The buying process
The key to a successful purchase of a property in Spain is to understand the buying process and the costs involved in doing so, here we will help you understand these points further in relation to purchasing a property on the Costa Blanca.
All property transactions must be approved by a registered Notary, a legal representative of the Spanish Government. Only Notaries can register you as the rightful owner of a property in Spain's Land Registry, which they do after witnessing the signing of the deeds ( Escritura) by the buyer and the vendor, and all associated payments and taxes are paid.
Once you have found your dream home it is normal practice that a 'reservation' is signed to secure the property at the agreed price. A reservation fee is paid at this point. This fee is normally around Euros 2500 and forms part of the price of the property.
Before you get to the final stage of signing deeds in front of the notary, what we call completion in the UK, your independent lawyer will perform due diligence on your chosen property.
It is normal practice for a purchaser to sign a deposit contract and pay 5-10% deposit, which commits the purchaser to purchase the property and the vendor to sell. There is some flexibility at this point to the amount paid.
To buy a property as a non-resident in Spain you MUST obtain a fiscal identification number -anNIE and open a Spanish bank account. Your lawyer can assist you to do this.
As a ball park figure allow for a further 10-12% dependent on the purchase price of the property. To cover all taxes and fees. If a mortgage is involved costs will be slightly higher. For a resale-costs are:
Transfer fee (ITP) - 10% of the purchase price. Notary fees-allow €500 to €900
Land Registry fees - allow €250 to €500.
Lawyers fees - allow €2000 inc IVA
Where a mortgage is involved there will be a valuation fee, stamp duty of 1.5% of the mortgage deeds (capital loaned) and a lenders commission of maybe 1% as well as Notary and Land Registry fees
Costs are slightly different. Transfer tax is not payable but IVA (VAT) of 10% of the purchase price and stamp duty of 1.5% of the purchase price (no IVA). Notary, Land Registry and legal costs will apply
YOU HAVE FOUND YOUR IDEAL PROPERTY-WHAT NEXT?
There are important things to consider before and after arriving. To get you started we have outlined in the main points below.
BEFORE ARRIVING IN THE COSTA BLANCA
When moving to the Costa Blanca it is a good idea to start thinking about how you will move your belongings to Spain at least two to three months before your planned departure date and, if necessary, get quotes from removal firms. Work out what you will be taking with you to your new home, whether you will need to put anything into storage and arrange suitable insurance for your belongings during transit.
Remember to arrange your own transport, check the validity of your passport and get a European Health Insurance Card ( EHIC) to cover you when you first arrive in Spain.
There is a lot of paperwork to be done. You will need to inform utilities companies of your departure date, cancel direct debits and bill payments, sort out mobile phone and internet contracts and have your mail redirected. You should also let the tax office i.e HMRC in the UK, contact your pension provider, doctor and bank so they know you are relocating. Bear in mind, keeping an existing bank account open is advisable. You will also need to tidy up any loans or credit cards if necessary.
It is also worthwhile speaking to a financial advisor a few months before you are moving to Spain and becoming a tax resident in Spain. Why? If you have private pensions, large cash deposits, shares, bonds or other investments, perhaps in a tax free form, re-structuring them or moving them off-shore could benefit you once you are no longer a UK tax resident. If retired, you will also need to think about having your pension transferred to your bank in Spain. And nearer your departure date, make sure you have enough Euros waiting in your Spanish bank account.
Before you arrive why not ask Seekers to ensure your property is checked over for you, test the boiler and air conditioning and check that utilities are connected. That way you will arrive to a fresh, functioning home and not be arriving to a domestic emergency!
ARRIVING IN THE COSTA BLANCA
Within the first three months of moving to the Costa Blanca, you should register for residency in person at your local Oficina de Extranjeros (Foreigners Office) or a designated police station, where you will be issued a Residence Certificate showing your name, address and NIE number (which you will have obtained when purchasing your property). To do this you will need your passport and it will incur a small fee.
Aside from obtaining a Residence Certificate, you should visit your local town hall and register yourself and your family on the Padron Municipal de Habitantes an equivalent to the electoral role which lists the names of all local residents. Registering on your Padron and receiving a certificate makes you an official member of your community, and is a legal requirement. You will need your certificate for administrative procedures such as buying and selling a car, registering a child in a school, getting married, applying for a health insurance card and certain social benefits.
You should also make registering locally for healthcare a priority after arriving on the Costa Blanca. As a new resident on the Costa Blanca, you will be entitled to free Spanish state health care, regarded by many as better than the NHS, if you register with Spanish social security, which means you must be contributing financially to the system i.e in employment.
However, if retired, you need not worry you will also receive excellent health care. You simply register an E121 form. If you move to Spain before retirement age and, do not work you will need healthcare insurance which is generally cheaper than in the UK.
Whichever of the above applies, the standard of care you receive will be excellent.