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can foreigners buy property in spain

Can Foreigners Buy Property in Spain?

In short, yes they can. Foreigners can buy property in Spain.

Property Investment has always been encouraged by Spain. Whether commercial, residential or land, if you are a foreigner you will be able to buy it.

You might have to jump through some hoops, but it should not be more difficult than anywhere else in the world. Here we wish to take you through the process, and hopefully clarify any doubts you might have (also check out our post: How to buy a house in Barcelona, a 10 step guide).

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First things first, the legal hurdles

Needed Documents

To be able to buy property in Spain as a foreigner you will have to get yourself a N.I.E. number. The “Número de Identificación del Extranjero” (translates to Foreigner Identification Number) is granted by the Spanish Interior Ministry. You’ll be able to get this document at your local Spanish embassy. Simply contact them and let them know that you’re planning to buy Spanish real estate. You will need to send them a document certifying this intent. This can easily be issued by your local real estate agency.

Other options are getting it personally once in Spain (long process and in Spanish) or via a local representative.The Spanish government insists on this document since it will allow them to track your property tax payments.

Also, although it’s not mandatory by law, it is highly recommended to get a Spanish Bank Account. This will significantly facilitate the process of paying property taxes and other fees associated with the purchase and maintenance of the property. It will also make everything easier if you need a mortgage from a Spanish bank.

The main Spanish Banks that currently provide loans to non-resident foreigners are: Banco Sabadell, Banco Santander & Caixabank.

Post of interest: Mortgage in Spain (a guide)

The Notary in Spain is the “lawyer” that will oversee the properties documentation and validate the property deed signature. They will also get your sale contracts ready, making sure it complies with local law. And if you wish they can register your brand new property with the Property Registry (Registro de la propiedad), you’ll have to do the registering yourself in case you want to save a little money. They can also take care of any tax and outstanding costs required to be paid by the buyer.

Real estate lawyers can come in handy to help ensuring the person proposing the sale is the legal owner of the property, and that there are no hidden depts or any other risks attached.

The Lawyers

The Notary in Spain is the “lawyer” that will oversee the properties documentation and validate the property deed signature. They will also get your sale contracts ready, making sure it complies with local law. And if you wish they can register your brand new property with the Property Registry (Registro de la propiedad), you’ll have to do the registering yourself in case you want to save a little money. They can also take care of any tax and outstanding costs required to be paid by the buyer.

Real estate lawyers can come in handy to help ensuring the person proposing the sale is the legal owner of the property, and that there are no hidden depts or any other risks attached.

 

This post might interest you: Can you airbnb your Barcelona apartment

Finding your property

Real Estate Agents in Spain are paid by the seller (around 3-6% of the purchase price). If you’re the buyer it only makes sense to have a Real Estate Agent looking for your property. 

They provide an amazing amount of information about the region, often deal with overseas buyers and are sometimes bilingual. Since in Spain there are no required studies to become a Real Estate Agent you might have to search a bit before you find the right fit. It often helps to work through recommendations or with agents that can give you some sort of track record. This will help you root out the wannabes, and unscrupulous people that tend to be attracted by this business.

Some great portals when searching to buy a property in Spain as a foreigner are:

Can foreigners buy property in Spain 5

Before you buy, due diligence is in order

It always pays off to be a little extra cautious before you buy. Some simple fact-checking can save you a lot of money in the long run.

  • Ask for credentials of any Lawyers and Notaries you will be working with during the operation. This might not be comfortable to do, but any serious professional should not have any problem in offering this information.
  • Debt is attached to the property in Spain. You can simply check with the “Registro de la Propiedad” (translates as property registry) if the property is leveraged in any way. The background check on any address costs around 10€ and takes approximately 3 working days. You’ll receive a document called “Nota Simple” (check out our post: What is the Nota Simple?)which states the rightful owners, and any debt attached to the property.
  • If you are planning to build or renovate your future property check with the local town hall on the exact regulations and permits. The rules change significantly depending on the city / municipality.
  • Is the property structurally sound and has it been built according to local code? In Spain, it might not be customary, but getting a surveyor or architect to have a look, might be a good idea. 
 
Post of interest: Buyer’s agent Barcelona

Buying a property that hasn't been built yet

Over the years many foreigners have had all sorts of trouble with unfinished or unbuilt properties.

While malicious intent is rare, caution is always advisable before you buy a property that hasn’t been built yet.

