Appointing a Fiscal representative i.e a solicitor (abogado in Spain)

Whilst it is not totally necessary to have a solicitor when purchasing a house in Spain, it is highly recommended.  They will be able to check out any outstanding debts which exist on the property as well as help with contracts, wills and NIE numbers.  You are free to appoint a solicitor of your choice,  or if you prefer we can recommend one.

NIE number(Numero de Identificacion de Extranjeros).

It is essential to have an NIE number for any financial dealings you may have in Spain. This is a simple, but sometimes lengthy process which involves filling in a form with your solicitor,  you also need to supply a  colour ‘passport’ photo, a photocopy of your passport and your passport, the solicitor will then obtain your NIE number from the local police station.. The NIE number can take anything from 1 week to 6 weeks to be obtained and our advice is to apply for one as soon after you arrive in Spain as possible. The price for this is generally included in the fee for the conveyancing however, if you wish to apply for one earlier the fee is normally around 55 Euros.

Bank Accounts

Whilst it is not a necessity to have a Spanish Bank Account to purchase a property in Spain we strongly recommend it.  We can help you to open an account at the bank of your choice.  The cost of opening a bank account for ‘non-residents’ is around £10 for the administration fee.

Mortgage

You can choose to apply for a mortgage in Spain or from the UK.  Mortgage rates in Spain tend to be lower than those in the UK currently around 5%.

Applying for a mortgage in Spain is a straight forward process, as in the UK.  You will need to prove that you have an income or sufficient funds to pay the mortgage.  The level of mortgage offered is directly dependent on your financial status and also the declared value of the property you wish to purchase.

There are generally 2 levels of mortgage offered, one for residents and one for non-residents. For non-residents the mortgage offered is generally around 60% of the declared value, for residents it is usually around 80% of the declared value of the property.

Purchasing a Property

Once you have decided on the property you wish to purchase and the terms and conditions have been negotiated with the vendor then a deposit of 10% of the purchase price is required to secure the property.  This acts as your official confirmation that you intend to proceed with the purchase of that property. The remaining 90% is payable on the signing of the title deeds before the Notary.

If you are purchasing a new construction then it is usual for the constructor to ask for stage payments to be made on the property. These will vary dependent on the individual constructor.

In the case a new building, the Option Contract reserves the plot of your choice allowing 30 days to carry out the necessary searches, after which the Main Contract is signed. This would state the payment structure at the different stages of construction. The Main Contract is the document that protects the purchaser´s legal status to the property. It clearly lays out both the purchaser's and the vendor's (in this case, the developer) contractual obligations and responsibilities.

In the case of a resale or ready-built property this is called an Option Contract or Reservation Contract. It acts as a signed receipt for the deposit and is normally valid for 30 days, or longer by agreement with both parties. Once the agreed time limit has passed the Title Deed (Escritura) is signed by both parties before a Notary. If it is difficult for either party to attend it is quite in order for them to sign a Power of Attorney enabling either the Agent or their Lawyer to sign on their behalf.

The Option Contract has conditions which protect both the purchaser and the vendor. Should the purchaser decide to withdraw from the sale, his deposit would be forfeited in favour of the vendor. However, should anything arise in the conveyancing, to dispute the legality of the property, the purchaser will have the option of cancelling the contract and the deposit will be refunded.

The solicitor you appoint will carry out all necessary searches on the property; to ensure that it is owned by the vendor, it has planning permission, there are no outstanding debts or charges on the property, and other legal encumbrances.

Once the searches on the property are satisfactorily completed and the deposit has been paid in accordance with the terms and conditions of the contract, then, as previously stated, the title deeds are signed by both the buyer and the seller before the Notary.

Completion and Escritura

Upon final or main payment, in the case of a resale property, the vendors together with the purchasers or their representative will sign over ownership of the property before the Notary. This document is known as an Escritura.

The original signed document is kept by the Notary and he will issue a first legalised copy which he signs and stamps. This is then sent to the Land Registry where it is registered in the purchasers´ name, “free of all charges and encumbrances”. Some time later the deeds are ready for collection fully legalised. Should these deeds ever be lost or misplaced, the Notary will issue a second legalised copy. The Transfer Tax, in the case of a resale property, will be paid at the time of signing the Escritura.

