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The Costa del Sol in Spain has long been a dream destination for property investors and those seeking a sunny and luxurious lifestyle. However, before embarking on this exciting journey, it's essential to understand the buying process and associated fees. In this article, we'll walk you through the key steps of purchasing property on the Costa del Sol, covering the differences between new construction and resale properties, as well as the various fees related to taxes, legal matters, and notary services.
Your Guide to Buying Property on the Costa del Sol, Spain
New Construction vs. Resale Property:
One of the first decisions you'll face as a prospective buyer is whether to invest in a new construction or a resale property on the Costa del Sol. New constructions often offer modern amenities, energy-efficient features, and the opportunity to customise the property to your preferences. They may also come with developer incentives or financing options. On the other hand, resale properties may provide a more immediate move-in option, offer unique historical or architectural features, and may be situated in more established neighbourhoods with existing amenities.
The Buying Process:
Step 1. Property Search:
Begin your property hunt by enlisting the services of a reputable real estate agent who specialises in the Costa del Sol region. They will help you find properties that align with your preferences and budget.
Step 2. Offer and Negotiation:
Once you've found your ideal property, your agent will assist you in making an offer and negotiating the terms with the seller. It's essential to work closely with your agent during this stage to ensure a fair deal.
Step 3. Reservation Contract:
Upon reaching an agreement, a reservation contract is usually signed, accompanied by a reservation fee (normally a 6,000€ payment to your lawyer in Spain. This amount can increase for more expensive villa properties) to secure the property while the legal due diligence is conducted. Please note that this amount is typically passed from your lawyer to the vendors lawyer once a basic round of due diligence is conducted within 48 hours.
Step 4. Legal Due Diligence:
Engage a qualified lawyer who is well-versed in Spanish property law to perform a thorough legal check on the property, verifying its title, ownership, and any potential encumbrances. Holdsworth Estates has been working with a reputable legal team based in Marbella for over a decade and would be happy to recommend them to assist you with the buying process.
Step 5. Private Purchase Contract (PPC):
After a successful legal check, the buyer and seller sign the PPC, outlining the purchase terms, payment schedule, and completion date. This is typically ten to fourteen days after signing the reservation contract and for a resale property you can expect to pay 10% of the purchase price plus IVA minus the reservation deposit you originally paid. With off plan properties you can expect that within 30 days of signing the reservation document you will be asked to sign the PPC and pay 30% of the purchase price plus IVA minus the original reservation amount.
Step 6. Property Survey:
It's recommended to hire a surveyor to inspect the property for any structural issues or defects. This is typically recommended when purchasing a resale villa and isn’t a common occurrence when purchasing apartments.
Step 7. Payment and Completion:
On the completion date, the remaining payment is made, and the property is officially transferred to the buyer. This transaction takes place before a notary public, who ensures the proper execution of the sale.
Fees Associated with Taxes, Legal, and Notary:
1. Property Transfer Tax (ITP):
This tax applies to the transfer of resale properties and varies between 8% and 10% of the purchase price, depending on the region.
2. Value Added Tax (VAT):
For new constructions, VAT is levied at 10% of the purchase price.
3. Stamp Duty:
Applicable to both new and resale properties, stamp duty is a regional tax ranging from 0.5% to 1.5% of the purchase price.
4. Legal Fees:
Lawyer fees typically amount to 1% to 2% of the property value.
5. Notary and Registry Fees:
These fees are essential for the completion of the property purchase and range from 0.5% to 1% of the property value.
Conclusion:
Buying property on the Costa del Sol can be a seamless and rewarding process with the right knowledge and guidance. Carefully consider whether a new construction or resale property aligns best with your preferences and consult with a professional real estate agent and lawyer to navigate the legal complexities. Being aware of the various fees, taxes, and notary charges will ensure a transparent transaction and lead you closer to owning your dream home in this picturesque coastal haven.
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