Spain can be a country of interest for many foreigners who want to settle in another region. Therefore, buying a house in Spain is the primary concern of those who are familiar with the territory and decide to make the move there. But, how is it to buy a house in Spain as a foreigner? What are the requirements? There are many questions to answer when you want to buy a house, especially if you come from another continent. In fact, buying a home can be a daunting and time-consuming process. But don’t worry! We will help you answer all your questions today.
The first thing you need to know is that anyone who wants to establish a business or acquire property in Spanish territory must request a NIE (Número de Identificación para Extranjeros) number, which is mandatory for foreigners. And we have more information for you below!
Housing price: how much does it cost to buy a house in Spain?
Like in any country, the cost of buying a house in Spain will depend on the type of house you want to acquire and the city or area where it is located. To give you an idea of the costs, according to Tinsa, a reference in real estate valuation for mortgage guarantee in Spain, in the first months of 2022, the price of housing in Spain, both new and second-hand, grew by 6.6% year-on-year, reaching an average cost of €1,645/m².
The Spanish cities where prices have risen significantly are Madrid, the Balearic Islands, and Navarra, although the most expensive cities to buy a house in Spain in 2022 are San Sebastián, with a price of €3,755 per square meter, followed by Barcelona (€3,474/m²) and Madrid (€3,474/m²).
Other values you should consider when buying a house in Spain are the taxes and costs associated with the purchase, which will be an additional 10% – 12% of the housing cost.
The taxes and additional costs you will have to pay before buying the house are:
- ITP (property transfer tax) if the property is second-hand. The exact percentage varies depending on the region where you are.
- VAT (value-added tax) for new homes. It is 10%, but if you are under 32 years old and the property will be your primary residence, the amount is reduced to only 5%.
- Notary fees.
- Property registration costs, 1.5%.
- Property appraisal, even if the bank manages it, you could end up paying around €200.
- Lawyer fees if you hire one, which are usually around 1% of the purchase price.
Requirements for buying a house in Spain as a foreigner
With a little knowledge of the current prices in Spain for buying a home, it is necessary to know the requirements to access the purchase. Finding the ideal house, meeting all the requirements to buy it, is a process that can take between three months and one year. It all depends on the legal advice you have and how long it takes to view and find the house you are looking for.
Here are the steps you should follow to achieve the purchase of a house in Spain.
Process your NIE
As we mentioned at the beginning of the article, this is perhaps one of the first steps you must take if you want to buy a house in Spain. You must process the NIE (Número de Identificación para Extranjeros), a mandatory legal document for foreign citizens who wish to establish a company or buy a property in Spain.
Keep in mind that this NIE will only be enabled to authorize you to carry out a specific operation in Spain; it is not a residence permit. Its validity will be 90 days, counting from the day it is assigned. If your plans are to stay and live in the country, then you will need to apply for a different type of NIE as a resident or temporary resident, depending on your nationality.
To process the NIE as a property buyer, you will need to present a sales contract, a document that justifies the purchase of the property.
Open a bank account
This requirement is not 100% necessary, but legal advisors usually recommend it to make the purchase of the property much faster, as making payments from a foreign account can take many days, especially if it involves large amounts of money.
So, the next thing you can do after obtaining the NIE is to open a bank account in Spain and transfer the money you have set aside for the purchase of the property, notary fees, lawyer fees, etc.
Keep in mind that if you need to make international transfers, you have several options.
Negotiate the price with the seller
It is very common to find the house you have been looking for, but the cost of buying it is higher than what you budgeted for. In these cases, it is entirely normal in Spain to try to negotiate and lower the final purchase price.
Before saying yes to the purchase of any property, you can compare the price offered by the seller with different online valuation sites that show you the real price of properties, and then try to negotiate for a lower value.
Check the property’s documentation
This may be the most complicated requirement of all, because most likely you do not know how to request the information or documents necessary to check the property’s documentation. So it is important to have a professional who can help you in the process, such as a lawyer or a real estate agent who can help you in this task.
In Spain, there is a legal obligation to ensure that the property is up to date with the payment of IBI (the municipal real estate tax), and you must request the IBI receipt and see if the property has any pending payments.
Review the property registry and request the simple note
The property registry will confirm the property’s owner, any outstanding debts or mortgages on the property, and whether the property is free of liens. So, in addition to having the IBI up to date, it is also important to check the property’s registry and see if it is clean. For this, the services of a lawyer or a real estate agent can be used.
Have a building inspection performed It is essential to have an appraisal performed by an architect to determine the property’s state, that is, whether it requires some kind of reform, how much it would cost to reform the property, or whether it is in perfect condition.
Make the down payment
To make the down payment, which will be about 10% of the purchase price, you will need to make an agreement with the seller and sign the contract. This contract can be drawn up by a lawyer and is generally called a “reservation contract.”
The reservation contract will contain all the information regarding the sale of the property and its payment.
To this contract, you will have to pay an amount between 5% and 10% of the total cost, and if the purchase is not completed in the agreed period, you will lose this deposit. In the event that the purchase is completed, the money paid for the deposit will be deducted from the total price of the property.
Seek financing (if necessary)
If you do not have enough money for the entire purchase price and the associated costs, then you will need to obtain financing. You will have to present all your documentation to the bank or financing company, they will evaluate your case, and, if you are approved, you will have to choose the mortgage that best suits your needs.
With the financing obtained, you will have to present it to the seller so that you can purchase the property.
Legalize the purchase in a notary
After the above requirements have been met and the financing has been obtained, you will need to legalize the property’s purchase through a notary.
After the purchase, you will receive a document called an “escritura,” which is a legal document that certifies that you are the property’s owner. With this document, you will have to register the property in the Property Registry.
You will need a lawyer to help you with the legalization of the property, as he or she will verify that the escritura is fine and that all legal requirements have been met.
Do you have more questions about buying a house in Spain? Or would you like to get some legal advice on the subject? Leave us your questions!
Disclaimer: please always check with a qualified lawyer on the process of purchasing a property.