What is the process for buying investment property in Spain?
Real estate agents will competently approach the search for the desired property in Spain and help you at every step because they have extensive experience in consulting and searching for various real estate objects following the criteria set by the client.
They know the key needs and requirements of clients and all the steps to take to enjoy your new home in Spain. They will help you find the perfect home.
Choosing a legal representative, a notary, and all other aspects necessary for the successful completion of the purchase, experienced real estate agents are engaged in comprehensive property management and rental mediation.
Find out what formalities you need to complete to enjoy your dream apartment or villa in Spain and what additional costs are involved in the purchase.
Choose your own Spanish house
Every process starts with choosing a house. You can choose between a property next to a golf course, a house with sea views or a house surrounded by romantic countryside. The current offer is full of beautiful modern buildings that are ready for occupancy.
A house that you can furnish according to your key wants and needs, choose to buy a historic villa with air conditioning and a large living area. Qualified real estate agents will effectively help you not only with procedures and choosing a house, but also guide you through the entire process of buying real estate in Spain. After buying a property in Spain, you can engage in renovations, interior design, property management, rental brokerage, and more.
Real estate agents support you in your investment business. Our new phrase is: If you want to develop a renting business, you will need to open a Spanish company and obtain the necessary permits for this activity.
Booking contract and initial deposit
It is best to reserve the chosen house before the end of negotiations and reviews. Even if your bid will be lower than the price, you can enter into a deposit agreement. Based on this, a deposit of 1% of the value of the house is deposited into the account of the lawyer or real estate agency.
Why is it so important to pay a minimum deposit? This way, sellers know that buyers are interested in buying a home. The next key step is to send the proposal. This is the best stage of price negotiations.
If you accept the amount offered by the seller, proceed to the next steps necessary to complete the purchase. If the seller rejects our offer, you can continue to actively negotiate the purchase of this property.
Term contract and prepayment
Then, with the help of a lawyer (who is responsible for sales and tax matters), a preliminary contract is drawn up and signed, specifying the most important information about the purchase of your home (including the date of signing). Notarization (usually 1-2 months in the secondary market) is also required. Signing a valid legal contract usually takes 14 to 21 days (based on a pre-agreed price).
This helps the lawyer to know the legality of the property, any liabilities, accounting records, etc. The period depends on how long it will take to consider the relevant issues. When signing the contract, an advance payment of 10% of the real estate value (including the deposit) is made. The amount of the deposit may be higher if you have a direct contract with the seller. If the seller refuses the contract, the buyer has the right to return the deposit in double the amount.
If you cancel your purchase, you will lose your deposit. When buying real estate from a supplier, the schedule for making subsequent payments is determined in the contract. According to current Spanish legislation, the purchase of a real estate in the primary market is subject to a bank guarantee.
The loan is provided by the bank which provides a deposit. This ensures that the seller does not lose money even if they cancel the contract. The client's presence is not required for both the deposit or the term contract. You can sign the contract remotely.
Contract of sale
The contract of sale of the house is signed by a notary public. Anyone who has money can immediately sign this contract if everything suits everyone.
A few days before signing the contract of sale, the notary and lawyer must enter the client's name in the real estate cadastre and mortgage register with information that the client will participate in the purchase at a certain time.
The notary is obliged immediately after signing the contract of sale to send the document and start the registration of real estate, the owner of which becomes the buyer. From the moment of submitting a loan application, the preparation of the title document takes an average of 6-8 weeks (this time may change if both parties make their adjustments). At the notary, you sign two contracts at the same time: a sales contract and a mortgage contract.
If you are unable to attend in person, a notarized representative may be appointed. When you buy a house in Spain directly from a developer, the steps may be slightly different – other payment methods may be available and used.
However, you must still pay the initial booking fee and subsequent installments according to the payment schedule. Sign the notarial protocol only after the completion of construction work.
How to get a loan to buy a house in Spain?
Repayment can be spread over 15 or 25 years, depending on the age of the borrower. Banks charge a loan issuance fee of approximately 1% of the loan amount.
Loan approval rules change frequently, so it's worth checking the current conditions that you can trust at your bank. How much can I borrow to buy an apartment or villa?
When buying a house from a contractor, up to 50% of the value is specified in the contract. Favorable credit conditions can be obtained for the purchase of houses from developers who have loans for the construction of houses.
In this case, the credit is "transferred" to the buyer. This is succession, the replacement of the creditor by a third party. Bank checks are still valid in Spain. Buyers use them to pay for real estate purchases. Another option is to transfer money to a company account linked to the client.
The lawyer asks the bank to write a check. This will save you the fees that banks charge for issuing checks. Banks give law firms significant discounts because they serve a large number of clients.
Rights and obligations of foreign buyers
Spanish real estate can be purchased by citizens of any country in the world. You do not need to be a resident, have a residence permit, or obtain permission from local authorities to run a business.
Real estate can be bought by individuals or legal entities. Foreigners are traditionally very active in local markets. Investors from Great Britain, France, and Germany buy most of the real estate objects in Spain.
According to the General Assembly of Notaries, sales of houses to foreigners in Spain fell by 37.4% in the first half of 2020 due to the pandemic.
What real estate can foreigners buy?
There are no restrictions on the types of real estate that foreigners can own in the country. In the primary and secondary markets, it is allowed to acquire ownership of apartments, country villas, free land plots, and all commercial real estate.
What rights do foreigners have after buying real estate in Spain? Owners of assets, regardless of their value, can apply for multiple-entry Schengen visas. This allows you to stay in the country for up to 90 days within 6 months. If you want to stay in Spain longer, you must apply for a residence permit.
Since then, the so-called golden visa law of 2013 has given all buyers who have invested in real estate over €500,000 the right to issue residence permits for all family members.
Over the years, the program has been revised several times, and thanks to the latest changes, it has become one of the most popular programs in the European Union.
In 2019, the Golden Visa program exceeded a record number of applications.
What obligations do foreigners have after buying real estate in Spain?
Foreigners who buy real estate in Spain have the same rights as residents but also have the same obligations. First, you are required to pay utilities and property taxes regularly.
In addition, when leasing objects, it is necessary to carefully comply with the requirements of the Law on Leasing, which has become stricter in recent years. In addition, tax residents must also comply with the laws of their country of origin.
For example, if you open a bank account or create a legal entity (which may be necessary for transactions) in Spain, you must notify the tax authorities.
The painstaking search for investment property in Spain
We recommend that you first familiarize yourself with the Spanish real estate market in detail. Read the latest articles and news about the country and hear the personal experiences of those who have already bought the property in Spain.
You can also consult a Spanish consultant and ask all your questions. Attending webinars on real estate abroad can also help you make your choice. A large database of available real estate is presented on the portal of sites with ads for the sale of real estate.
Sort offers by the parameters that are important to you, save your favorite options and subscribe to updates. For more information about the property, feel free to contact the seller (there is always a Contact Seller button on each property page on almost all property websites).
You can also leave a request to choose an object according to your needs. Brokers and developers themselves will send you several suitable options.
