Your Valencia Properties

Buyers check list

This “Buyer’s Check List” is intended to give you, the buyer, guidance and a better understanding of what is involved when purchasing a property in the Valencian community. For your convenience I explain some key terminology below

• Deposit Contract. A deposit contract states the terms and conditions of the agreement such as property details, price agreed, the date of deed signing and so on. Normally another 20% to 30% of agreed price is paid over at this stage. This quantity can be determined by the seller up front as part of the deal.

• Reserve document: This refers to a reserve fee. A reserve fee is put down once you have decided on the property you wish to purchase, and before signing the deposit contract. The amount put down on deposit is later deducted from the total cost of the property.

• NIE Number: the NIE number is a Spanish National Identity number, necessary if you wish to purchase a property in Spain. This must be obtained before the deeds are signed, but not necessary to sign the deposit contract. Clients must be physically present before the authorities when applying for it.

• Bank Guarantee. If you are buying an “off plan” property and you are paying monthly instalments towards the final cost, ensure that you have a bank guarantee. Developers are obliged “by law” to give you a certificate from the bank stating that if the developer fails to honour the terms of the contract the bank must reimburse you with all payments made up till then.

• Planning Permission: The developer is obliged to issue you a copy of the development’s planning permission, apartment or house plans with the corresponding measurements, and also a list of materials to be used in the construction. The details outlined in the licence and house plans must coincide with exactly what is being built. You can ask your lawyer to check the authenticity of the licence with the local council where it was issued.

• Deeds: Once the property is ready for sale (seller to buyer) the deeds are signed in front of a Spanish Notary. This is obligatory under Spanish law. Later you will receive a copy of the deeds once the property is registered.

• First Occupation Licence: Known as the “Cedula de Habitabilidad”, this licence certifies that a newly built property has been checked by a local council technician who deems the property fit for occupation. Do not sign the property deeds until you have a copy of this licence. Without this document you will not be able to contract basic services such as water, electricity and gas.

• Stamp Duty: The stamp duty is 7% on the value of the property, payable on the day of signing, or up to 30 days after. If you are paying monthly instalments on an off plan property, you will be paying the 7% stamp duty as you go.

• AJD (Actos Juridicos Documentados): A special 1% Tax is charged to both residence and non residence on newly built properties that are not considered to be their primary residence. Also, if you are going to apply for a Spanish mortgage you will be charged 1% on the amount required. So, if you are purchasing a newly built property as a second residence and decide to take a Spanish mortgage be prepared to pay 1% on the cost of the property plus 1% on the mortgage required.

• Agent Fees: Agents fees vary from 2% to 5%. This depends on the agent.

Additional requirements and costs

The costs and percentages quoted below are estimates based on a property that costs approximately €230,000

• Notary, registry and administrative costs. (0.8% approx, i.e. €8 for every €1000)

• Water and electricity connection fees (0.5% approx, i.e. €5 for every €1000)

(Water charges are stipulated by individual councils and vary)

• Lawyer fees (0.5% approx)

• House insurance (between €150 and €300 depending on type of insurance required)

• Supplementary Will (€150 + 16% VAT per person approx). This Will is supplementary to your main Will. It is advisable to have this in Spain (No other Will outside of Spain will overwrite the contents of the Spanish Will)

• Furniture costs: depends on how you choose to furnish to property. On a 3 bedroom apartment you could fully furnish the property for approximately €10,000

Keep in mind the following:

• Monthly community maintenance charges
• You must open a Spanish bank account (Non resident account recommended)
• All bills can be paid through direct debits from your Spanish account
• Banks charge for issuing Draft Cheques, required for paying developer (0.1% approx. but you MUST negotiate a much lower rate, the banks will concede)
• Local taxes (Refuse collection, street lighting, etc…)
• Wealth Tax (paid yearly and calculated on the “catastral” value of your property)

Lawyer

It is advisable to contract the services of a reputable lawyer who speaks English and knows the area where you are purchasing the property.

The lawyer will guide you through the complete buying process, and insure that all correct steps are followed ensuring you enjoy a trouble free process.

Important Note

This “Buyer’s Check List” is intended to give you, the buyer, guidance and a better understanding of what is involved when purchasing a property in the Valencian community. However please keep in mind that Lawyer, Notary, Registry, Water, Electricity & Agent fees can change slightly depending on the cost of the property or indeed location of the property.