Purchasing and selling a property is often one of the most important investments a person makes in their life. It should therefore be undertaken with the advice and support of an expert lawyer. Spanish Legal Services take due diligence for you when buying and selling a property, ensuring all the processes are conducted securely to avoid becoming a victim of fraud. We verify that the property is legally built and that its planning permission is in order.
This blog is a guide on the key things that need to be considered when purchasing a New Build House in Spain.
Setting a budget:
One of the most important elements to purchasing a property is determining your budget. The money you have saved or that you have available, will determine if you need a mortgage of a greater or lesser amount. Nowadays, depending on whether or not you are a resident in Spain, banks will usually loan around 80% of the property’s value. Don’t forget it is necessary to add extra expenses and taxes of the purchase to your budget.
Finding a property:
The Internet has facilitated the ability to find a property abroad. However, liaising with a trusted real estate agent is vital and can be the difference between a smooth purchase journey and a headache.
The advantages of buying New Homes are that they have ample surfaces, rooms for telecommuting, outdoor spaces such as terraces and gardens, common areas of all kinds and energy efficiency measures, among many other aspects.
Choosing a mortgage:
The first thing you need to do is investigate loan conditions i.e. interest rates, the years of duration, the clauses etc. To grant the loan, the bank must appraise the property. The buyer will bear the appraisal cost, which ranges between 250 and 600 euros, depending on the entity that carries it out.
There are 2 types of mortgages:
– Fixed mortgage: whereby the same interest rate is applied throughout the life of the loan, even if market interest rates go up or down.
– Variable mortgage: whereby the amount of the monthly instalments varies according to a reference index (the most common is the Euribor).
Request as much information as possible from the developer:
As you are purchasing a New Build, the first search that needs to be conducted involves checking that the property owner is who they say they are. To do so, it is necessary to go to the corresponding Land Registry and check if the plot of land on which the building is going to be built is owned by the developer and see if it has any charges, mortgages, easements, etc. In other words, you need to apply for an office copy entry at the local Land Registry.
This document will provide you with the information required.
Secondly, you must complete some searches at the Town Hall of the place where the works will be built, to see if they have building licenses and to check if there is any easement in favour of the Town Hall. You need to check if the maintenance of the urbanization belongs to the owners and not to the Town Hall itself.
To summarise, these are some of the essential things you should know:
– Building lince
– Certificate of habitability
– The mandatory guarantee
– The price and method of payment
– Final construction certificate, ten-year insurance
– First occupancy license
– Information and instructions for the use and conservation of the facilities
– Instructions for evacuation of the property in case of emergency
– Data and plans of the property with information about the useful surface, distribution, telecommunications, etc
In the context of the acquisition of a property, the legal due diligence should at least cover the title of ownership and contractual relations about the property, as well as the urban planning situation of the property. In general, the due diligence process is carried out before the signing of a contract.
The developer is obliged by law to have a series of data and documents about the work. Some will be available from their inception, but others will be generated as it progresses.
Spanish Legal Services can conduct these checks on your behalf and support you through this process, advising whether or not to proceed with the purchase.
Checking warranty:
If you purchase a New Build, according to the Ley de Ordenación de la Edificación (LOE), the new house must offer workmanship and materials coverage to cover any defect or hidden defect that may have arisen in the construction of the property.
– 10 years for structural defects (beams, pillars, slabs, foundations, etc.)
This falls within the ten-year insurance, without which the promoter cannot transfer the property.
– Three years for defects of habitability,
– One year for defects in finishes.
Taxes and expenses:
These are the expenses and taxes that you will face when buying a New Home:
– VAT: In 2022, it is 10%, except in the Canary Islands, which is 6.5%.
– Documented legal acts (AJD): This tax is paid by the buyer and depends on each autonomous community.
– Arrangement fee: This can be up to 2% of the capital loaned for the mortgage, although the percentage may vary or even not be charged at all.
Closing formalities:
These are the contracts that you must sign as the process progresses.
– Reservation contract: This is the reservation of the property and involves the disbursement of a certain amount of money. This contract establishes a form of payment and a maximum term to disburse the operation’s remaining amount. Failure to comply with this agreement entails penalties for both parties.
– Purchase and sale agreement: The client must provide 10% of the property’s price disbursement. If one of the parties terminates the purchase contract, a series of penalties are agreed upon for both parties, outlined in this document.
– Deed of sale: The buyer and seller sign the deed of purchase in the presence of a notary. The developer makes the sale of the property to the buyer official.
The legal due diligence should cover examining the clauses of the purchase and sale contract, and checking if it has abusive clauses on non-payments by the buyer, which can lead to the termination of the purchase and sale contract to his detriment; on the dismissal of responsibility of the seller for the breach of the execution and delivery deadlines of the property and mortgage subrogations in the circumstances not beneficial to the buyer.
Post Completion:
• Obtain a copy of the title deeds. Original to the land Registry
• Set up the direct debit mandates for IBI, community bills and utilities
• Arrange building and content insurance
• Appoint a representative to deal with Income tax
• 2 or 3 months after completion, the original deed confirming that you are listed as the owner of the property
Spanish Legal Services can help you with a speedy, hassle free and secure purchase of a new property in Spain.
We are experienced in handling the buying, selling, or mortgaging of properties in Spain, from villas, apartments and townhouses, to plots of land and investment properties.
We also assist the buyer in opening a bank account to source their funds and obtain an identity card N.I.E.
Get in touch for further information at https://spanishlegal.co.uk
About the Author
Susana Díez Urquiola
Principal Solicitor at Spanish Legal
Susana Díez Urquiola is the Principal Solicitor at Spanish Legal, specialising in Spanish law for UK-based clients. A qualified Spanish solicitor, she graduated from the University of Deusto (Bilbao, Spain) in 1985 and is a member of the Bilbao Bar Association. She later qualified as a Registered European Lawyer in the UK, allowing her to practise Spanish law while advising clients based in the United Kingdom.
With over 25 years of experience, Susana advises on Spanish inheritance law, cross-border estates, and the acquisition, disposal, and financing of property in Spain. She provides clear, strategic legal guidance to individuals and families navigating Spanish legal matters from the UK.
Her approach is built on precision, transparency, and long-term client relationships, ensuring that clients receive reliable legal support across jurisdictions.
