Spain is still one of the premier holiday destinations in the world and is undoubtedly in the top three of countries visited. It is also the number one destination for relocation and/or the buying of a second home by other Europeans. There are no restrictions on buying in Spain and the procedures are fairly straightforward. The south of Spain is very popular because of the short winters and long hot summers, particularly with property prices that are still lower than those in northern Europe. In addition to the relatively low cost of living, Spain is a haven for keen golfers and sun worshipers alike.

There is a huge choice of property available all over mainland Spain and equally the islands. Before deciding on the type of property you want to purchase you should be clear on what you want the property for as that will affect your choice. Do you want it as a rental investment, a holiday home, a permanent home or for your impending retirement? Once you have decided on the area you like you should visit it as often as you can before coming to a final decision on buying there. Although many of the things may seem like common sense you would be surprised at the number of people who do not consider the basics. For more advice please read our tips on ‘Buying a property abroad’.

Due to the fact that Spain is such a popular destination we will go into greater depth regarding the purchase process. Once you have found your ideal property we advise, as always, with any property purchase, that it is essential to enlist the services of a qualified Solicitor or Lawyer (Abogado).  You will need to register with the Spanish Tax Authorities, by obtaining an NIE Number (Número de Identificación de Extranjeros). In order to purchase a house in Spain you will require this documentation.

When you agree to buy a property there is usually a cash holding deposit of around 3,000 Euros to be paid although, by agreement, it may be up to 6,000 Euros but we suggest keeping it as low as possible. This deposit needs to be paid but covered by a ‘reservation agreement’ that will be signed by both the sellers and the buyers and may have conditions attached such as completion dates and items to be included in the sale price. This contract is normally binding for 30 days but it could be longer by agreement.

The final contract has to be signed before the end of the reservation period. The reservation fee will be taken into account and included within the 10% deposit that becomes due at this stage of the process. If a full purchase agreement is not signed then the prospective buyer stands to lose the reservation deposit, hence our advice against paying a larger deposit. There are different types of contract which may be entered into at this time.

An agreement to purchase a property that is ‘bought off plan’ refers to a property that is to be built as a future development. These agreements are sometimes referred to as ‘investment contracts’ and with these type of contracts great care must be taken and we suggest that it is important to obtain the services of a reputable and independent lawyer both for advice and to act on your behalf. It has been the case where a developer has used the deposits received to kick-start the project rather than investing so much of their own money.  People who buy these properties often do so to sell the property prior to completion in order to avoid having to make the final payment and in the hope of making a profit. This type of contract can be risky if it is signed with the intention to sell prior to completion because if it is then not possible to sell it before the property is complete the balance of the sale price becomes due. If the final payment cannot be made then the buyer stands to lose his or her deposit. In some cases full planning permission has not been obtained at the time the contract is signed so the process could become quite lengthy.

Many resale homes are sold under a type of contract which gives the prospective purchaser the option to buy the property and this is commonly referred to as an ‘option contract’. It is the most widely used but it can work to the buyers disadvantage if their finances are not in place. If the ‘title deeds’ are not signed and transferred within the contract period then the buyer could lose the 10% deposit paid when the contract was signed. This type of contract doesn’t provide for the same degree of  legal protection as the full contract and makes it easy for the seller to withdraw fom the sale if the transaction is not completed and full payment not made within the time specified. That is normally 30 days but it can be varied by mutual agreement and written into the contract.

The other type of contract referred to as a ‘full contract’ requires 10% of the purchase price to be paid (less the amount of the reservation deposit) on signing. With this type of contract if the seller withdraws from the sale then the purchaser is entitled to twice the amount of the deposit as compensation. On the other side of the coin, if the buyer withdraws from the purchase then he loses his deposit. When the contract is fully signed up by all parties concerned then the contract is legally binding to both seller and buyer.

Whichever type of contract is used, the buyer should be aware of the implications of the contract from the outset. All the transfer documentation is prepared by a public official known as a ‘Notary’, the papers are signed and the sale finalized at the offices of the Notary. Once signed, the buyer becomes the legal owner of the property. Fees and taxes for property purchases in Spain will normally stand you in at around 10% of the purchase price.