Decide why you are buying
Before you even think about looking at brochures, visiting property exhibitions or searching the Internet, take the time to research exactly what it is you’re looking for. This may sound basic, but the reasons for your purchase will affect all the subsequent decisions that you have to make. Some people buy property purely as an investment; others want to relocate, some want a second home in the sun.
Choose your location
If you’re looking for investment property, for example, it’s important to choose a property of the type and location that will give you a maximum return. As a general rule, properties by the coast attract higher rental incomes. If you want a property to retire to, or are looking to make a permanent move, consider buying somewhere further inland to get more for your money and think about how far you’re prepared to travel for shops and other amenities.
Decide your budget
There are always hidden and additional costs when you buy property and Spain is no exception. As a general rule, allow 10% on top of your purchase price, to cover various taxes and legal fees. You can get a mortgage in the UK or in Spain and, for the latter, it is normal for banks to advance a loan of up to 80% of the declared value of the property.
Visit in person
Never buy any property without making a personal visit. While you’re there, spend some time in the immediate area, get to know people, ask questions and find out what the local amenities are like. See how the environment changes throughout the day. Are there busy times when traffic becomes a problem? Is there a noisy bar or club nearby? Where’s the nearest hospital?
Find a lawyer
Spanish property law is complicated, so make sure you have a good local lawyer to look after you interests. Lawyers will usually charge you 1% of the sale price of the property but it’s an excellent investment for peace of mind. In the case of purchasing a resale property, your lawyer will check that the property belongs to the seller and has the necessary building permissions, as well as, very importantly, checking that the seller is free of debt because under Spanish law any debts will pass to the new owner. For new constructions the same checks will be made on the land, along with a background and financial check on the builder.
Once you’ve chosen a suitable property, the price and conditions will need to be agreed. It is quite acceptable to make an offer subject to mortgage approval and, for properties that are still being built, you’ll want to agree a schedule of stage payments rather than pay the whole amount up front. If you haven’t already appointed a lawyer, you must do this now or run the risk of entering into an agreement that cannot be enforced under Spanish law.
With the offer accepted and the deposit paid, the next step is to exchange private contracts - ‘Contrato privado de compraventa’ - which states the agreed price and what is to be included in the sale. This usually happens within two weeks from the offer being accepted and it’s where your lawyer really starts to earn his money by conducting property searches and making sure that there are no outstanding debts attached to the property, for which you may be liable. This is confirmed in a document called a “nota simple”. In most cases you will now be required to pay a deposit of around 10%.
Final completion and registration of the title deed
Final completion takes place when the title deeds are signed before a notary and you pay the balance of the purchase price. The signed deed is lodged with the land registry and your lawyer will take care of the remaining formalities such as payment of the relevant transfer taxes.