Valencia is nowadays considered one of the best places to buy in Spain and accordingly, it is no surprise that demand for property in the Valencia region has been increasing steadily over recent years - perhaps a reflection of the increasing interest in the region's Capital City as the perfect balance offering city conveniences but without the crush of major Spanish cities you are likely to see when buying property in Barcelona or Madrid.
That said, buying property in Spain is a complex undertaking, so it is always wise to be aware of issues that might arise, and so I recommend that you review the advice in: pitfalls of buying property in Spain. For those buying a house in Valencia, below is a summary of the property purchase process:
- You can apply for your NIE (Foreign identification number), which is the number granted by the Spanish authorities necessary to carry out any economic transaction in Spain.
- You can open a Spanish bank account, since you will also need it at the time of purchase, so it is better to start the process as soon as possible. Furthermore, you may need some documents to open a bank account in Spain to demonstrate your income like payslips, tax return, bank statements, etc. because the bank must comply with regulations from the EU regarding money laundering.
- When you find the property that interests you, I recommend that you do not sign any reservation document or anything similar before your lawyer checks the property.
- Once the price of the property has been agreed, the lawyer carries out due-diligence on the property, to ensure that the property has no charges, liens or mortgages and the sellers are able to sell the property and all expenses related to the property have been paid (taxes, utilities, etc.), as well as that the property complies with all the legal requirements. This may take approximately 2/3 days.
- Since the legal status of the property has been verified, you may sign the private deposit contract (arras contract) where the buyer and the seller agree the price of the sale, the expenses of the purchase, deadline to sign the final purchase and also, other conditions of the purchase may be added. It is very important that this contract is clear to both parties because this is the basis of the final purchase.
- Usually, at this time, you will pay anything from 3.000.-euros to 10% of the purchase price to the seller to take the property off of the market.
- When everything is prepared, the public deed of sale will be signed before the Notary. On that day, sellers and buyers meet in the Notary’s office and the buyers pay the balance of the price to the seller and the expenses from the purchase, and the seller will give the buyers the keys and also, some documents which states that all the expenses from the property has been paid until that date. A certificate of Energetic Efficiency is mandatory to be issued too.
- Expenses related to the purchase of a house in Valencia: In the Valencian Community (Valencia, Castellón and Alicante) these expenses are as follows (based on a purchase price of 200.000.-euros):
- Purchase taxes (ITP and AJD) 10% of the purchase price = 20.000.-euros
- Notary fees: 500.-euros approx.
- Land Registry fees: 600.-euros approx.
- Lawyer fees 1% of the purchase price: 2.000.-euros plus VAT
- Estate agent´s fees: their commission depends on each case, so I recommend you always ask when you are visiting the property, just in case it is expected that you pay this also. Usually it is from 2% to 4% of the purchase price, plus VAT.
- If you are not planning to relocate to Valencia, your property will be subject to Spanish non-resident property tax.
- The deed of sale has to be registered in the Land Registry once the Taxes of the purchase has been paid. This process could take 2/3 months and after that, you can pick up the original copy of the deeds. I recommend that you keep with you until you wish to sell the property and four years minimum after that, because you may need it for tax purposes.
- Once you are the owner of your home in Spain, there will be a minimum level of expenses relating to the property, which will vary depending on the type of property, location etc-as follows:
- Rates (IBI), to be paid once a year. Also, if you buy a house in the countryside, you may have to pay some additional taxes for rubbish collection.
- A minimum of the utilities (electricity, water, etc.) each month
- property owners' association (if your property is one of many in a building) each quarter
- Non-resident Taxes (IRNR) or, if you become resident in Spain, Income Taxes (IRPF). You pay such taxes once a year.
Wrapping up, being assisted by a specialised English-speaking lawyer when undertaking a property purchase in Valencia is vital and should be seen as an investment to ensure a stress-free process.