Real Estate Practices in Spain
Real Estate Licensing Requirements in Spain
Currently, no requisite is demanded in order to be a real estate agent. You only need preparation if you want to become an API (a certified real estate agent), which was a license that, years ago, was also required in order for one to work as a real estate agent. Nowadays it adds prestige, but is not obligatory.
Housing Types Available in Spain
Apartments: By location, we have apartments in the city centre in classic buildings with a unique stylish feature and apartments in the modern parts. The most attractive apartments are on the beachfront. By housing type, an apartment can be a normal, a duplex, ground floor, a loft, a penthouse, an attic or a studio apartment.
Villas: Types of villas include: a villa (detached or semidetached), a country house (in Spanish “finca”), a terraced house, or a villa-hotel. Villas are normally situated in the countryside near the cities, towns and coastal areas.
Commercial Properties: Commercial properties are those with the license of commercial use or office use.
Investment Property, Land and Others: In this category, a variety of different kinds could be found. For example, a building, castle or palace, golf course or plot, hotel, hunting estate, industrial land, plot with or without a project, retirement home, school, shopping centre, island, etc. Moreover, Spanish wineries with unique and valuable features are very popular among the international investors in these recent years.
Real Estate Commission in Spain
Generally, for the residential properties, we charge the sellers a commission of 5% and the buyers 0%. For the commercial properties, we charge the buyers a commission of 5% and the sellers 0%.
In many other Spanish real estate companies, for both the residential and commercial properties, they may charge both the buyers and sellers. Buyers should always confirm with different companies about the exact commission.
Mortgages or Financing Options Available to Foreign Investors in Spain
In Spain, mortgages can be issued by the Spanish banks to foreign investors.
In order for a foreign buyer to obtain a mortgage from a Spanish bank, the buyer should provide the bank all related documents and proof of a stable income that will allow the buyer to pay for the loan installments. If purchasing a property for self-use, Spanish banks may offer a loan of up to 80% of the value of the property. And for the majority of foreign investors without Spanish residency, they could offer up to 50% of the value of the property. Depending on the bank’s evaluation of buyers’ income and the property, a fixed interest rate and offer is given to the potential client.
Property Taxes in Spain
The Property Tax (hereinafter IBI), is a local tax which is levied on all Spanish properties.
All property owners are obliged to pay this tax by 1st January each year, at the time this is accrued.
In outline, the amount of this tax is calculated by reference to the official value of the property (cadastral value), and every Town Hall stipulates an applicable tax rate to such value.
Spanish Acquisition Costs for the Buyer
Generally speaking, when purchasing a house from a private individual, he should consider:
Taxation VAT (when buying a new construction) or Property Transfer Tax (ITP): 10%
Agent commission: 0%-5% (depends on the agent)
Notarisation and registration: around 0.5% (depends on the city and documentation)
And for most non EU buyers, they may consider more costs of local lawyers, medical insurance, Spanish ID application, certification of registration, which are, in many cases, necessary for the purchase.
Spanish Disposition Costs for the Seller
Generally, for the seller:
Agent commission: 0%-5% (depending on the agent).
Notary: Cost of the first original copy of the purchase deed around 0.5% (depends on the documentation and the city).
Municipal tax in terms of CAPITAL GAINS: Depends on the amount of time in which the seller has been the homeowner, and also depends on the cadastral value and the local council regulations.
Other procedure costs: possible lawyers, certification, etc.
Income Tax for individuals (IRPF): if there has been a capital gain. The percentage depends on the purchase price of the property, the sales price of the property and also the importance of the year in which the seller acquired the property (year 2016, in some cases it can be exempted).
Title Practices in Spain
1. The notary examines the property documentation (IBI, certificates of community fees) and the documentation of both the sellers and the buyers (NIE)
2. The notary asks for receipt from the Land Registry to verify the ownership and encumbrances of the property (mortgage, etc.) and so that they may be cancelled in the moment of purchase or any other previous moment.
3. Upon the signing of the purchase deed between the parties before the notary, the price shall be paid.
4. The notary notifies the Land Registry of the contract of sale and, if applicable, the cancellation of encumbrances if there are any, so that the legal change in ownership may be carried out.
5. In the time frame of approximately one month, the new owners and all other operations, or changes made, shall be registered with the Land Registry.
Closing Procedures in Spain
Once a decision regarding the purchase of a property has been reached, it may be formalized directly before a notary public or, the more frequent way involves signing a previous, private purchasing-selling contract with a portion of the price being paid (normally between 10 and 15%), and in which a deadline is stipulated for the formalization of the purchase-selling agreement before a notary public
During the time period up till the final signing, the following steps are carried out:
1. The obtaining of the necessary documentation if not already obtained, such as in the case of foreign buyers, it is necessary to obtain an NIE (National Identification Number). You can apply for and obtain an NIE from the Spanish police in a time frame of 7 to 10 days.
2. The obtaining of the financing required in order to carry out the transaction.
3. The obtaining of a Spanish bank account, from which the final payment can be carried out and in which a direct debit is set up in accordance with the expenses that the property will have (light, water, taxes, etc).
Finally, the public purchase deed is signed before a notary.
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