Do you ever get the feeling of “should I move here?” when visiting a beautiful place, like Barcelona, during your holiday? You’re not alone, in fact in 2021 and 2022 the Spanish real estate market has seen a revival of foreigners buying property in Spain. Many of them are tempted by the climate, culture, food and charm of the vibrant Catalan capital.
1 in 10 of the real estate transactions in Barcelona are now international, with the British, German and French buyers leading the list. Here is all you need to know if you will be buying property in Spain soon:
Formal requirements for buying property in Spain
In legal terms the only requirement that a foreigner must fulfill in order to purchase a property in Spain is to obtain the NIE number (Número de Identificación del Extranjero – Foreigner Identification Number). This number is unique to each person and is necessary to carry out any formal or legal proceeding in Spain, especially signing the deed and paying the taxes associated with the property purchase.
Getting the NIE number is not a very complicated process, but it may take some time due to the long wait list for the appointment. If you are planning on buying the property in Spain, think in advance about getting NIE, so that the transaction is not hampered by the procedure.
You can either start the process of obtaining the NIE number in your country, by visiting the Spanish embassy or consulate, or get the document when you are already in Spain. In the latter case you will have to book an appointment in the nearest police station.
In order to get the NIE number you need to demonstrate that you have a legitimate cause that requires you to get this number. Real estate transactions are one of them. The simplest way would be to present a document signed in the notary stating your willingness to buy a property or a signed pre-sales agreement (arras).
Bank account in Spain
You may encounter the information that opening a bank account in Spain in order to purchase a property is not necessary, however, we strongly advise you to do so. Opening an account in a Spanish bank will not only make the purchase transaction a smoother process, it will also prove useful when it comes to tax and fares payments. Moreover, many vendors will require you to have a bank account in Spain to ensure the safety of the process and save on some commissions.
It’s best to plan ahead and open a bank account in Spain if you plan on buying a property here. Although some initial partial payments, like reservations or deposits may be done from your original account, the final payment needs to be done from a Spanish account.
Upon transferring the money to the vendor, the bank will run a mandatory filter of the money laundering system. It is to ensure the origin of the money that’s supposed to be used for the property purchase. Be prepared to provide the proper documentation in order to proceed.
Opening an account in Spain is easy. To start the process you’ll need your passport or ID Card. In the further steps the NIE number will be required.
Buying property in Spain: step by step.
Once you get the formalities, the NIE and bank account, out of your way, you can start the adventure of apartment searching.
Search for properties in Spain
Looking for a property in a foreign country can be overwhelming at the beginning. To make sure you are making the right decision, try to visit the location and have a look around at different neighbourhoods before you dive into the listing websites.
In Spain you don’t need to sign a contract with a specific agent who would be your only point of contact. You can visit different properties with different agents. To avoid problems don’t try to schedule viewings in the same property with different agencies. When visiting a property the listing agent may ask you to sign a visit sheet stating that they were the ones who you visited with, in order to ensure you carry out the transaction with them if you decide to buy.
Speaking of listing sites in Spain, although there are international listing websites where you can search for property in Spain, we recommend you use the local apps and portals, as they have the most updated offers. The main addresses you may want to check out are: idealista, fotocasa, habitaclia.
We are happy to assist you as well, in Spanish, English or Russian. Have a look at our listing catalogue here.
Making an offer. Reservation agreement (reserva)
Once you find the ideal place you want to make sure someone doesn’t buy it before you. The offer making process in Spain consists of signing a letter of intent with your written offer. Your offer is then presented to the owner and, if they accept it with or without some negotiation, you’ll have to make a reservation deposit payment (reserva), typically of 1% of your offer number.
If you are buying through a brokerage, they will be in charge of preparing the document, negotiating and guiding you through the process. In that case also the 1% deposit will be usually paid into their account and deposited there, until the next step is finalised. If the transaction falls through because of the owner’s fault, you’ll be given your money back.
Preliminary contract (arras)
After the offer is accepted by the owner and the deposit is completed, the next step of buying property in Spain consists of signing the preliminary contract (contrato de arras). Typically the time between la reserva and arras is around one to two weeks. This is the time for you to get your final check on the finances and the mortgage if you need one.
Signing the arras is a procedure regulated by Spanish law. It involves a deposit of 10% of the agreed price paid to the owner. This is a strong commitment, not only because of the amount to pay, but also because of the implications if the transaction falls through after arras. If it´s the owner who decides not to sell after signing the preliminary contract, by law he is obliged to pay you back double the amount paid in the arras deposit. If you step back, you lose the 10% payment.
The arras document also states the timeframe to the notary signing, usually between two to three months. This is the time needed in most cases to complete the mortgage proceedings and for the owners to arrange their move.
Signing the contract at the notary (escritura de compraventa)
The big day! Signing the contract of sale (escritura de compraventa) takes place at the notary. After the signing you are required to register the property at your name in the Land Registry (Registro de propiedad).
Taxes and fees for buying property in Spain
- Property transfer tax (for the second hand market): 10% of the purchase price (6,5% in Canary Islands). For the new properties you are required to pay VAT tax (IVA), also 10% of the purchase price.
- Notary fees, land registration fee and title deed tax: 1-2.5%
- Legal fees: 1-2%
- Estate agents fees: In Spain the agency’s commission is usually paid by the seller, and typically is around 3%-6% of the price.