There are of course certain legal formalities when buying property in Spain

Solicitors In Spain

When selecting a solicitor to represent you on the purchase of a property be careful about taking on a recommendation from the builder. The builder may offer special incentives to use somebody he knows, like a discount on the charges, or that the deal can go through quicker etc.

Solicitors like a retaining fee of approximately 150 euros per annum and about 500 euros for the handling of a purchase or sale of a property. They also handle other jobs such as getting an NIC number (similar to our National Insurance number). The fee for this is approximately 100 euros. You need this number to buy a car, and property. Your solicitor can also get you a Residencia, but the necessity for this (benefits) are not as great now. In the past you paid a lower tax on the sale of property and got a higher interest rate at Banks. The solicitor will set the level declared as the purchase price of your villa as extras are not vatable. The amount declared is currently vat rated at 7%. On the selling of your villa the taxation is based on the profit made between the buying and selling price, if you are moving back to the UK. If you sell and buy in Spain then there is no taxation.

Council Tax

Local Municipal Authorities set their equivalent of the UK’s council tax.

There is a council tax which comes into effect with new property when the builder hands over the responsibility to the council. Prior to this a minimal charge of roughly 100 euros per year is made and when the council takes full charge then they ask for around 250 euros per year. There is a collecting agency for the council tax and you can go into their office and pay it or pay it through the bank. You are reminded of this, well in advance.

One thing to note with the council is that they are not responsible for anyone hurting themselves (by falling) outside your property. To cover yourself you need to take out an insurance which is normally part of your fees when a community is formed. I will not go into this too much, but a community is a legal requirement and presidents, vice presidents etc are required to be elected to sort out pool maintenance fees, who can and cannot build in that area (extensions etc) this fee is roughly 1000 euros per year.

So then, you should expect the basic legal costs to be a very minimum of 9,000 euros on the purchase of a property valued at 100,000 euros. This covers solicitor`s costs, VAT on purchase, first year’s council tax and first year’s insurance – all based on current rates.

Property and Wills

One important point for expats now living in Spain. Don`t assume that your will which you made in the UK is good for Spain. Laws vary from one country to the next, and it`s vital that your money and property go to whom you intend it to go upon your death.

This is why you should seek legal advice in Spain so that you save any unnecessary expensive legal procedures due to wrangles because your will isn`t accepted under Spanish law, or more likely has loopholes. All expats should ensure they have a will, and update it from time to time to take account of additional assets owned.

In Spain the luxury real estate market is now looking reasonably healthy. Prices have certainly dropped but they were the first to stabilise as soon as the excess stock was absorbed. Many people who had overstretched themselves got into trouble as interest rates rose to levels they hadn’t been before and others in that area were bankers, lawyers and other professionals etc… whose industries disappeared almost overnight and they were unable to pay the large mortgage repayments that came with the territory.

The now famous distressed sale market grew and virtually disappeared quite quickly as this excess was soaked up by those who had previously wanted to buy in the luxury areas but the price was slightly out of their range. As distressed sales appeared and were comparatively cheap they dragged the market down with them of course. Now they are largely gone the anchor on the market has gone too of course.

Not that you are suggesting price rises but with low interest rates in all of Europe, where many of the luxury property buyers come from, and the fact that those counties are slowly coming out of recession, many people now looking to buy in Spain at good prices. It is unlikely that in this particular sector at least there will be any further price falls. As there are limits on the number of luxury Spanish properties on sale the scarcity principle should come into play and maintain prices long and medium term.

So where are the luxury properties? Spain has many areas that are havens for the super rich, the obvious candidates are Marbella, Andratx in Mallorca, Catalunya, sprawling city centre pads in Madrid and Barcelona, the more exclusive golf resorts dotted around the country and the Canary Islands noted for their weather all year round are also popular in this field.