The Notary (Notaria)

Abogados must not be confused with Notaries.  The Notary (Notaria) is a solicitor appointed by the Spanish government to witness the signing of all legal public documents before their inscription in the property registry. In this case the title deeds (escritoria in Spain) of the property.  He receives the Transfer Tax (applicable only to resale properties) on behalf of Hacienda (the Spanish Tax Authorities).  He represents both the buyer and the seller. 

The Notary fees are around 2% of the purchase price of the property and must be paid at the time of the signing of the deeds. The Original signed document is retained by the Notary who will apply for a formal change in the land registry. The purchaser will receive an initial legal copy of the title deed which is signed and stamped by the Notary. The official title deed can take a while to be processed and until then this is your official proof of ownership and must be kept in a secure location.

Land Registry (Registro de la Propiedad)

The Land Registry Office is where all Escrituras are registered. All local Land Searches are carried out here and any charges or encumbrances relating to the property will be registered here. Registry fees vary according to the Land Registry. The charges are similar to that of a Notary and will seldom exceed 500 euros.

Taxes

You should definitely allow for a sum of around 10% of the price of the property to cover payment of purchasing fees such as land registry fees, notary fees, legal fees and taxes.

VAT (IVA in Spain)

VAT is known as IVA in Spain and is applicable to the sale of all new property.

There are different ratings which are as follows:

Plot only 16% VAT, Plot with construction 7% VAT (assuming that the landowner and the developer are one and the same), new ready-built properties 7% VAT

Resale properties are not subject to VAT

Plus Valia

Plus Valia is a local tax calculated as a percentage of the difference in the increased value of the property from when it was last sold. The calculation is based on the Rateable Value (not on the real value) of the property and is a one off payment charged when property changes hands and due within a few months of purchase.

Each Town Hall defines the percentage and it varies according to municipality. Not all Town Halls enforce Plus Valia. Normally the vendor accepts responsibility for the payment of this tax

Transfer Tax

All resale property bears a 7% Transfer Tax but is exempt from VAT. The Transfer Tax is paid to the Notary at the time that final contracts are signed.  The Notary receives these funds on behalf of Hacienda. (Transfer Tax is not paid on new property although a duty of 0.5% is imposed when a newly built is declared on a plot).

Capital Gains Tax

Although, this is not a tax that purchasers need to pay at the moment of purchase, it is nevertheless a tax that they should be aware of.   This tax is generally paid by the owner when they sell the property. The tax is currently 7% of the declared value of the property.

The Capital Gains Tax will be calculated and the vendor will either have to make up or claim the difference from the 5% deposited. If overpayment has been made, Hacienda is obliged to return the difference to the vendor within 6 months.

The rate of tax is 35% of the gain made although a reduction is made if the vendor has owned the property for more than 2 years. If the property has not changed ownership for more than 10 years, any gain will be exempt from tax. However, up to a period of 20 years of ownership, the 5% retention will remain as an enforcement by Hacienda so that it may ensure that the non-resident has complied with his tax obligations whilst in Spain.

Transfer tax is calculated on the increase in the value of the land from when it was last sold.  The calculation is based on the ratable value of the property and is a ‘one-off’ payment.

Tax on Rental income

Britain and Ireland have a double taxation treaty with Spain.  The standard rate of tax in Spain is 25% and is paid on the declared income from the property.  The minimum declaration is 2% of the value of the property. The rental income must also be declared to the inspector of taxes in Britain or Ireland. You can obtain a tax clearance certificate from the Spanish tax authorities which is then passed to the inspector of taxes in your country, this can be obtained by your solicitor.  You will be asked to pay full tax on the property in Ireland but the 25% already paid in Spain will be refunded.  It has been law since April 1998 that residents of the Irish Republic declare all foreign assets.

Rates

This is like the old English rates system and is based on the declared value of the property. The average price paid is well below UK Council Tax levels being around 140 Euros per year.

Community Fees

These are payable yearly and the average price is around 130 Euros per year. These are paid in respect of services ie. Street lighting, refuse collection, police.

Water

If your property has a mains supply then there is a standard charge for water which is approximately 12 Euros payable every 3 months. The charges for consumption are in addition to this.

If you have a supply from a balsa, underground store, then the fees are dependent on consumption and are payable when the water is delivered.

Electricity

This is very dependent on how much you consume, there is a standard charge of around 12 Euros payable every 2 months and then a charge for consumption in addition to this.

Telephone

The standard charge for a telephone line installation from Telephonica is around 180 Euros. The line rental and call charges are then payable every 2 months and are very similar to the BT rates.

