Richard Way and Liz Rowlinson introduce the people you should encounter when buying a property in Spain, and suggest what you should expect of them...
If you have decided to buy a Spanish property we always advise that you use a lawyer to look after your interests during the purchase process. It needs to be an independent lawyer who doesn’t come “with” the agent so there is no conﬂct of interests, yet many agents will help buyers by suggesting good lawyers who they often use, who will in many cases be impartial.
Do beware if a vendor or agent suggests that you do not need to use a lawyer. The Spanish system might not require it, but it will provide you with peace of mind that someone is helping you to avoid any of the pitfalls that can befall a buyer in a country that is not their own. You would not buy a property in the UK without a lawyer, so do not do so abroad.
An abogado is a Spanish lawyer who specialises in property work. They will be registered with their local law society known as the Colegio de Abogados. Ask them to conﬁrm the services they will provide, their legal costs and the overall costs of the purchase in writing to you before you instruct them. Legal costs are usually 1 per cent of the purchase price, with a minimum fee of €1,500 plus IVA (VAT).
So what should the lawyer do for you?
The lawyer can arrange to put a power of attorney in place for you. This is a document that you would sign before a notary either in Spain or your home country which authorises the lawyer to act on your behalf in Spain. Using the power of attorney they can open a Spanish bank account for you, apply for your Spanish tax identiﬁcation number known as NIE and purchase the property for you.
A lawyer should carry out land searches to check who owns the property, its description and to see if there are any charges, rights of way or debts over the property, says Alex Radford, an abogado in Málaga. “They will also compare the land search to the catastro registry search, which is a separate land registry with plans of all of the registered properties in Spain, to ensure the descriptions from the land and catastro registry match up. Unfortunately, they don’t always.”
The lawyer will check if there are town hall rates debts or debts for rubbish. If you are buying a property on a complex the lawyer will ask the seller’s lawyer to obtain a certiﬁcate from the community of owners to see if the property has any debts with the community. They will also check that the property is connected to mains water and electricity by requesting water and electricity receipts.
As these searches are being carried out, the lawyer will prepare a contract describing the property, the price agreed, when the deposit and balance of the purchase price are to be paid and the date for completion.
Assuming the lawyer is happy with the result of the searches then the property purchase contract will be straightforward. If there is a mortgage, it will be mentioned in the contract. All of your purchase costs and the balance of the purchase price have to be paid to the lawyer before completion.
The lawyer will prepare the deed of property purchase with the notary and will attend completion with you or using the power of attorney. After completion, the lawyer will register the property in your name(s).
The best estate agents in Spain are like gold dust, while the unsavoury ones – which thankfully these days are few and far between – could turn your dream into a nightmare.
The bad eggs are usually easy to spot. Prone to a bit of bling and heavy on the hair gel, they’ll steer you towards properties they want to sell rather than ones you might like to buy. A reliable agent should be there for you throughout the buying process, from the moment you start browsing properties right up to the day you get the keys to your new home and even beyond. Once you’ve chosen an area or resort, pick an experienced English-speaking agent with an established local oﬃce who you feel comfortable with. Often they’re expats who’ve bought and settled in Spain, so they know how it feels to be a foreign house-buyer. Spend time in the car with them – you’ll chat and they’ll give you an insider’s tour of the area.
Ideally, you shouldn’t need to engage with more than one agent, as yours should go out of their way to ﬁnd properties that match your requirements. They’ll even consider properties not listed with them.
“With over 22,000 properties currently for sale on the Costa del Sol, even trying to ﬁnd your way through the selection process is complicated,” says Chloe Williams at The Spanish Estate Agent. “To optimise your time, a good agent will help with the selection, liaise with all other agents on the coast through the multi-listing system, arrange appointments and journey plans.”
Crucially, a Spanish agent’s role involves much more than ﬁnding and selling you a property. “We can put you in touch with legal, ﬁnancial, furniture and property management ﬁrms,” adds Chloe. “We pride ourselves on looking after clients after the purchase. We’ve even had our British clients pop in to see us 12 months after the purchase, to book a dental appointment in Spanish.
Champions of new-build, developers are the creators of oﬀ-plan and key-ready homes. They mastermind new developments, by purchasing land and getting the necessary planning licences, commissioning builders and selling the plots or units. You can buy directly from them, but most use estate agents to sell their stock too. They are the trend-setters at the cutting edge of the property market.
Developers range from small-scale boutique operators to large national companies with projects throughout Spain. Negotiating high-level deals with landowners and appointing heavyweight contractors means they need to be ﬁnancially astute. They work closely with banks to ﬁnance projects and manage clients’ payments. Fear not, though, it’s not like the heady pre-crash days, when credit was sloshing around like watered-down jugs of sangría, allowing too many developers to take chances and walk a ﬁnancial tightrope which eventually snapped.
“Relevant market experience is essential,” Marc Pritchard, of the developer Taylor Wimpey España, says. “The developer should be well-established and have a strong reputation. The buyer should ask how long they’ve been working in the country and how much experience they have working with their particular nationality. This can help with everything from legal notes and the purchase process, to buying furniture. And you should look for developers who encourage visits to their site. The chance to look around the show home, appreciate the site’s location and judge the quality of the ﬁnishes is an important part of the buying process. If the developer is reluctant to oﬀer appointments to visit, it’s not a good sign.”
Buying oﬀ-plan property commands particular care. Your lawyer’s job will include due diligence on the development land and checking your contract is watertight and protects you adequately in the event of the developer defaulting. Above all, ensure any deposits or stage payments made before completion are protected by a bank guarantee – in fact, this is law.
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A trip to the notary’s oﬃce is the ﬁnal and unavoidable stage of a successful property purchase in Spain. You cannot become the lawful owner of a property without engaging the services of a notary.
