.
On 17 August 2015, European Union legislation on ‘forced heirship’ changed according to regulation number 650/2012.
Any person then owning property in a participating EU state (who has taken appropriate action before their death), can choose between the law of the country of
their habitual residence, or the law of their nationality to govern the devolution of their EU estate.
Between your home country, Spain and the European Union, rules can change frequently, so getting proper, up-to-date and regulated tax advice is essential.
Foreign & Commonwealth Office – GOV.UK – Laws and taxes for British nationals who want to buy or let property in Spain.
It is strongly recommended that you choose a lawyer who is specialised in Spanish land law (urbanismo). The Spanish property conveyancing system is different to the UK and you should ensure that those involved in the transaction are qualified professionals who have an expert knowledge of the system.
Exercise extreme caution if an estate agent, promoter or lawyer urges you to cut corners to save money or time.
If you choose to work with a British estate agent, promoter or lawyer, check that they are qualified, reliable and have experience operating in Spain. Check that they are registered with the Law Society in the UK and specialise in International Transactions. If your lawyer is based in Spain, ask for their registration number and check that they are registered and practising with the local bar association (Colegio de Abogados).
You should also check that your lawyer has professional indemnity insurance and not sign any papers or hand over any money until you have taken independent legal advice. Although the British Embassy cannot recommend a lawyer, we do have lists of local English-speaking lawyers and qualified translators available on our website.
Should you become involved in a property dispute, but do not have sufficient means to meet the costs of a court case, you can apply for legal aid. More information is available on the European E-Justice Portal. Applications for those resident in Spain should be directed to the local bar association.
Please bear in mind that if you do become involved in a property dispute, you may need to seek a new lawyer with specific expertise in the field of litigation you wish to pursue, e.g. specialist civil lawyers for compensation claims against private parties such as agents, developers or banks, and specialist public body litigants (contencioso administrativo) for claims against local, regional or state authorities.
If you do not have a good understanding of Spanish, make sure that you get all contracts and relevant documentation translated by an independent translator. You can find a list of accredited translators and interpreters in Spain on the Spanish Ministry for Foreign Affairs website.
Do your homework: you should analyse and compare a range of different products and services offered by different lending companies. If you have any doubts about the terms and conditions, ask the lender to clarify. You should also check that the lender is listed as authorised to operate in Spain with the Bank of Spain.
Look for the mortgage which is most appropriate for your capabilities and needs. There are a range of mortgages on offer and you should pay special attention to the interest rate and repayment period, fees for setting up the mortgage as well as early repayment and cancellation fees.
If you cannot keep up the mortgage repayments, the Spanish bank could repossess your property in Spain. If the value of the property is less than the total debt outstanding (you are in negative equity), the bank may pursue your UK assets to recover the mortgage shortfall using a European Enforcement Order.
Make sure you fully understand the mortgage agreement you sign. If you have any doubts check with the branch during the 10 working-day period after the binding offer has been provided. If for any reason you cannot keep up the mortgage repayments, you should speak to your bank immediately (before defaulting on repayments) to discuss the options available.
Further information on mortgages in Spain is available from the Spanish Mortgage Association.
The Spanish tax authority is called the Agencia Tributaria. It provides some information on its website in English.
Brief information on taxation is provided within the Living in Spain guide.
Further information is available in the property fraud guidance.
Complaints against the legal system
If you believe your lawyer has been negligent and has not met their obligations, you should complain in the first instance to the provincial bar association. If the response is unsatisfactory, you can take your complaint to the regional and then national bar associations. Complaints should be in writing and in Spanish. A full list of the bar associations around Spain can be found on the website of the General Council of Spanish Lawyers.
If you have a complaint about the way a court has handled your case, you can present a complaint to the General Council of the Judiciary.
Please see our separate guide on Residency requirements in Spain.
