What do you need to know before buying a property in Marbella Area?

You are about to buy a property on the Costa del Sol? For most this is the second most important purchase, so get prepared, informed and make a list of your important criteria. Then, make sure you inform your agent as much as possible and make sure he/she understands the purpose of the purchase for him/her to step in your shoes when selecting properties from the thousands that are on the market at any given time.

What you want is to be ready to act when you find the right property for you. And there are a few administrative tasks to comply with to be able to purchase a property in Spain. Those requirements can be easily dealt with at the same time as you are visiting properties. Prime Location Marbella can advise you to identify the right professionals that will assist you through the various tasks.

In Spain, the role of the notary is solely to witness the act of purchase, therefore I recommend that you meet with a local lawyer that will assess the legal aspects of the purchase and perform the necessary legal checks on the property paperwork on your behalf. I also recommend obtaining early the national identification document (NIE), which is the only administrative requirement anyone buying a property in Spain. Finally, open a bank account in one of Spain’s leading banks that facilitate tracks of payments made ​​for the purchase and were you can set up automatic payments for the property utilities after the purchase. Choose one that has online facilities in your language.

Once you’ve found the right property, it is custom to sign a reservation agreement (contrato de reservacion) to define the general conditions of purchase. At that point the buyer pays an amount to reserve the property (often 6,000 euros) and sets the date for the signing of the deeds (Escritura de Compra Venta). In some cases there may be an intermediate step with the signing of a private purchase contract (Compromiso of compraventa o Opcion de compra) with an intermediate payment (usually 10%). This step is advised if the signing at the notary is distant (more than one month). At the time of signing at the notary, you will pay the remaining amount of the agreed price and at the same time receive the keys to the property. After you pay the taxes for the purchase and the transaction ends with the registration at the Land Registry.

The taxation of the purchase depends on the type of property you buy, new or second hand. For a second hand property the buyer must pay the property transfer tax, the notary fees, the registration of the property, his own legal fees and other small taxes. Overall these costs amount to approximately 10% of the purchase price for purchases up to 400.000 euros. The property tax rate increases by 1% for amounts from 400.001 to 700.000 euros and another 1% above 700.001 euros. For a new property the buyer must pay a VAT tax (instead of the Property Transfer tax), the notary fees, the registration of property, his own legal fees and other small taxes. The total would amount 12 to 13 % of the purchase price, regardless of the purchase price.

Keep in mind that the costs of ownership may vary significantly from one property to another. The running costs are commonly made of the community fees (gastos de comunidad), the property tax (Impuestos sobre Bienes Inmuebles), the garbage tax (Basura) and the wealth tax (property tax for non-residents). To what you have to add the property supplies such as water, electricity and gas.

If you do require to finance part of the property purchase, ask you agent for recommendations to compare the lending conditions from your own bank. And if your currency is not the Euro, you may need to exchange your currency. Don’t hesitate to ask for information about saving on currency exchange costs that can be important on large amounts.

A property survey can be done prior to the purchase of a property in Spain should you want to. Ask your age for local property surveyor.

After the purchase you may need to decorate and furnish the property although it is not unusual that a property is sold with decoration and furniture included. If not your agent will be able to assist you in pointing to the right shop depending of your taste and budget.

The day you sign at the notary you become legaly owner of the property and responsible of it. Make sure you contract the right insurance to cover the possible risks.