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How to buy an apartment in Barcelona (a 10 step guide)
How to buy an apartment in Barcelona?
You’re ready to buy a second home in sunny Barcelona. Maybe you want to take advantage of the dollar – euro parity. Or you want to find an investment property, to hedge some hard earned cash agains inflation.
Sometimes it’s difficult to navigate an unknown real estate market. In this post we’d love to give you a complete guide, to help you purchase your new apartment in Barcelona. Hopefully without any hiccups.
In this post
1
Figure out the total cost
Before you even start searching for your apartment in Barcelona, it’s best to figure out how much the total cost of your property would be. This way you’ll know exactly how much you can afford to spend!
On top of your budget you should add things like purchase tax (ITP), closing costs, mortgage opening costs, etc.
Purchase tax and closing costs
In Spain you have to pay a hefty purchase tax, whenever you buy a property.
In Barcelona you’ll pay 10% of the purchase price (this percentage varies in other areas) plus approximately 1,5% in closing costs and other fees. To be safe add 12% to the purchase price.
Example: Purchase price at 500.000€ + Property Tax of 50.000€ + 2% closing fees at 10.000€ = 560.000€ total budget
Mortgage costs
If you’re in need of financing banks normally give out a maximum of 80% financing for Spanish residents, and 60-70% for non residents.
Some banks will charge a mortgage opening cost (around 1% of total mortgage). If you need a mortgage broker please get in touch below
2
Talk to the banks (if a mortgage is needed)
Since the real estate crash in 2008, Spanish mortgage regulations became more strict. During the crash most banks came close to bankruptcy, and a lot of homes got repossessed.
This lead to banks giving out fewer mortgages, and asking for more thorough background checks. Hence it’s a very good idea to get your mortgage pre-approved.
Bank vs Mortgage broker
At Property Management Barcelona we believe you should approach one or two banks directly, and also get a mortgage broker. This way you’ll understand if the broker is actually getting you a good deal. And don’t worry, most mortgage brokers only gets paid once you sign for your mortgage.
How firm is the mortgage pre-approval?
Please keep in mind that a mortgage pre-approval doesn’t guarantee a mortgage at a 100%. The pre-approvals are normally issued by bank agents who have a lot to gain by giving you a mortgage.
That being said, until your mortgage submission isn’t sent to the banks risk analysis department, there are no assurances. This only happens once you’ve found a property and the bank has had a chance to appraise it.
Post of interest: Mortgages in Spain (a guide)
3
Start the search, to buy your apartment in Barcelona!
Now the fun begins! Searching for your next dream home. Luckily nowadays you can get a lot done online.
Two of the best real estate portals in Spain are idealista.com and fotocasa.es
In Barcelona’s center most properties have a range in between 4000€ – 6000€ per square meter. Some of the deciding factors for the price are: Floor the apartment is located on, if the flat faces the street (exterior) or the inner courtyard (interior), elevator availability, and if the flat has a terrace or balcony (both highly coveted in Barcelona). Of course, neighbourhood and size are the ultimate determining factors.
Spanish real estate agents
Barcelona’s center is a sellers market. The demand (buyers) far exceeds the supply (sellers).
This translates in many real estate agencies not being up to par with customer service. They know they’ll sell the flat eventually, so they don’t have to actively chase every lead.
Please don’t get discouraged if you receive no reply to your mails and calls. Just keep pushing!
(This might interest you: Real estate commissions in Spain)
Searching from abroad
If you are searching from another country we highly recommend you hire a real estate Personal Shopper.
They will help with language barriers, will be able to do video visits on your behalf, navigate de local legal terrain and keep your best interests at heart.
4
Nie & bank account
During the search, we highly recommend you start the process on two things you’ll need, in order to buy your apartment in Barcelona.
NIE
The NIE is the Spanish foreigner identification document. The Spanish government requires you to have this for any real estate purchase. Basically, they want to make sure you’ll pay your taxes after buying.
You can easily obtain this at your local Spanish embassy (takes approx 3 weeks) while living abroad.
Post of interest: How to get the Spanish NIE (a guide)
Spanish bank account
Getting a Spanish bank account is not mandatory but definitely helpful. Through this account you’ll be able to easily pay for taxes, services and anything else related to your property.
5
The negotiation
You’ve found your dream apartment, but would also love to get a good deal.
In Spain, people are very used to negotiating and actually expect it. Especially in real estate deals.
Finding the negative
During the visits find out about all “negative” sides the property has. Use them as leverage during the negotiating process. Issues like pending renovations, similar but better priced properties in the area, lacking attributes of the flat (ex. terrace, elevator, etc.) and any legal difficulties.
