19.10.2024
Buying Property in Spain Step by Step
Buying property in Spain, especially in popular locations such as Marbella on the Costa del Sol, can be a straightforward process when you work with experienced professionals. For both local and international buyers, the support of qualified real estate agents and legal advisors ensures a clear and well-managed process at every stage. This approach helps avoid unexpected complications and guarantees a safe and secure purchase. Below are seven key steps that will guide you through the entire property buying process in Spain.
Step 1: Defining Your Property Preferences
Start by clearly defining your expectations for the property. Consider the location, type of property, and your budget. Experienced real estate professionals will help you identify the best opportunities tailored to your needs and objectives.Property type
Before beginning the buying process, it is important to decide which type of property best suits you. This may include an apartment, villa, townhouse, or other options depending on your lifestyle and plans.
Location
Location plays a crucial role, not only in terms of views from your home or apartment, but also proximity to schools, restaurants, shops, tourist attractions, golf courses, and everyday amenities.
Purpose of purchase
It is equally important to determine the purpose of your purchase. Consider whether the property will be used as an investment, a rental income opportunity, or as a private residence for personal use.
Step 2: Working with a Real Estate Agent
Choosing the right real estate agent in Spain, especially in locations such as Marbella, is crucial to the success of your purchase. Working with an experienced agent from the very beginning ensures that each property is carefully matched to your needs and that the entire buying process is managed efficiently. A professional agent will not only help you find suitable properties, but will also arrange viewings, provide in-depth insight into the local market, and most importantly, oversee all formal aspects of the transaction, including negotiations.One major advantage in Spain is that the buyer does not pay the agent’s fee. The agent’s commission is covered by the seller, which means professional support is completely free of charge for the buyer and significantly increases the safety of the transaction.
However, it is important to note that in Spain there is no legal requirement to hold a license, formal education, or prior experience to work as a real estate agent. As a result, less qualified intermediaries may sometimes mislead clients. This is why selecting an agent with proven experience and deep market knowledge is essential. Our agents bring years of hands-on expertise and work closely with trusted professionals such as lawyers and tax advisors. They also have access to exclusive off-market properties that are not publicly advertised online.
It is worth remembering that working with one reliable agent delivers far better results than searching through multiple agents at the same time. A skilled real estate agent becomes your trusted guide throughout the buying process, offering full support at every stage and ensuring a smooth and secure purchase.
Step 3: Property Search
It is essential for the real estate agent to gain a thorough understanding of the client’s needs, requirements, and expectations regarding the property. Based on this insight, combined with market expertise and an extensive network of contacts, the agent selects the most suitable properties that meet the defined criteria.After the initial selection, our agents provide detailed information about the shortlisted properties, including location, quality, and potential benefits. Viewings are then arranged using modern tools such as virtual tours or video calls, or by inviting clients to visit and view the properties in person in Marbella.
Step 4: Negotiations (applicable to resale properties only – negotiations are rare on the primary market)
Price negotiations play a key role in the property purchase process on the resale market. In practice, negotiations are handled almost exclusively by real estate agents representing both the buyer and the seller. Direct price negotiations between clients and sellers are very uncommon. The agent’s role is to protect the client’s interests while finding a fair and workable compromise that satisfies both parties.Below are the key elements of the negotiation process:
1. Market value analysis
The agent assesses the realistic market value of the property based on in-depth knowledge of the local market. This helps determine whether the asking price is justified.
2. Negotiation strategy preparation
Together with the client, the agent defines a clear negotiation strategy, including minimum and maximum price thresholds.
3. Conducting negotiations
The agent manages professional communication with the other party, builds constructive relationships, and works toward mutually beneficial solutions.
4. Negotiating additional terms
Beyond the price, the agent may negotiate payment timelines, included furnishings, or any necessary repairs.
5. Securing the agreement
Once an agreement is reached, the agent ensures the transaction is formalized through a reservation or deposit contract, protecting the interests of both buyer and seller.
The agent’s experience and interpersonal skills are critical in achieving the best possible terms and ensuring a smooth and secure transaction for the client.
Step 5: Reservation Agreement
Once the property has been selected, it is reserved through the payment of a reservation deposit.The deposit secures the property and removes it from the market.
At this stage, it is strongly recommended to have your own independent lawyer, who will represent you in all legal and administrative matters going forward. At our agency, we work with several trusted lawyers who specialize in property transactions of this type. The reservation deposit, typically around €6,000 or approximately 1% of the property value, is paid into the lawyer’s client account. This protects the transaction and confirms that both parties are fully committed to the negotiations and the next formal steps
The reservation agreement is usually signed within 14 to 21 days. During this period, when purchasing a resale property, the buyer’s lawyer conducts legal due diligence, including verification of ownership, outstanding debts, and any potential legal issues. In some cases, a technical inspection of the property is also carried out to assess its overall condition and verify all technical aspects.
Step 6: Preliminary Agreement (Private Contract) and Deposit
With the assistance of a lawyer, a preliminary agreement, commonly referred to as a Private Contract, is prepared and signed. This document sets out the key terms of the purchase, including the deadline for signing the title deed before a notary, which is typically one to two months for resale properties. It also covers the handover of keys and other essential details of the transaction.Upon signing the preliminary agreement, a deposit is paid, usually amounting to 10% of the property value, taking into account any reservation deposit already paid. When purchasing from a developer, the deposit may be higher and is often accompanied by a structured payment schedule.
Under Spanish law, purchases from developers are also protected by a bank guarantee, which safeguards the buyer’s funds in the event that the developer fails to meet their contractual obligations.