Before you complete your property purchase you should make sure that:
- you have seen the Land Registry extract (nota simple), available from the Colegio de Registradores (translations into English for an additional fee), and checked the following details
- the property and land for sale match the details registered and the sellers are the registered owner(s)
- there are no debts or charges, such as a mortgage, on the property
- there are no legal proceedings initiated against the property for contravention of land planning law
- you have checked that planning permissions are in order and the property is a legal build. This is particularly relevant when buying off-plan or direct from a developer. The town hall can inform you whether the building has all licences and permissions and provide details of the type of land. If the property is built on rural land or land that is not classified for construction, additional confirmation should be sought from the regional government as to whether they have authorised the construction
- if you are buying an off-plan property, confirm that the property has been certified as finished by a registered architect and registered as a new build in the property register. The registration should also provide details of the developer’s insurance against structural and other defects in the construction. In the case of a private build (the previous owner built their own house and decided to sell before ten years had lapsed) you will need to request these details separately
- you have checked the latest town plan to see whether or not the plot you wish to buy has any building restrictions, is in a green zone or includes a public pathway or similar. This can be viewed at to the town planning (urbanismo) department of the local town hall
- you have carried out a property survey. Whilst this is not obligatory, it is wise to get a chartered surveyor to check the property
- You know the cadastral value of the property and how much purchase tax will be due. Be aware that tax is charged on the council’s valuation of the property as opposed to the amount of the sale. You can check this at the regional government’s online tax agency site using the cadastal reference number
Make sure you have seen the following documents:
- a paid-up receipt for the previous owner’s annual property tax (IBI). It is also wise to get a certificate from the town hall proving that there are no unpaid rates from previous years
- the Catastral certificate giving the exact boundaries and square metres of your land. The Cadastral record will be linked to the Land Register record by a cadastral reference which will be included in both. You should ensure that the property and land description contained in both records matches
- the licence of first occupancy or habitation certificate issued by the town hall. You will need this document to connect to electricity and water companies. Developers cannot force you to complete without this licence.
- receipt to prove all utility bills have been paid by the previous owner
- if applicable, a certificate signed by the President of the Community of Property Owners stating that there are no outstanding debts. You should be aware that if you later find that there are such debts outstanding, as the new owner, you assume the debts for the current and previous year (two years in total)
- as from 1st June 2013, all homes for sale or to let in Spain are required by law to have an energy efficiency certificate. If you are considering buying a property, the seller is obliged to show you this certificate
On completion, the public deed should reflect an accurate description of the property. It is advisable that you register the property in your name with the Land Registry as soon as possible to ensure full protection of your rights. The notary can even send advance notification to the Land Registry electronically once the public deed is signed.
Buying property in certain areas
If you are considering purchasing a coastal property you should contact the Coastal Demarcation office in your region to get a certificate to certify that the property is not affected by the 1988 Coastal Law. Bear in mind that while it is possible to view the coastal boundaries of the public maritime areas online on the Environment Ministry’s website, this may not provide sufficiently accurate information on which to base a property purchase.
Exercise extreme caution if the Land Registry record shows that the property you wish to buy is built on rural land. In normal circumstances this type of land is reserved for agricultural use and you would need to undertake additional checks with the municipal and regional authorities to ensure that full planning permission has been obtained for residential use.
Buying property off-plan
Buying off-plan property inevitably involves higher risk than buying re-sale property. If you are considering buying off-plan in Spain there are a number of points to consider.
Make sure you have a bank guarantee (aval bancario) to cover your stage payments. Developers of off-plan properties are legally obliged under law 57/1968 to secure all deposits with a bank guarantee. You should ensure that this guarantee is individual and not a collective guarantee covering the whole development, which does not give the same protection. You should also request proof that your payment has been deposited in a special escrow account, which can only be used for construction of the specified development.
Make sure the developer you are signing the agreement with is registered with the Mercantile Registry and the person who is going to sign on the developer’s behalf has the legal power to do so. You can visit any Mercantile Registry office or use the registradores website.
Check with the Land Registry to make sure the land which is going to be built on is registered to the developer you are doing business with.
Make sure you obtain a copy of the Cadastral certificate giving the exact boundaries and square metres of your land.
Ensure the developer has insurance covering damage caused by structural defects to the building. This insurance should be included in the property manual (libro del edificio) that the developer gives you.
Check the project has planning permission. Make sure the planned building has been authorised by the town hall through the correct licensing procedure, and has approval from the regional government. You can check this at the Land Registry, because if the description of the future building is registered, the registrar will have seen evidence that the licence exists and work has begun in accordance with the approved design.
