Cost of Buying a Property in Spain: find details of 10 different costs you may (or not) have expected to incur when buying property in Spain.
1. The Property Valuation
The amount charged by the notary is controlled by law and varies according to the price of the property.
The minimum amount chargeable for the carrying out of a valuation is €208 and will ultimately depend upon the following factors:
- Not all surveyors or survey companies charge the same
- The location of the property
- Will the surveyor need to charge expenses (mileage etc) to reach the property?
- Does the surveyor need to access technical information (plans etc)?
Ultimately, the financial institution will have to accept the surveyors report and so you will most likely use one recommended by them or by an independent surveyor like TINSA that is well known and has links with most of the financial institutions.
The Association of Professional Property Surveyors recommend a price of between €250 and €300 for a property valued at €120,000 and it increases according to the value of the property.
2. Deeds of Purchase
While it is perfectly legal to arrange for the transfer of a property in Spain via a private legal contract, this is not the typical way of doing so.
From a practical point of view, no financial institution will offer a mortgage to facilitate the purchase without a public deed.
The process involves the drawing-up of the deeds of transfer by a public notary. A notary is an independent official who oversees the process and ensures that the proceedings take place according to the law and that the documentation is verified.
Below is a table with approximate costs according to house price. Please note these may vary and the cost must always be confirmed by the notary before proceeding:
3. Inscription on the Property Register
Once the property has been transferred it is advisable to register the new ownership details with the public property register.
Apart from not being able to obtain a mortgage without doing so, failure to register can cause multiple problems in the future with regard to future property transfers, inheritances, defending title against third parties etc.
Below are approximate costs for having this carried out. It will be necessary to check specific prices with the individual registry.
4. Removal of the Previous Mortgage From the Registry
While not a legal requirement, it is preferable to have the previous mortgage removed from the property register.
This is the case even though the mortgage has been paid off following the sale of the property. The charge will still appear on the register and it’s removal incurs a number of charges, notably notary and registry charges.
The process involves obtaining a certificate from the financial institution that issued the mortgage that the mortgage has been discharged.
This certificate is then presented to the notary who draws up a public deed to that effect. The deed is then presented to the registry for inscription on the property register which thereby removes the mortgage charge from the property.
5. Legal Costs
Solicitor’s costs for providing the legal assistance required for purchase or sale of a property in Spain, while they may vary from lawyer to lawyer, will typically average around 1% of the value of the property.
This may vary if the value of the property is particularly high or low, but for most ‘average’ conveyances, the costs will be approximately 1%. Also, the fee may rise if the lawyer is required to carry-out more work if a mortgage is used to purchase the property.
Bottom line, as in any other professional field, you will need to check with the individual lawyer and perhaps pay a dividend for any lawyer with a particularly good reputation.
6. Mortgage Arrangement Costs
There are a number of costs involved in arranging a mortgage in Spain and include commissions charged by the financial institution involved as well as taxes to the government.
The commissions charged by the bank can be divided into two types: Finance Check and Opening Charge.
The amount charged for checking into the applicant’s financial history to determine if they should qualify to receive the loan is a percentage over the total amount of the mortgage conceded.This is a one-off payment and may only be charged where the mortgage is issued.
Likewise there is a percentage charge that relates to the administration involved in arranging the mortgage. For mortgages of a value below €150,000 this charge includes the charge for the finance check.
There also tends to be a charge for carrying out the relevant checks on the property registry so that the bank can ensure that the property that is being offered as security for the mortgage is free of all charges etc.
All together, typically the banks will charge around 1% of the amount being lent for arranging the mortgage.
TAXES as a cost of Buying a Property in Spain
7a. IVA (Impuesto de Valor Añadido – VAT)
This cost is separated into two parts. Sales tax is payable on the purchase of a property in Spain.
However, depending on whether the property is new or second-hand you will pay either IVA or ITP tax. The purchase of a new property in Spain currently attracts a VAT rate of 8%.
7b. ITP (Impuesto Transmisiones Patrimoniales)
The purchase of a second-hand property in Spain attracts ITP sales tax which varies across Spain but is typically between 7% and 8%. The reason the tax rate varies is because it is set by the regional rather than central government.
8. AJD (Impuesto de Actos Jurídicos Documentados)
The registering of new property deeds upon purchasing a property in Spain as well as the creation of a mortgage in Spain both attract the AJD tax. These taxes are regulated by the local government and so the rate of tax can vary across Spain.
Typically the rate will vary between 0.5% -1% of the value of the property on the deeds or the amount of the mortgage.
9. Home Insurance
Often the concession of a mortgage by a financial organization will come with a requirement to take out a home insurance policy recommended or managed by the same financial institution.
It is difficult to put an average price on such products as they may vary as to what exactly is covered by the insurance – structure, structure + contents, structure + contents + legal costs etc.
The most that can be said is that it may be slightly cheaper than the UK equivalent but broadly in the same range.
10. Utility Transfer Fees
In many regions of Spain it is necessary for there to be a technical inspection of the property when the ownership of the property changes.
This is carried out by the local town hall and is to check that the property is safe to be connected to the mains utility services such as gas, electrical and water supplies.
The local town hall will determine the specific regulations but often if the property was inspected more than 5 years ago it will be required.
The cost will also vary but you can expect to pay from €250 to €350.