If you’re looking to buy a property in Spain, it’s key that you take into account the additional fees you’ll occur when budgeting for the move. These can add a sizeable chunk to your initial outlay, and some costs will be ongoing once you have purchased the property. The better prepared you are during the planning stage, the more enjoyable your whole buying experience can be.
Getting your Spanish property valued
If you are getting a mortgage on your property your bank will want a valuation and there will be valuation costs. The exact figure will vary between mortgage lenders. Depending on the property’s size, you should be prepared to pay anything between €300 and €800.
Previously, the bank appointed the valuation company used, so you didn’t get to choose the company that did the valuation. But, the law has now been changed and you can appoint your own valuer as long as the company is registered with the Bank of Spain. You will then be offered a mortgage dependent upon the valuation the property is given, similarly to the way it works in the UK.
The Mortgage Arrangement Fee
This fee only applies if you are getting a mortgage. The bank will charge between 1% and 2% of the purchase price, more commonly it’s 1%. However, there will be a minimum charge to pay, which is around €1000. If you choose not to go ahead with the mortgage for any reason there will be no fees to cover.
Most banks will insist that the first year’s insurance is paid once the mortgage funds have been transferred. This is normally for buildings insurance. You might also be offered life insurance at the same time. Many banks will quote you a lower interest rate if you use their insurance products. As with any insurance agreement, it’s a good idea to get multiple quotes before committing to a contract.
It’s advisable to use a Spanish solicitor (Abogado) when you are buying a property. They will do the necessary paperwork and check that there are no outstanding debts on the property (if there are, these are transferred to the new owners, so it is something you need to look into). Most solicitors charge around 1% of the purchase price for this.
You might find an Abogado who charges by the hour which might could out cheaper, depending on the value of the property you are purchasing. If your solicitor charges 1% which is the other payment option then you’ll end up paying more if you are buying an expensive property. It’s best to put aside between €1,000 and €2,500 for fees. Talk to the solicitor before going ahead and ask for a quotation.
In order to register your property at the Spanish Land Registry, your Deeds must be witnessed by a Notary. These fees depend on the value of the property and the number of clauses in the deeds. and are set by the Spanish Government. You should expect to pay between €600 and €2000 for this service. For example, if you are buying a less expensive property, for €70,000.00 as an example, your Notary fees will be around €700.00.
What it costs to register your Spanish property
the fees for registering your property are also dependant on the value stated in your deeds. More or less you should be paying about half a percent of the purchase price. For example, if you have a property worth €150,000.00 then the registry fees will be around €750.00.
Transfer Tax Explained
If you are buying a previously owned property you will have to pay a transfer tax. The cost varies from region to region. The maximum fee is 10.1% and the minimum is 3.1%. For an idea of the varying costs across the country, if you are buying in Barcelona or Valencia, you will pay the maximum fee of 20.1%. the fee in Andalucia is 9.1%, 6.1% in Madrid and the Canary Islands will cost you 6.1%. The average cost is 7.9%.
Value Added Tax (VAT)
If you are buying a newly built home there will be VAT to pay, known in Spain a IVA. The cost will be 10% of the purchase price. For example, if you buy a new property for 150,000 euros you will pay 15,000 euros.
A new property is one which you buy from the developer. If you buy a newly built property through a bank because they have re-possessed the property from the developer, you will pay Transfer tax. This is because it will be considered a pre-owned property.
Another cost if you are buying a newly built home. In Spanish it is called Impuesto Sobre Actos Juridicos Documentados (IAJD). Again, of this varies from region to region. Costs start at a minimum of 0.4% and go up to a maximum of 1,50%. Most regions charge between 1% and 1.5%.
What you'll need to pay for your deposit
Although this deposit will come off the purchase price, it needs to be paid before the bank will grant yo a mortgage. If the seller asks for a deposit it means that if you back out of the sale for any reason you will lose the deposit. But, if the seller backs out they will have to pay you double the value of the deposit In effect double the amount you paid. Deposit amounts shouldn’t go beyond 10% and it is usual to reduce this amount to a sum that’s agreeable to both yourselves and the seller.
Fees to consider once you have purchased your property
When you have bought your home, you will need to transfer the utilities into your name. Make sure that the previous owner has paid any amounts that are due. If they haven’t paid the debt will be down to you. Confirm between your Abigado and the seller that all the utilities have been paid up to the date of you taking ownership.
If you have bought an old property, the electricity company will charge you to install up-to date equipment or they will require an electrician to confirm that the installation meets the required standard. This is called a Boletin, and it will cost between €50 and €100. If you need a new installation from the electricity company, you can expect to pay around €100 to €300 euros. Electricity bills are sent out monthly or bi-monthly, depending on the company you use.
Again, before you tale over ownership of the water bill, check it’s all paid up to date. If you have a new property that needs a new installation you will be looking at between €50 and €300. The cost may be more if you live in an isolated location. You will normally receive a water bill every quarter.
Some large towns in Spain now use natural gas. But, the norm is still the use of bottled gas for hot water and cooking. Gas bottles are generally delivered to your home. You take out a contract with the local gas company and pay them a small returnable deposit of around €6 or €7 for the gas bottle itself. When you start to use gas bottles, prices vary from region to region, but they are an average price of between €12 and €14 each.
Once you’ve purchased your property you’ll also need to pay for rubbish removal. The annual fee is normally payable every 6 months. A house in a rural area have an annual bill of around €100. In Spain they have large communal bins dotted around every town and village rather than personal rubbish collections.
Property Ownership Tax
In Spanish this is called Impuesto Sobre Bienes Inmuebles (IBI). It is a local tax that you pay on your property. The amount you pay depends on the region and the value of the property, which is calculated by by the Town Hall and it’s called the Valor Catastral.
Older homes tend to be lower than the market value and some newer homes can be higher, depending on the year the valuation was set. The costs tend to be from 0.4% to 1.1% of the valuation. For example, a new home in Andalucía with less than 300 square meters might cost you around €275 a year.
As an estimation, you should allow for approximately 15% of your purchased property value for expenses. This is likely to be slightly over the amount you require, but as with any property purchase it’s better to overestimate and have the funds remaining afterwards, than to need it and not have it.