Whether signing a reservation agreement or a preliminary contract, the entire procedure can be completed remotely, without the buyer being physically present in Spain. As this stage may take some time, it is strongly recommended to grant a power of attorney to your lawyer, allowing them to finalize the transaction on your behalf.
Step 7: Formalities
In the period between signing the preliminary agreement and the final deed, several formal requirements must be completed. Naturally, all of these steps are handled on behalf of the buyer. The key formalities include the following:1. NIE Number
In order for a foreign national to purchase property in Spain, it is mandatory to obtain an NIE number (Número de Identidad de Extranjero), which is similar to a tax identification number. The NIE is required for all financial transactions in Spain, including purchasing property, paying taxes, and signing contracts for utilities and services.
An application for an NIE number can be submitted in two ways:
A) At the Spanish Embassy in Warsaw, where the relevant forms can be obtained and the required fee paid.
B) In Spain, in person at a Policía Nacional office. It is also possible to authorize a lawyer to apply for the NIE on your behalf.
The processing time is usually between three and four weeks. In most cases, to simplify the procedure, property buyers authorize their lawyer to apply for the NIE on their behalf, avoiding the need for personal attendance.
2. Spanish Bank Account
To proceed with the property purchase and legal formalities in Spain, opening a Spanish bank account is required. This account is used to transfer funds for the property purchase, pay taxes, and set up utility contracts.
To open a bank account in Spain, the following documents translated into Spanish are typically required:
- Copy of an ID card or passport
- Proof of residential address, such as a utility bill
- Documents confirming employment and income, for example a tax return or employer’s certificate
- Documents proving the source of funds for the purchase, such as a notarial deed of sale, bank statements, or inheritance documentation
- A bank reference letter from a bank in Poland
- NIE number (Número de Identidad de Extranjero)
These documents are required for the Spanish bank to complete the KYC (Know Your Client) procedure, which is mandatory for all financial transactions.
Step 8: Final Deed (Completion)
The final property purchase agreement in Spain is signed before a notary, who plays a key role in the entire transaction. Once the funds are in place, the signing of the title deed can proceed without delay. A few days before the scheduled completion, the notary and the buyer’s lawyer submit the buyer’s details to the Land Registry, which temporarily blocks any changes to the property records prior to finalization. After signing, the notary immediately files the deed with the Land Registry to register the new owner.If the buyer is unable to attend in person, a notarial power of attorney may be granted, allowing a designated representative to sign on the buyer’s behalf.
When purchasing a property from a developer, the procedure differs slightly. Payments are made in stages according to an agreed payment schedule, aligned with the construction progress and contractual terms.
How to Obtain a Mortgage to Buy a Home in Spain?
As full citizens of the European Union, buyers from Poland are eligible to finance the purchase of property in Spain with a mortgage from a Spanish bank. After paying the reservation deposit for the property, the buyer is required to commission a bank valuation at their own expense. This valuation is a key element of the mortgage process, as the bank uses it to assess the property’s market value. The cost of a property valuation in Spain typically starts at around €300, but may vary depending on the purchase price and the property’s location.By working with banks such as Banco Santander de España, Banco Sabadell, La Caixa, or CajaSur, buyers can obtain mortgage financing in Spain on competitive terms.
Key mortgage conditions include:
- Financing at 50–60% of the bank’s valuation of the property
- A loan term of up to 20 years, depending on the borrower’s age
- Interest rate of approximately 3.60% in the first year, followed by EURIBOR + 1.9% from the second year
- Mortgage arrangement fee ranging from 1% to 1.5%
- Early repayment fee of 0.25% during the first three years, and 0% thereafter
Non-resident buyers can typically obtain financing of up to 50–60% of the property value. In the case of new-build properties purchased from a developer, financing is usually limited to up to 50% of the price stated in the title deed. In addition, some developer projects offer the option of transferring existing financing to the buyer through a process known as subrogation.
In Spain, property transactions are often completed using banker’s checks, which remain a widely accepted form of payment. Alternatively, buyers may use escrow or client accounts held by law firms, which can be more cost-effective due to preferential banking conditions negotiated by legal offices.
Transaction Costs When Buying Property in Spain
When purchasing property in Andalusia, buyers should take into account additional transaction costs, which typically range between 8% and 13% of the property value. Below is a detailed breakdown of these costs.1. Taxes
Resale market:
- Property Transfer Tax (ITP): 7% of the property value for resale properties.
New-build market:
- VAT (IVA): 10% of the property value when purchasing from a developer.
- Stamp Duty (AJD): 1.2% of the property value.
2. Legal and Administrative Costs
- Lawyer’s fee: 1% of the transaction value + 21% VAT.
- Notary fees: starting from approximately €1,000 (for example, for a transaction valued at €2,500,000, the notary fee is around €2,200).
- Land Registry fee: approximately €500–€1,000.
3. Mortgage-Related Costs
- Stamp Duty on mortgage (AJD): 1.2% of the loan amount (paid by the bank in accordance with regulations in force since 2019).
- Mortgage arrangement costs: typically between 1% and 1.5% of the loan capital.
4. Other Costs
- Utility connection and contract setup (water, electricity, telephone): from approximately €500.
- NIE number application: approximately €190 + 21% VAT per person.
These costs may vary depending on the type of property, its value, and specific regulations within individual Autonomous Communities. For this reason, it is strongly recommended to consult a lawyer to obtain an accurate estimate of all expenses related to the purchase.