Using the positive
It greatly helps to emphasise all “positives” you have to offer. If you are paying for the whole thing in cash or if you can close quickly are two of the main reasons vendors will drop the price quickly
Closing
It’s best to have at least two favourite properties, before making your offer. This way you’ll keep a cool head, and won’t be emotionally attached to the outcome.
Once you have all your information, present your offer and wait. Give the seller some time to think about it. Let him negotiate against himself. We are sure you’ll get a good agreement in no time!
6
Reservation & Due dilligence
Reservation
Once you’ve agreed on a purchase price it’s customary for most agencies to request a reservation payment of 1% of the property value. Depending on the agency, they might even request this payment before presenting your first offer. This is normal and you’ll get that money back, no questions asked, if the deal doesn’t come to fruition.
Once the reservation is paid, the real estate agency has to stop commercialising the property.
Due dilligence
After the reservation is paid out, and you have an agreed purchase price, it’s time to do your due diligence.
At Property Management Barcelona we recommend you visit the property with a local architect to check for any structural or hidden issues. Also this might be a good time to hire a real estate lawyer, who can help with all documentation and contracts. We can put you in touch with both professionals, just shoot us a mail!
Finally, at this stage, the bank will send their appraiser to the property (only applies if you need a mortgage).
All needed documentation
Introduce your email address below, and we'll happily send over a full list of all required documents in Spain.
7
The downpayment contract
This is the most important step of the entire operation. Through this contract the conditions and timelines of the deal will be established, as well as the escape clauses.
Downpayment contract aka “Arras penitenciales”
A “Contrato de Arras penitenciales”, is the most popular contract model used in Spain. This type of contract establishes that if the buying party backs out of the deal without a valid reason, they will loose their deposit. If the sellers back out, they’ll have to give back twice the deposited amount to the buyers.
It’s customary to pay out 10% of the property value at this stage (discounting the initial 1% paid out during reservation). This is a private contract signed just between both parties.
Escape clauses
It’s very important to write into this contract a few escape clauses. This way you’ll be able to back out of the deal, without loosing any money. Some typical ones are failure to secure financing / the vendors not being able to supply all documentation / the property not being free of debt prior to property deed signing
8
Notary & Mortgage revision
Notary
In Spain the notary is the appointed figure to oversee all property sales. They are similar to a lawyer and will oversee the final stages of the process. To check all documentation, validate the signing parties and explain the mortgage to the buyer are amongst their main functions.
The buyer, by law, will choose the notary. This makes sense, since he’ll act as the final filter, supervising that everything is done according to the law (protecting the buyer in the process)
Mortgage revision
After the real estate crash in 2008, one of the improvements made by the Spanish government was the implementation of a mandatory mortgage revision. This means that if the buyer gets a mortgage, the notary must explain all the conditions to him. Normally the buyer will meet up with the notary a couple of days prior to the property deed.
This way the government protects the buyer from abusive mortgage agreements, which were common before the crash.
Maybe consider hiring some help: Buyer’s agent in Barcelona
9
The property deed
The big day arrived! The buyer and vendor meet at the notaries office, where both parties will sign the property deed.
The buyer
The notary will read through the entire property deed aloud, and both parties will proceed to sign.
At this stage the buyer will pay out the remaining 90% of the purchase price.
In Spain this can be done either with bank certified checks, or transfers validated by the bank of Spain. It’s important to have asked the vendors which payment methods they prefer, so there are no mixups.
Also, at this time, the buyer will sign the mortgage deed.
The vendor
After signing the property deed, the vendor will hand over the keys and last paid service invoices.
And you’re done! Now it’s time to move into your new house in Barcelona and start enjoying this beautiful city!
Post of interest: Golden Visa Spain
10
Don't forget about the tax man
Funds provision
A couple of days after signing the property deed, the notaries office will send over a funds provision. Basically it’s an estimate on how much you’ll spend on ITP tax + notary expenses + property registry expenses.
ITP tax
The ITP (“Impuesto sobre transmisiones patrimoniales” in Spanish) is the single biggest tax payment you’ll have to do after purchasing a property.
In Barcelona and Catalunya in general, it corresponds to 10% of the purchase value. Keep in mind that if you’re buying in another Spanish area, this value will differ and probably be less.
The procedure
After receiving the funds provision, you wire transfer those funds to the notary. They then pay and request all necessary documentation. This process will take approximately two months. After that you’ll receive the final registered deed and paid tax slips.
Post of interest: Property Tax in Spain (a starter guide)
