- D1491 Ref
- 4 beds
- 4 baths
- 705 m²Built
- 1.460 m²Plot
Ready to become the happy owner of property in Marbella?
There are several stages to approach it in a structured and organised way whilst understanding the purchase process. Conventionally, let’s call them: house hunting, getting ready for buying, financial matters, transaction, ownership costs.
The first stage (out of 5): House hunting
Viewing the options, choosing and reserving the One
Neither photos nor virtual tour will give you a good feel for the area, infrastructure, neighbourhoods. When visiting a target property, you need to learn about the immediate surroundings personally, as they can have a big impact on the quality of your life. Before saying ‘this is my home’, you should see it with your own eyes, hear with your ears, smell with your nose. Feel its rental possibilities or marketability.
It is not enough to know age of house. ‘Freshness’ doesn’t always mean ‘advantage’. Construction boom has created houses with low-cost noise insulation, smaller kitchens’ size, etc.
Walk to the nearest beach or golf course. Promised “10 minutes” can be a different period of time for sellers and buyers.
You need to gather as much information as possible during viewings. To maintain a rational, meticulous and business-like approach throughout the visiting stage you can create a check list.
Don’t forget to write down:
General maintenance, greenery, parking, kids’ playground, guest admission, street noise, pets, dog-walking area, garbage collection, “unwritten rules” of residents, residents themselves. Listen out for barking dogs, screaming children or a neighbour practising on the drums. Do not hesitate to talk to people you meet, Spain is friendly and talkative.
Identify signs of distress, obvious structural faults, mere cosmetic problems (hairline cracks in plastering), check walls condition, water leaks, sign of humidity, mold, draught proofing, insulation, entrance and interior doors, ventilation. See the views from all the windows. Special attention needs to be paid to plumbing, rust on pipes, boiler, gas, sockets. See water meter. Confirm how the sewage is dealt with. Try all the light switches. Look for neat fuse boxes, check the meter is well-kept.
All these details can also affect the price bargaining.
A tip. You will see more than one property that you could consider buying. Take photos and make the notes (‘villa with stunning solarium’, ‘chic palace’, ‘yellow accent wall’, etc.)
Think of a convenient evaluation system, use plus and minus, points, emoji, thumbs up, etc. Compare, choose and make a decision. Visit it again. Good realtors will always give you another chance to inspect the chosen property more thoroughly.
The next step is to secure your chosen property by depositing a sum of money, the reservation deposit with the vendor (Contrato de arras). Тypically, the amount required is between €3.000 and €12.000, or 10% of the price or more (by agreement).
2d stage: Documents for foreign buyers. Nie. Opening a bank account in Marbella
There are no restrictions on buying property in Spain for foreigners. However, non-residents will have to make some steps before a major transaction:
• apply for NIE (foreign identification number),
• open an account in a Spanish bank,
• check the legal status of the property
• sign a preliminary agreement
• if necessary – apply for a mortgage (we’ll speak about it later)
Foreigner identification number NIE (número de identificación de extranjeros)
Foreigners, who, owing to their financial, professional and social interests, are associated with Spain, will be given, for identification purposes, a sequential number NIE – Numero de Identificacion de Extranjero, which is personal and unique. You will need it if you own property in Spain, or live here as a resident, want to work, study, start a business in Spain, or even open a bank account.
You can apply in person via Spanish Consulate abroad, or in Spain, in person or through a legal representative (power of attorney! you should authorise a third party to obtain you NIE number on your behalf).
In Andalusia, unlike let’s say Catalonia, this is quite a simple procedure for which you will need: the original and a photocopy of the main page of your EU passport (all pages for non-EU nationals), 2 photos for non-EU nationals, 2 copies of the Ex-15 application form filled out and signed.
Opening a bank account in Spain
Better do it in advance. You can make payments (incl. bills) online with this bank account but not all banks provide this service in English or other languages.
Many financial institutions work with foreigners: Sabadell, Caixabank and etc.
To open a bank account, you will typically need to provide:
- Proof of identity (e.g. passport),
- Proof of employment status and income legality (e.g. employment contract, student card, tax declaration, etc.).
As well as the standard documentation, you may be asked a proof of address (rental contract, recently paid community bills, etc.). Some banks (BBVA) ask to provide a certificate of non-residency (Certificado de No Residente). To get one, you have to apply at Spanish police station and the process typically takes 10 days.