If the building’s description is not yet registered, visit the local Town Hall to find out whether the land is classed as suitable for development. If the property is to be built on rural land or land not classified for residential construction, you should exercise caution and obtain additional confirmation from the regional government as that the development is authorised. It is also advisable to obtain a certificate regarding the planning situation of the plot you wish to buy from the Town Planning (Urbanismo) department of the town hall. This will include other information such as whether the plot has any building restrictions, is in a green zone, includes a public footpath or if there are any current plans to build a motorway etc.
Once construction has finished, and before you sign the title deed, ask for proof from the seller that the construction has been finished in accordance with the description given in the plans. This is issued as a certificate (certificado final de obra). You can also check this at the Land Registry.
Make sure you have the licence of first occupancy (licencia de primera occupación) which is issued by the town hall for new buildings and certifies that the property is habitable. You will need this document to connect to electricity and water companies. Developers cannot force you to complete without this licence.
Consider asking a chartered surveyor to check the property. This is not obligatory but it is wise to obtain a professional opinion on the property before you complete. The Royal Institute of Chartered Surveyors (RICS) exists in Spain and there are residential chartered surveyors working across the peninsula and the islands. Members of the RICS are qualified and experienced professionals offering independent and impartial advice.
The Spanish College of Architects in each province also offers a list of independent specialist surveyors.
Should the developer not build your property within the timeframe stated in the contract, or services and utilities are not completed and connected to standard, or the habitation certificate cannot be issued, you are legally entitled to either:
- rescind the contract and have the deposits returned plus interest
- or extend the deadline, allowing the developer to complete the property
If you want to rescind the contract, it is advisable to seek independent legal advice. Once you have consulted a lawyer, the first step is to write to the developer to explain that due to non-compliance with the contract, you want to rescind the contract and request that the deposits paid so far are returned, as well as the accrued interest. You should include any relevant documentation (e.g. a copy of the contract, copies of payments made, copy of the bank guarantee) and state a timeframe by which you want the amount to be reimbursed. It is advisable to write to the developer via Burofax, which enables you to prove that you have sent a specific document, and that the recipient received it.
If the developer does not respond to you within the specified timeframe, you should contact the claims department of the bank or savings bank responsible for the guarantee to request a refund of the payments made. Again, it is wise to make contact via Burofax and attach copies of all relevant documentation, including a copy of the bank guarantee, a copy of the complaint submitted to the developer, a copy of the developer’s response (if any) and copies of any documents which indicate that the developer has not complied with the contract.
Should the bank not comply, the only remaining course of redress is to instruct a lawyer to take a civil case against the bank.
If you believe you have been a victim of fraud and you have neither a bank guarantee nor an insurance policy from the developer, you should seek independent legal advice regarding taking criminal legal action through the courts and register a statement with the police.
Renting out your property
As from 1st June 2013, all homes for sale or to let in Spain are required by law to have an energy efficiency certificate. If you are offering your property for rent after this date, you will need to obtain an energy certificate first.
If you want to let your property to tourists on a short-term basis, you must ensure that you are doing so in accordance with Spanish law. The regulations on letting tourist apartments (apartamentos turisticos) and holiday homes (viviendas vacacionales) to tourists will vary depending on the region where the property is located.
If you are planning on making a return by renting out your property on a short-term basis, it is best to seek independent legal advice and check what the rules are at the local town hall or the tourist department of the regional government before you buy. Be aware that the marketing of private residential property to tourists is strictly regulated in many regions of Spain.
Owners who are caught illegally advertising or letting out their properties without complying with local legislation can be liable for significant fines, in some cases reaching as much as €30,000. If you are planning to buy an apartment which is part of a residential block, you should also check whether there are any rules set by the committee of owners that prohibit or restrict short-term letting. You may want to consider hiring a Spanish letting agent to assist with finding tenants, drawing up rental contracts and managing the property on your behalf. In some regions, such as Murcia, it is obligatory to use a specialist tourist apartment management company for short-term rentals to tourists.
Owners who let their properties on a long-term basis are free to do so within the terms set out by the national rental law. However, it is worth seeking professional advice to make sure that you are complying with Spanish legislation and that you are using the correct rental contract.
In Spain, there are different types of contracts depending on how long the property is due to be let. You can get copies of these contracts from tobacconists.
