What do you need to know about buying property in Spain? – A buyer’s guide to must-ask questions
The prospect of buying abroad can seem like a minefield and it could be argued that buying a property in Spain is particularly complicated given that there are 17 autonomous regions, all with their own rules and regulations. Thankfully, you don’t need to worry about that as a good lawyer in Spain will know everything there is to know and guide you through this process, which is why we recommend seeking Spanish legal advice before commencing your search for your perfect home in Spain.
However, many people start their search for a property in Spain with the properties themselves. While there are many reputable estate agents, it’s difficult to know who to trust and who not to trust – especially if you’re not fluent in the local language. So, doing your research and being forearmed with key questions is crucial. It pays to know what you’re talking about!
Here’s our handy list of information you should arm yourself with. Make sure your Spanish estate agent can provide the following information and answer the relevant questions about buying in Spain.
- Is the whole property is registered at the Land Registry? It’s crucial that Spanish property is registered, as if it is not the ownership and legality can be questioned. Ask for a copy of the Nota Simple – a short legal report of the property, which contains details of the current owner(s); the type of ownership; brief description of the property; size of the property; boundaries of the property; any charges/debts attached to the property; classification of the property and more. You can obtain a Nota Simple translated into English here.
- Check whether there are any charges or debts attached to the property, such as mortgages or unpaid taxes. In Spain, such debts are attached to the property as opposed to the individual, so if there are any charges over the Spanish property you’ll need to ensure that your lawyer in Spain obtains proof that the vendor has paid all his obligations prior to taking over the property.
- In Spain, property boundaries, particularly for rural properties, can be unclear. Ask for a plan of the plot and ensure that the boundaries are clearly identifiable AND match those outlined in the Nota Simple.
- Property in Spain requires a Licence of First Occupation (LFO), or equivalent for older properties. This means that when the property was first built, it was inspected by the local town hall to ensure it is in line with the planning permission granted. The License of First Occupation may also be referred to as referred to as a First Occupancy Licence, First Occupation Licence, Licencia de Primera Ocupación (LPO), Cédula de Ocupación or Cédula de Habitabilidad. It’s important to note that mortgage lenders usually require the LFO before they will grant a mortgage loan against a property.
- Ensure that the Spanish property is registered with the town hall for IBI (Impuesto sobre Bienes Inmuebles). This is a local tax – similar to council tax in the UK – that is payable by the owners of all Spanish properties. The tax must even be paid for unoccupied properties and those that are not registered are not exempt from the tax – hefty fines may occur if unpaid. Ask for a copy of the most recent bill, to gain insight into future costs once you own the property.
- Check that there is not an historic breach of Spanish planning rules or building regulations. You can find this out by asking whether the property has ever been inspected by the town hall regarding breaches of planning permission.
- Find out what the taxable value of the Spanish property is (this is the minimum value that the Regional Tax Authority deems the property to be worth). The reason for this is that if the minimum taxable value is higher than the purchase price, you may need to pay transfer tax on the higher value. Therefore, this could provide an opportunity to negotiate on the purchase price.
- Ask whether the property in Spain has its own meters for water and electricity and ask for copies of the most recent bills. Some Spanish properties can share meters or may be subject to supplements, so it’s worth knowing this in advance to ensure it doesn’t cause complications further down the line. Plus, gaining an insight into the cost of utilities in Spain will help you budget for the future.
These are just some of the common glitches you may encounter, which are usually easily rectifiable with the assistance of a good Spanish solicitor, but we recommend you always ask whether there are any other issues you should be made aware of.
Article published: April 9, 2018