Answers to commonly asked questions 

If, having returned home, you then wish to make an offer on a property you have seen we can put your offer to the owner of the property.  Once it is accepted we can arrange for the contract to be sent to you or your solicitor by fax or courier. You will need to sign the contract and transfer the deposit before your offer is officially accepted.

How can I be confident that everything is progressing to plan once I return to the UK?

We have a vested interest in your purchase so you can feel totally confident that we will be monitoring the progress of your property purchase.  In the case of new constructions we will be ensuring that the stages are going ahead as planned, and, in the case of re-sale property we will be ensuring that, once the property has been checked for encumbrances & the searches completed by the solicitor, the signing of the title deeds can take place as soon as possible. It is our intention to keep you well informed at every stage.

What if I change my mind on a property?

Once you have signed a contract for the property and paid a deposit then this is considered an official intent to purchase the property.  Obviously, it is therefore extremely important that you are absolutely certain that this is the property you wish to purchase and that you do not feel under any pressure to sign the contract.  If you do feel pressured - do not go ahead - there will be other properties in the future.   Property purchase anywhere is an important decision to make & it is important to make the right decision.

What if I am unable to attend the Notary to sign the title deeds?

It is quite common to give your solicitor or ourselves Power of Attorney in order that the title deeds can be signed on your behalf.  You will need to have transferred the final balance for the property plus taxes to whoever has Power of Attorney prior to the signing of the title deeds.

How long will it be between signing the contract and completion?

This is dependant on the outcome of the searches made by the solicitor (abogado) and the process can take anywhere between 1 week and 4 weeks.

What happens to my deposit if the searches are returned unsatisfactory?

If for whatever reason the searches are returned unsatisfactory, you will receive your deposit back in full.  It is for this reason that the initial deposit is held normally by the abogado & not paid immediately to the owner.

Do I have a choice of solicitor when I purchase a property?

Yes, the choice is entirely yours. You are free to use a solicitor of your choice or we can recommend one in the local area or you may choose to use the solicitor associated with the Sun Villas Direct Ltd Property Sales division.

What if I decide to purchase a 'new construction'

Be guarded regarding "Reservation agreements" & have them checked out by your legal advisor before committing your signature to the document.   When you buy from a developer, and even on other occasions since it is not unknown for some estate agents to use this practise, buyers may be asked to sign a "document of reservation", or some similar description, and make an accompanying payment. 

These documents vary enormously in their quality, nature, wording, effect, and legal consequence. Most commonly, they represent a mechanism by which the vendor or his agent attempts to "close" a sale and bind the purchaser into continuing by means of taking a "reservation fee" or payment of sufficient size to hurt the purchaser if he desists. 

Almost without exception, such documents are entirely preliminary to the contract procedures outlined above. Whilst reputable developers can usually be excepted from the following statement, it is not uncommon in documents of this nature that the intending purchaser receives scant, if any, protection of his legal position and his money. 

Staged payments method. It is not unusual for a purchaser to buy a property "off-plan" from a developer.  "Off-Plan" is a property not yet built that may or may not be in the process of being built. 

In such cases, there will more than likely be an initial reservation agreement requiring a nominal payment, leading within a very short space of time to the signature of a private contract accompanied by the initial contract payment. 

This initial payment usually represents the first of a series of payments on the contract (and when dealing with reputable developers the reservation payment is normally taken into account and deducted there from). 

The balance of payments will be due according to a schedule contained within the contract and (be aware) any default will often lead to loss of a substantial percentage, up to 100%, of payments made to date.

Final payment will coincide with completion and handover of the property and with elevation of the private contract to escritura pública.

It is a feature of such staged payment development contracts that the developer is required by law to provide a bank guarantee to the purchaser in respect of all his payments made successively during the term of the contract, in order to secure the financial position of the purchaser in the event of default of the developer/vendor. 

Again, our advice would be:  see your legal advisor before committing your signature to such a document.   Act as you would act if you were conducting your business in the UK!

USEFUL GLOSSARY

Abogado
Legally qualified person i.e. a solicitor, who acts on behalf of the purchaser in the purchase of a property. The standard solicitor's fee for the purchase of a property is between 1% and 1.5% of the purchase price plus IVA.

Impuesto I.R.P.F (Capital Gains Tax)
A tax paid on the gain made on the property when it is sold.

Copia Simple
A copy of the title deeds (see Escritura).

Señal (Deposit)
Usually approx 10% of the selling price and your official confirmation that you intend to proceed with the purchase of that property.

