Once you have made the decision on which property you want to buy you will have the difficult task of actually buying it. This guide will prepare you for some of the surprises buying property in Spain and Spanish property law might throw at you, and give you a head start when the time comes. Be sure to read this as Spanish property law is unlike any other European country.

Find a lawyer
You will need to find a good Spanish lawyer, this is essential as there are a lot of differences in property law, taxes and administrative procedures in Spain. Nearly all of the horror stories you hear about people who come in to difficulties when buying a home in Spain are due to not using a lawyer. The best way to find a good lawyer is through recommendations, ask around to find other people who have bought a home in the area and see who they used. If possible try to find a lawyer local to the area you are buying, they will then know the local system and the ways you can speed up the purchase of the house, and ensure it goes through smoothly. The fees should end up been no more than 1% of the purchase price and this should include a few basic services. Checking the property is registered, that the owner is really the person they say they are and if there are any debts against the house are the main ones. In Spain any debt will stay with the property even when ownership is transferred, so it is very important this is checked out.

The Contract
When the contract is drawn you will need to have 10% of the purchase price as a deposit. It will usually include assurances that property is sold free of charges, tenants and mortgages aswell as the completion date. When it is signed and your deposit paid the property is secured. This is a binding contract so penalties will be incurred for breaking it or not honouring the terms of the contract. At this stage you should check the receipt that shows the IBI (Impuestos sobre Bienes Inmuebles) the annual real estate tax, has been paid. It also gives the Valor Catastral which is the official assesed value of the property.

Signing the Deeds and Property Registration
A month or so after the contract has been signed you will sign the deeds in the presence of the Notary and pay the balance of the purchase amount with or without the “Black Money” (see below). You will then register the property with the land registry which should be done as soon as possible. Before this time it is possible for the seller to get a mortgage or make charges against the property.

Black Money
It is commonplace in Spain for houses to be under valued during the sale and for black money to pass between the buyer and seller to make up to the full value. The reason behind this is for the buyer to lower their transfer tax and the seller their capital gains tax. This all takes place in the presence of the Notary in a comical scene where they turn their back and pretend they don’t know what is happening! Although commonplace you should be very careful before going down this route as the tax authorities are clamping down on it and heavy fines being imposed. Also when you come to sell the house if you can’t find someone to use the same technique you will incur much larger capital gains tax.

Costs
The costs of buying a house in Spain are unlike those in England so you should be aware of them before you buy. As a general rule you should allow 12% split roughly as shown below

• Professional fees - the cost of the lawyer usually around 1%
• Notary charges - paid to the Notary for preparing the deed and overseeing the signing, the fee is fixed according to the property value and shouldn’t exceed 1%
• Property registration fees - paid to the property registration office to inscribe the new deed into your name. Shouldn’t exceed 1%
• Property tax (resale) or IVA (new build) - Both are charged at 7%
• Plus Valia (local municipal tax) - Based on the increase in the value of the land since the last time the property was sold. This differs greatly depending on the size of the plot
• Mortgage registration - if you need a mortgage this will need registering with the Spanish authorities and costs around 1%