You must ensure that you declare your rental income to the Spanish tax authorities (Agencia Tributaria) whether you are resident in Spain or not. Taxation is a complex issue, and it is advisable to seek the advice of an accountant or professional tax adviser with comprehensive and up to date knowledge of both the UK and Spanish tax regulations.
Equity release schemes
Equity release schemes are schemes which are designed to allow homeowners to release equity from the value of their property as income, a lump sum or a mixture of both. A reverse mortgage (hipoteca inversa) is one form of equity release which allows homeowners to borrow money against the value of their home, which is used as collateral. Reverse mortgages are generally marketed at retired homeowners who are over 65 years old.
If you are considering an equity release scheme, such as a reverse mortgage or lifetime loan, it is advisable to check that the company offering the mortgage is registered with the financial regulator for the securities markets, the Comision Nacional de Mercado de Valores (CNMV) and that they do not have any warnings issued against them.
A list of financial companies which are not authorised to operate in Spain and those subject to an ongoing investigation is available on the CNMV website.
Seek independent legal advice prior to signing any contracts to make sure that the information the company has given you is correct, there are no abusive clauses in the contract and you are fully aware of your obligations and rights.
Be suspicious of financial companies or agents who try to persuade you into signing a reverse mortgage agreement as a way of avoiding or reducing your tax obligations. If you have any concerns about your tax obligations (for example inheritance tax) you should seek the advice of an experienced professional tax advisor who can advise you independently. Alternatively you may wish to check with the Spanish Tax Office (Agencia Tributaria).
If you are not happy with the scheme you have been sold, the first step is to submit a complaint to the company responsible for your investment. If, after two months, you are not satisfied with the response or do not receive a response, you are entitled to complain to the CNMV.
Although the CNMV final reports are not binding, they will comment on the conduct of the company or person against whom the complaint has been made. Where the report favours the customer, the company involved is required to notify the CNMV of any action taken to resolve the matter. If you believe you have been a victim of a fraud involving an equity release scheme you can register a statement with the police and seek independent legal advice on taking action through the courts. Further information for victims of fraud is available on the fraud page.
Problems with timeshare property
Timeshare ownership is well established in Spain with many respected companies, agents and resorts operating legally and fairly. However, there are also many unscrupulous companies, some of which claim to provide various incentives (including stock market investments and discounts on airfares and accommodation) when exchanging existing time-share ownership or taking out membership of holiday clubs.
You may find it useful to read the timeshare fraud advice from Action Fraud, the UK’s national fraud reporting centre, run by the National Fraud Authority.
Other sources of advice
The Spanish Land Registry publish a guide in English – How to buy a home in Spain: step-by-step
Spanish Property Insight provides information and advice on buying a property in Spain.
Expat forums, English-language newspapers and talking to local residents including other British nationals who have already made the move can really give you a feel for an area and give you the inside track on any local problems.
The Spanish Ombudsman is responsible for defending the fundamental rights and civil liberties of citizens by monitoring the activity of public authorities. If you have a complaint about any public authority, you can submit a complaint to either the regional or national ombudsman. If you are facing problems with your property in Spain, there are many residents associations who may be able to provide support and advice as well as put you in touch with others who have had similar experiences.
- Abusos Urbanisticos No (AUN)
- Abusos Urbanisticos Almanzora No
- Abusos Urbanisticos Lliber No (AULN)
- Asociación Europea de Perjudicados por la Ley de Costas
- Association of Foreign Property Owners , Calpe (AFPO)
- CHIFRA (Chiclana Foreign Residents Association for English speaking residents in Chiclana de la Frontera)
- Finca Parcs Action Group
- Justice4Catral Residents
- National Platform of Those Affected by the Coastal Law
- Plataforma de acreedores Grupo Trampolin
- Residents of Alfaz del Pi
- Save Our Homes In Axarquia (SOHA)
- Please contact email@example.com if you having property issues in Valle del Sol and would like to be in contact with this group.
Disclaimer: This information is provided as a general guide and is based upon information provided to the embassy by the relevant local authorities and may be subject to change at any time with little or no notice. The FCO and the British embassy will not be liable for any inaccuracies in this information. British nationals wishing to obtain any further information must contact the relevant local authority.