Escritura
The title deeds.

Tasas (Fees)
Apart from the actual cost of a property, you will need to allow approximately 10% of the purchase price to cover the various fees and costs of acquiring a property. The 10% will cover Abagado [Solicitor's] fees, Translation fees, Land Registry costs, Notary fees, Stamp Duty and IVA [VAT].

Gestor
A licensed conveyancer.

Hacienda
The Spanish tax authorities and equivalent to our Inland Revenue.

IVA
The Spanish equivalent to VAT (Value Added Tax).

Registro de la Propiedad (Land Registry)
The place where all Escrituras (Title Deeds) are registered and where title and any charges against a property are checked. Registration fees to inscribe the new deed into your name should not exceed 1% of the registered value.

Contrato de Compraventa (Main Contract)
A contract with conditions (such as the payment structure at each stage of construction, see stage payments) attached to the sale of a property.

Notaría (Notary)
Public official appointed by the Spanish government to witness the signing of all legal public documents. They put on the public record the fact that the title deed recording the sale/purchase has been signed in their presence and understood by the parties concerned. When the Escritura is signed in front of the notary either the purchase price is handed over to the person selling the house or the seller confirms that the money has already been handed over. The original signed document is retained by the notary who will apply for a formal change in the land registry.

Numero de Identificacion Fiscal (NIE)
Foreigner's Identification Number. All non-residents require a NIE and the solicitor acting on your behalf will obtain one for you.

Contrato de Arras (Reservation Contract)
A document reserving a property and acting as a signed receipt for any monies paid (see Deposit) with respect to that contract. Normally valid for 30 days to give lawyers time to carry out the necessary searches

Plus Valia local
A local tax, usually paid by the vendor, calculated as a percentage of the difference in the increased (rateable) value of a property since it was last sold.

Purchase Currency
Due to fluctuating currency rates the purchasing currency is almost always Euro's. Whilst UK banks will assist you in buying Euros and arranging the transfer of funds to a Spanish Bank, a number of specialist Foreign Exchange companies offer better exchange rates. With no fees or commission to pay, plus limited free transfer of funds, your property purchase can become less expensive.

Impuestos de Actos Jurídicos (Stamp Duty)
The current rate is 1% (December 2002)

Impuesto de Transmisiones Patrimoniales (Transfer Tax)
A 7% tax payable on resale properties.

Health Care & Form E111 in Spain

Form E111 - always travel with this document in your possession! 


You can claim back most of your treatment and medication costs if you fall ill or have an accident in the EEA regions of Europe....  as long as you carry a Form E111, which is available free from main Post Office branches throughout the UK.

Form E111 is a document which entitles the holder to free or reduced cost emergency medical treatment anywhere in the European Economic Area (EEA).    If you or anyone in your family are unlucky enough to be taken ill or have an accident during a trip to Europe, you need only present your Form E111 to the hospital or doctor who is treating you. This will entitle you to the same treatment as residents of the country you're visiting. 

Please note that Form E111 is not a substitute for comprehensive travel insurance. 

Are you eligible? 

You're eligible to use Form E111 if you reside in the UK and you're a national of the UK, a national of any EEA country or a stateless person or refugee 

Who's covered? 

Form E111 will cover you, your spouse and dependent children up to the age of sixteen, or nineteen if they are still in full time education. It also covers unmarried partners with children.   If your children are not covered then they can make an application for their own Form E111

What treatment is covered?

Only state-provided emergency treatment is covered. You generally won't be covered for private treatment. 

Where to get Form E111 

Ask for a 'Health Advice for Travellers' booklet which you will find available at any main Post Office branch. Complete the details on the application form and the E111 itself and get the forms signed and stamped at the Post Office branch. 

Or you can call 0800 555777 and request a form.

How long does my E111 last? 

Your Form E111 is valid for as long as you remain a UK resident. Only reapply if you use it to claim for treatment and it isn't returned, or if you lose it.

Remember!

Keep a photocopy of your E111 with the original. Some countries may keep the photocopy if you receive treatment. Other countries may keep the original.

The information on countries where your E111 is valid is contained in the leaflet, 'Health Advice for Travellers', which is available from main Post Office branches. 

The Language

Learn Spanish Today - Learn Spanish on-line for free, using interactive audio/visual lessons.

Useful Contacts

For a listings of schools in different areas click here

Spanish Education (UK contact) - Tel 0207 727 2462