Here’s why. For your purchase to be legally binding, your title deeds must be signed (by all parties) in the presence of a notary, who then legalises the document with their own signature and formal stamp. The ﬁnal step to cementing ownership of your new home is the inscription of your title deeds at Spain’s land registry (equivalent to the UK’s Land Registry), which only recognises deeds that have been legalised by a notary.
Notaries are highly trained lawyers who have qualiﬁed to draft and legalise a range of private contracts and transactions within the Spanish law system. Their status equates to that of a public oﬃcial and they collect taxes on behalf of the state.
Their fees, which are regulated, are paid to them direct by their clients, usually private individuals and companies. For property completion, these are typically €500-€1,000, depending on the property (excluding disbursements and land registry fees). Notaries’ services are not limited to property-related contracts: for example, you would use one to certify a power of attorney (POA).
Key functions include ensuring a contract and its implications are understood properly by all parties, that the contents of the contract are valid and lawful, that any agreed monies change hands accordingly and any taxes relating to the contract are collected. Notaries can insist on translators, or translated copies, being present when non-Spaniards are signing a title deed. They represent the interests of neither the vendor nor the buyer, so will not do the level of due diligence and searches on a property that your lawyer should do.
How to choose a notary? Most towns and resorts have at least one resident notary, while cities will have a choice. They are usually well-known and respected figures in a local community. It is likely your estate agent or lawyer will have a good relationship with one or two. Be guided by them on which to use and liaise with them about possible dates for completion day. They will know the most eﬃcient ones and the best times to visit. At the very least, your lawyer will come with you to the notary’s oﬃce on completion day. If you’ve given them POA, just wait for the call saying the deal is done and dusted.
The building surveyor
Not an every-game player this one, but one that many British people expect to see, especially if buying a resale. The fact is, building surveys as we know are not an automatic part of buying a second-hand property. Instead, there’s a valuation carried out by a tasador (oﬃcial valuer), something that is required if you are taking out a mortgage from a Spanish provider.
Matthew Noble, a chartered Spanish building surveyor of MKN Surveyors, explains: “The report they provide is nowhere as in-depth as you’d expect to see in a building survey. The tasador has to follow strict rules when it comes to valuing the property, so the value they come up with maybe signiﬁcantly diﬀerent to the one given by the estate agent".
You can choose to get a full building survey from a qualiﬁed, independent surveyor, much the same as in the UK, something that Mr Noble advises.
“You’ll get a detailed report on your intended purchase. If there are any issues with the property, these will be noted with a full explanation. Sometimes the potential cost for repairs/modiﬁcations will also be included, which could be useful in price negotiations,” he says.
Just as with the optional use of a lawyer in Spain, you wouldn’t buy a home in the UK without one, so why do it anywhere else?
How to ﬁnd one? The Royal Institution of Chartered Surveyors (Rics) has members throughout Spain plus English-speaking surveyors who travel and the Spanish College of Architects has a list of independent surveyors. A surveyor from either body will mean you’re getting a qualiﬁed professional who can give you impartial advice. The cost is about €1,500, depending on size, location and property value.
The currency broker
If you come along to our property exhibitions you’ll see a fair few of these. Don’t be put oﬀ by their overtures: a currency transfer specialist can not only save you money but also bring peace of mind during your property purchase.
Sadly, too many buyers overlook them and instead make their euro transfers to Spain through a regular bank which oﬀers less favourable exchange rates, charges unnecessary commission and typically provides a poorer service.
The beneﬁts of a currency specialist don’t stop at saving you money. They want to make paying for your Spanish home easy and stress-free. Given the bulk of their clients are people buying overseas property, they understand the Spanish purchase process and the most eﬃcient ways to make payments. They will liaise with clients and, if desired, formulate a suitable payment strategy and suggest a range of solutions.
Britons with sterling funds are exposed to currency movements and after agreeing on a purchase price in euros the cost in sterling will ﬂuctuate with the exchange rate. To remove this uncertainty, currency specialists oﬀer forward contracts. These enable you to secure an exchange rate for a future transfer, allowing you to ﬁx the total sterling cost of your purchase before completion.
Purchase completed, currency specialists can assist with all ongoing transfer requirements in both directions. This could be sending your monthly pension to Spain, helping to pay regular Spanish bills, repatriating rental income or bringing the proceeds of a sale in Spain back to the UK.
Other important players...
The property manager
Your property manager acts as your eyes and ears in Spain while you’re getting on with the nine-to-ﬁ ve back in the UK. You can tailor your level of service, but at a minimum, they’ll hold keys for you, manage bills, keep the pool clean, ﬁ le your non-resident tax return and do a spring clean. Use them for rentals too: let them take care of everything including bookings, or ﬁnd your own guests and ask them to do changeovers. Fountains of knowledge about their local areas, their contacts lists are invaluable. Many estate agents oﬀ er this service. Just choose who you want to use.
The mortgage broker
As in the UK, the mortgage market in Spain is highly evolved and using a Spanish mortgage broker can help secure lower rates and higher levels of borrowing and provide a much better service than if you go to banks directly yourself. Brokers can suggest the best lender, whether Spanish or not and also help you navigate the system, even if you are ﬂuent in Spanish. Some mortgage brokers have UK oﬃces, whilst agents and developers will often be able to put you in touch with a broker.
Once you own a home in Spain, you will need to submit a tax return every year, even if you don’t rent it out and receive rental income. You might feel the reassurance of being given guidance by an expert who knows the system. A gestor (or gestoria) is an admin person who can help people go to town halls to register on the census, apply for social security cards and residency. A lawyer can also perform these duties, as well as compiling non-residents’ income tax returns for owners of Spanish properties.