The documents may need to be officially translated in Spanish, and if they are from abroad, they may need to be authenticated using an Apostille stamp. Most banks don’t charge for opening an account but you will pay an annual fee for administration (monthly, quarterly).
Particular attention should be paid to the fees that different banks charge for receiving transfers from abroad which can add thousands of Euros to the cost of your purchase. To avoid a nasty surprise, you need to speak about these fees in advance with the bank where you open your account and, of course, carefully read the contract for the opening and administrating your account, which usually indicates commissions and interests.
Banking in Spain is relatively high compared to other EU countries. The amount of fees may vary from bank to bank and from account to account. Regular current accounts are the most inexpensive. If your salary or pension goes to the open account, you can be offered bonuses and discounts.
3d stage: Signing contracts
When buying property, you will be asked to sign a reservation contract, a purchase contract and an official deed at Notary on day of completion. This is not the only way to proceed but the most common. However, there are various ‘private’ contracts you can be asked to sign.
Option contract – Contrato de opción de compra
You pay vendors 5-10% of the agreed price, in return vendors commit to sell you property at the agreed price within the timeframe agreed.
Reservation contract – Documento de reserve
A deposit (€3,000-6,000) reserves a property usually for 30 days, then you either proceed to buying (deposit counts towards final price) or back out and lose it. The Spanish buyers don’t typically use this contract.
Deposit contract – Contrato de arras penitenciales
You pay a deposit (normally 10% of agreed price). If you fail to go through with the purchase, you lose it. However, if vendors back out, they pay you back double the deposit. Spaniards often use this contract when buying property.
Sign this contract once you have done all necessary checks, as you may lose deposit if problems subsequently emerge.
Down payment contract – Contrato de paga y señal
It is very similar to deposit contract. The big difference being that there is no mechanism for backing out, unless both sides agree to call of transaction. Neither of the parties can back out unilaterally. so you will be forced to go through with the purchase if the vendor is unwilling to tear up the contract and return your down payment.
Private purchase contract – Contrato privado de compraventa
It is also a binding contract with no mechanism for backing out unless both sides’ agreement. However, you pay no down payment at signing it and pay the full amount at the signing of deeds before Notary.
When you sign any contract that involves payment, this should be clearly noted in the document you sign or a signed receipt. All contracts should provide unambiguous detail on the property, buyers, vendors, price agreed, deadline for signing the deeds, vacant possession, debt-free title, how the transaction costs will be paid, clauses that allocate responsibilities, need to be met for the contract to be valid, how disputes will be resolved. If you are buying with furniture and other items, it should be included in an inventory attached.
Completion for a property purchase in Spain – Escritura de compraventa
It is undertaken in offices of Notaria Publica. All parties connected to the completion must be in attendance: buyers and sellers and/or their legal representatives or lawyers, bank personnel for redemption or subrogation of an existing loan, bank providing a new mortgage, etc.
After signing at completion, a copy of the deeds should be given by the Notary; the originals are sent to Land Registry to be registered (which can take up to 3 months). After registration the original deeds and all invoices relating to the transaction will be available.
Both parts of the legal side for buying a Spanish property, the preliminary and the completion contracts, are not difficult if you are well-prepared.
4th stage: After signing the deeds. Registration of ownership. Utility contracts
Once the closing is done, the follow-up work is to make sure taxes are paid) and your new ownership of the property has been registered. You can need help from a lawyer (abogado) or a professional legal and accounting consultant (gestor).
Tip. Always find out in advance the cost of their services.
Buyers should understand that their expenses are not only a figure in the contract. There will be some additional costs. The amount does not depend on the buyers’ nationality (Spanish and foreigners pay the same), but depends on a property – residential or commercial, new or resale.
If there’s a mortgage, buyers’ expenses may include: a fee for loan opening (0.5-1%), valuation (€ 300-500), property insurance (€ 100-1000), possibly mortgage broker fee (0.5 -1% of the loan amount).
Immediate notification faxed to Land register
The notary fax to the property register a notification of the transaction (by fax) if the buyers ask to do so. This makes it impossible for anyone else to inscribe the same property in the Land register for the next 10 days.
Put taxes in order
Make arrangements to pay your taxes within 1 month via an authorized bank which notifies the regional tax office (Delegacion de Hacienda de la Comunidad Autonoma). You will need: NIE, a form to fill out and copia Simple.