  • Check the company you are buying from actually exists. www.registradores.org can help you with that (only Spanish)
  • Check that the planning and building permits have been granted via the local city hall.
  • This might be obvious for many, but never sign a contract you don’t fully understand.
  • Enlist an independent party if any translations are required.
  • Demand proof that any sums paid by you are either being held or spent appropriately.
  • Include in the contract a clause that all of your funds shall be returned in case the property is not built.
  • Again, it might be wise to hire a real estate lawyer at this stage. If you need a good one please get in touch, we’d love to help.

Luckily construction standards in Spain have greatly improved over recent years. New buildings are being erected to the same standards you can find anywhere else in Europe or North America

Mortgages in Spain

After the 2008 crash, Spanish regulations for the Real Estate Industry got tougher and the banks were reformed significantly. As a result banks began to give out fewer mortgages and made them less accessible to the general public.

Therefore it is worth getting a pre-approval from the bank for a mortgage before you go too far with the property search. Also in the pre-sale contract (Contrato de Arras), it is important to add a clause that will allow you to exit in case the mortgage falls through.

  • Spanish banks normally negotiate mortgages terms with each individual. They always follow a certain set of guidelines but can adjust to the needs of each client. A mortgage broker at this stage might be a great idea, he will help to surmount the language barrier, and hopefully get you the best deal available.

The actual process of buying property, step by step

The usual process of buying a property in Spain as a foreigner is not complicated, here we outline all the steps normally involved:

Before The Purchase

  • If you require a Spanish mortgage, you will have to decide which option works best for you, and get pre-approval from the bank you have chosen. Fixed rate, variable rate or mixed rate are amongst the usual options.
  • You will have found your property. Normally with the help of a Real Estate Agent (Remember the seller pays for his full commission unless you’ve hired a personal real estate shopper)
  • An offer is made via a reservation payment (1% of the total property value is customary) and hopefully accepted by the seller. It is usual at this stage to do a little negotiation until both parties agree on a price. 

During The Purchase

  • Both parties sign a “Contrato de Arras”. This is a downpayment contract stipulating your intent to buy, the sellers intent to sell and agreeing on a future date to complete the operation. At this stage, it is usual for the buyer to pay a 10% deposit of the purchase price (discounting the amount already paid out during reservation). Always be sure that clauses are in place to get you your money back, in case the seller backs out of the operation or you fail to secure a loan.
  • You will hire a Notary  to draw up the sale contract (“Escritura de Compraventa” in Spanish)
  • Although not mandatory, it is highly recommended to check with the “Registro de la Propiedad” (Property Registry) if there are any outstanding debts against the property. Remember in Spain any debt is attached to the property, and will be transferred with it, in case of purchase.
  • Final arrangements with the bank for the mortgage are made. You’ll have to go to the notary where he/she will explain everything you’re agreeing to if you sign for the mortgage.
  • Both parties sign the property deed (Escritura de Compraventa) at the pre-established date, to finalize the operation. During the signature, the full remaining balance of the purchase price is paid out. At the same time the mortgage deed is signed (if applicable)

After The Purchase

  • You have the notary register the sale at the “Registro de la Propiedad” and pay out the property tax. The amount to be paid varies from province to province within Spain. In Catalunya (Barcelona) it’s 10% of purchase price.

Taxes & Fees

As a buyer, you have to calculate a certain amount on top of the purchase price which will cover taxes, fees of the people involved in the operation and any added costs.

As a rule of thumb, you can estimate anything in between 10,5% – 13% on top of the purchase price. This percentage will include:

  • Property transfer tax 6-10% (valid for existing properties, percentage depends on where in Spain the property is located) / Vat (or IVA in Spain) at 10% (new properties)
  • Notary costs, and property registration fee 1-2,5%
  • Legal fees 1-2%

Capital Gain Tax (if you’re selling a property prior to buying another)

Capital Gain Tax is paid on the profit you made by selling your last property. Meaning the difference between the purchase price and sale price. The amount of tax in Spain currently varies between 19% and 23%

  • First € 6,000 – 19%
  • € 6,000 – € 50,000 – 21%
  • € 50,000 and over – 23%

You may claim a reduction on these Capital Gains if the property has been your main residence for over three years, or if you are investing the full amount in another property. Be sure to talk to an accountant before you proceed with any payment.

After everything you’ve learned, it’s time to start looking for your new property in Spain.

Post of interest: Property Tax in Spain (a starter guide)

Can foreigners buy property in Spain 4

We hope to have helped

Any property purchase can be tricky, especially in a country you are not familiar with.

After this post, we hope you are now familiar with the basics and will navigate the local real estate market without any hiccups.

If you have any questions please let us know about it in the comments section, or just shoot us a mail.

In the meantime happy property hunting!

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