The Property Finders
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There are some regional differences relating to property purchase in Spain. For example, purchase tax varies by region and the Canary Islands has its own form of VAT. However, the questions covered below apply in all regions.
What’s the difference between Buying agents and Estate agents?
The seller engages an estate agent to achieve the highest possible price for their property. Part of their job is to disguise and downplay negatives that may be a deterrent. They will only be able to offer properties they have listed, usually in a well defined area.
The buyer engages a property finder to find the right property at the lowest possible price. As we cover entire regions we can compare and contrast alternatives across several locations. An estate agent wants to sell and doesn’t really care whether it suits the buyer or not. They always try to show properties in the most favourable light. If an estate agent tells me I can only view a property in the morning I am immediately suspicious. In all probability there is no afternoon sun and they are trying to disguise the fact. If an agent pushes for weekend viewings you can be quite sure traffic thunders past on weekdays! A buyer’s agent does the exact opposite. You can be confident we will alert you to any negative aspects related to the property or its surroundings.
Helping to choose locations – compare and contrast
We often find that people are not really sure exactly where they want to be. But we are able to offer balanced and impartial advice about a variety of locations across an entire region. Then we use our intimate local knowledge to pinpoint the most likely options for each individual’s requirements. In contrast, estate agents want to sell in their area only and often make negative comments about other locations. We really listen to our clients. So we often suggest locations many miles from where they originally thought they wanted to be. Sometimes they have never even heard of the place in which they eventually buy!
How to get started
If possible we arrange a meeting at which we take a very detailed brief but if a face-to-face meeting isn’t an option then we set up a video conference call . We consider all the issues. What is the purpose of the purchase; relocation, investment, business opportunity, rental income, holiday property? What is the budget? We help people stay focused and realistic. Once we have defined all potential locations we get to work researching and assessing what is currently available. We submit written reports of our findings so you can short-list what you want to see. Then, and only then, do you need to travel. You won’t waste time viewing unsuitable properties so the trip can be just a couple of days or less.
How we source property
In the more established coastal areas we may use estate agents who we know and trust. But we also have extensive networks of contacts to see what properties might be available privately. So we often come up with properties that are not actually ‘for sale’. In the more rural areas we find out who is the local runner, or ‘corredor’ in that particular area. We can also do targeted mailings to find potential sellers in specific developments which match the criteria.
The cost – why we charge a fee
Free property finding services are a myth. We lose the ability to give independent and impartial advice if the seller pays our fee. We work exclusively for the buyer so there is no conflict of interest between buyer and seller. Estate agencies do not actively search for a property on your behalf, no matter what they say. And an estate agent can only access properties if the seller is willing to pay a commission, which private sellers are not.
In almost every case, we save our clients money. Add up the cost of a few wasted viewing trips, never mind the time it all takes. Best of all, we know how the system works. We are convinced we will negotiate a better price than you could on your own. We regularly save our clients considerably more than the value of our fees in this aspect alone.
In Spain, incorrect title deeds cause most of the problems for buyers. However, it is not the estate agent’s responsibility to resolve these issues for the buyer. There are no disclosure laws in Spain so it is up to the buyer to know what to ask. We do that for you at the outset. Trying to rectify discrepancies after completion is often difficult or impossible and usually expensive.
We do not take the place of a lawyer and always recommend you appoint your own legal representative. But we do double check everything. The media love a good disaster story but these are always the result of failure to do good research and a thorough investigation of all the issues.
What is the procedure in Spain?
In spite of horror stories in the media the property buying process in Spain is actually very simple and transparent. Once you choose a property the normal practice is to pay a small reserve deposit to ensure the seller takes the property off the market. This allows time to make the necessary legal enquiries. This reserve deposit be as little as 1,000 € in the country areas or as much as 10,000 € in the prime coastal areas. Meanwhile, your lawyer requests the Nota Simple, a reduced version of the Title Deed or escritura.
A private contract is not a legal requirement in Spain. In fact, many Spaniards dispense with this stage and go straight to the notary to sign the escritura. However, most overseas property buyers need time to arrange transfer of funds or organize a Spanish mortgage. So, when the buyer is from overseas a private contract between the seller and buyer is the normal procedure. Expect to sign this within 21 days. At this time the buyer pays 10% of the agreed price, less the reserve deposit amount already paid. The transaction is now binding on both sides. If the buyer subsequently defaults they lose their 10% deposit. However, if the seller pulls out Spanish law requires that they return double the 10% deposit.
What happens next?
The final step in the purchase process in Spain takes place in front of a notary. Both the seller and purchaser are present or represented by means of a power of attorney. The escritura will be signed, the keys and monies will be handed over and that’s it. Many property buyers from overseas give their lawyer a power of attorney which covers things like applying for the NIE. This is the fiscal identity number which buyers need before completion can take place. And the lawyer can also transfer utilities after completion, otherwise you must to do this in person.
If I am non-resident in Spain is rental income liable to tax?
Yes, and the Spanish tax authorities are determined to stop evasion. The flat rate is 25% of net income.
Are non-residents liable for Capital Gains Tax in Spain when they sell?
Yes, Capital Gains Tax is 19% for all E.U. non-residents while it is 35% for non-E.U. individuals or entities. And if you decide to become resident in Spain it will still be 19%, irrespective of nationality.
I have been told that money is held back when I sell. What is that for?
This only applies to non-residents. It ensures that the seller pays any Capital Gains Tax due. The retention is 3% of the amount declared in the escritura at the time of sale. In effect, the retention is a down payment of the Capital Gains Tax owed. It is the responsibility of the buyer to pay this to the tax authorities within 30 days of signing the escritura. With a power of attorney your lawyer can do this for you. Hacienda then has 6 months in which to calculate the actual CGT due and to return any overpay. Of course, they can also claim any underpay.
Is it true that the tax authorities have tightened money laundering controls?
Yes. The one that will most affect property buyers is the obligation to include the method of payment within the escritura. Previously, buyer and seller simply had to swear to the notary that the full purchase price had been paid and received. Now they have to state in the deeds how it has been paid. Failure to do so will mean that the property cannot be registered in the new owner’s name.
Does Spain have a Golden Visa programme?
Yes and if you are a non-EU citizen it may be worth looking at. From a British perspective having a visa is as though Brexit never happened. There are various methods of acquiring a Golden Visa and the most accessible and lowest cost one is by investing in property with a minimum value of €500,000. This does not have to be in one property; it is cumulative and the total investment could be in two or more properties as long as the total comes to a minimum €500,000. This must be in cash but any amount over the minimum can be in the form of a mortgage.
If two people are buying together do they both get a visa?
No. For both to get a visa the investment would have to be at least €1m, i.e., €500,000 x 2. If two names appear on the Title Deed the assumption under Spanish law is that each are contributing 50% so a purchase between €500,000 and €1m will only generate one visa. Therefore, couples have to decide who gets it. However, this visa covers a partner and dependant children under 18 years old. Many of our clients investing over €500,000 but under €1m have opted to do this.
How long does it take?
Providing you meet all the requirements, such as minimum investment level, no criminal record, private medical insurance etc., the visa is automatic and speedy. However, we recommend you take expert advice in advance of your purchase to make sure you do it right.
If you have a specific question about buying property in Spain that we haven’t covered here please fill in the form below and we’ll get back to you.
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