Registration in Registro de la Propiedad
When the taxes paid, the property should be registered at the local property registry. This guarantees that your ownership rights are fully protected.
• NIE and copy of passport;
• copia autorizada;
• ITP tax payment confirmation;
• A copy of seller’s IBI tax payment.
After the registration you will receive the original contract of deed.
Updating the Cadastre
Inform Cadastre (in town hall) of your new title within 2 months.
The property registry office and notary do this, but they might not provide all the necessary information (your address, bank account, etc.), so have your lawyer or gestor inform Cadastre as well.
- copia simple,
- photocopy of your ID,
Community of Owners, or Comunidad de Propietarios
On buying property in urbanisations or block of flats, you automatically become a member of “Community of Owners” and need to inform administrators of your contact details.
Changing the utility contracts
The utility companies should be informed of the changes.
2 options to sort out contracts (water, electricity, gas, telephone):
1. To take over vendors’ contracts is the cheapest option. Having copies of each latest utility bill ring up (visit local office, sometimes online) utility company, quote policy number on the bill, your NIE and change the name, address and bank account details to yours. sent to.
2.To set up new contracts sometimes is easier than to deal with vendors and risk your ability to get services. You need to provide your name, NIE, property address, your bank account details, a copia simple of the deeds and a first occupancy licence (primera ocupación) for a newly built property
To avoid problems, hire a gestor or property management company if you don’t speak fluent Spanish.
Stage 5: Owning a property in Spain. Costs. Expenses. Taxes
Now a property owner can apply for annual visa if necessary; invitate friends and relatives to enjoy Spain, rent the property for a long term (1-year, annual renewal) or short (link – tourist rental terms).
Owning a property in Spain as everywhere else will lead to expenses.
- Maintenance costs (cleaning, repairing, reforming, utility bills, garbage collection, etc.) are determined by the size and type of the property. Obviously, a large villa with a garden and pool will require much more effort and cost to maintain than a small apartment that can cost €1000 per year.
Owners of a property that is part of any development, building or complex with shared common zones are by law obliged to be the members of Community of Owners (Comunidad de Propietarios) and pay community fees for maintenance of the common areas and any other services that the community votes for at the annual general meeting. The numbers can vary from 200 to thousands of Euro.
- Number of costs in the form of taxes and fees.
Property Ownership Tax (Impuesto Sobre Bienes Inmuebles – IBI)
Local tax on the ownership depends on whether the owner is a resident or not. Calculated on the basis of ‘valor catastral’ (administrative value that is usually lower than market value) set by the town hall the tax rate goes from 0.4% – 1.1% of the valor catastral depending on the region (annually € 200-1500).
Annual Wealth Tax (Impuesto Sobre Patrimonio)
The state progressive wealth tax rates start at 0.2% on assets up to €167,129 and rise up to 2.5% on assets over €10,695,996. The regional rates vary.
This tax has been changed several times in recent years. “Patrimonio” has been reintroduced during Spain’s financial crisis, but with a much higher tax-free allowance of €700,000 per person that also applies to non-residents.
It appeared as a ‘temporary’ measure, but yet there is no clear indication of when it will be abolished, if at all. Spain lags behind in making itself more attractive to foreign residents and investors, compared to Portugal, France, Czech Republic, the Netherlands or UK who took those steps some time ago.
Personal Income Tax (Impuesto sobre la Renta de No Residentes – IRNR)
Non-residents who own property in Spain have to pay an annual income tax influences by whether the property is rented out or not.
Not rented out
Non-resident property owners who do not rent out their property and have no any other source of income in Spain pay income tax based on property value. The tax rate is fixed as 25% of 2% of the valor catastral of the property. If property value is € 700,000, taxable base (2%) = € 14,000, tax (25%) = € 3,500.
Non-residents are obliged by law to declare rent income and pay taxes on it. The taxable base and the tax rate will be determined by the laws as they apply to each person’s particular circumstances (taking into account the double taxation treaty between Spain and the country of origin). Often non-residents simply pay a flat rate of 25% of the gross income they earn from their property in Spain.
Residents in Spain pay income tax based on their annual income. The rates vary in different regions, but recent years have brought the taxpayers positive news, and the government has planned a further reduction of tax rates.
- Another expense – insurance
Drumelia Real Estate specialists and consultants will be delighted to answer all the questions of our clients.
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