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FAQ’s - Frequently Asked Questions

  

Q1. I have been told I need an N.I.E to buy or sell my property in Spain. What is an N.I.E. and how do I get one?

Q2. When should I open a Spanish bank account?

Q3. I understand that in Spain everybody pays a part of the final sales price in cash and this is known as "black money". The sellers of the villa we want to buy have accepted our offer, but want us to pay 20% of the agreed price in cash. Our estate agent is encouraging us to agree but we feel uneasy about handing over a large amount of cash and receiving no receipt. What would you advise us to?

Q4. What is the Plusvalia Tax in Spain?

Q5. Will paying a deposit on a house secure it for me?

Q6. What expenses should I bear in mind apart from the price of the house itself?

Q7. Can I get a Spanish mortgage?

Q8. Should I buy property in Spain as an investment?

Q9. Should we retire to Spain?

Q10. Can I save money by buying inland?

Q11. If I buy an off-plan property and my completed home turns out to be smaller than expected or is lacking certain facilities like the shared pool, what legal action can I take?

Q12. What is an Abogado?

Q13. Can I buy a car in Spain to use when I go to my apartment every now and then?

Q14. How does the exchange rate affect my purchase?

Q15. Should I use the lawyer recommended by the builder?

Q16. Should I have a penalty clause inserted into the contract?

Q17. Should we consider downsizing when we move to Spain?

Q18. Do we need to learn Spanish?

Q19. Do the Spanish still have a mañana, mañana philosophy?

Q20. Is it easier to buy straight from the developer and architect?

Q21. How do I know what I am allowed to build?

Q22. When is the best time of year to buy?

Q23. Will I be able to find work in Spain?
Q24. How much commission does the estate agent charge, I have heard from 8 to 18% which is a lot added to the price of house compared with UK? Can someone put in a offer of less?
Q25. How do you provide a service FREE of charge? 
Q26. What are the dates of public holidays in Spain?

 

 

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Q1. I have been told I need an N.I.E to buy or sell my property in Spain. What is an N.I.E. and how do I get one? 

 

A1. Recent Spanish legislation makes it compulsory for anyone selling or buying property in Spain to have a NIE - Numero de Identidad de Extranjeros which literally means "Identity Number for Foreigners". The modern NIE is just a piece of paper with your name and number and an official stamp. We suggest that you make several photocopies of the original and keep them for everyday use, rather than carry the original around with you. It is surprising how quickly that very important piece of paper can become torn and dirty. Recent legislation passed in Spain has made it necessary for anyone paying money to the Spanish Inland Revenue (Hacienda) such as when a property is bought or sold to have a Spanish identity number, and to obtain it in person. A legal representative can not apply on behalf of a client but he or she can collect the NIE once it has been applied for (usually about 4 weeks later).

 

 

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Q2. When should I open a Spanish bank account?

  

A2. Open an account with a Spanish bank as soon as convenient. You will need this account for the payment of your standing orders for electricity, telephone, community fees and so on.

 

 

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Q3. I understand that in Spain everybody pays a part of the final sales price in cash and this is known as "black money". The sellers of the villa we want to buy have accepted our offer, but want us to pay 20% of the agreed price in cash. Our estate agent is encouraging us to agree but we feel uneasy about handing over a large amount of cash and receiving no receipt. What would you advise us to?

 

 

A3. Your estate agent is right, it is common practice in Spain to "camouflage" the real sale price, although recent legislation makes it more difficult to do so than it used to be. It does sound very ‘underhand’, but the property market in Spain boomed at a time when legislation was not prepared for a thriving real estate sector, and things like ‘black money’ payments reflect this peculiarity. Cash payments in effect become "invisible" (and therefore "black") during the property sale because they are not mentioned in the deeds and do not figure in the sales contract. They are usually handed over during the signing of the contract. The "black" or "undeclared" money has advantages for the property vendor, because it means he/she will pay less capital gains tax on the sale of the property because the price (Declared Value) that figures in the deeds is lower than the money which has really changed hands (i.e. deed price + cash) and this in turn means that the vendor's taxable profit is also lower.

 

 

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Q4. What is the Plusvalia Tax in Spain?

 

A4. The plusvalia tax is set by the local authorities and based on the increase of the value of the land from the date the owner acquired the property to the time of the present sale. The local authorities determine the amount of plusvalía tax to be paid for each house purchase in Spain, depending on the area where the property is located. The market value or sales price of the property does not have an effect on the plusvalía tax. Normally, but not necessarily, the owner pays the plusvalía tax. However, this will depend on the sales agreement. The tax is calculated according to the rateable value of the property and the number of years it has been in the ownership of the seller.

 

 

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Q5. Will paying a deposit on a house secure it for me?

 

 

A5. It is actually quite common practice in Spain to offer a small deposit (approx 3000€) to the owner or estate agent to remove the property from the market while you arrange the legal side of things. If you are satisfied with the first legal checks, and your legal representative is happy for you to do so, then you would normally be expected to pay within about 2 weeks a 10% deposit (which includes the original 3000€) on the price of the house to secure its sale to you. The deposit system has advantages for the seller and the buyer. If at any stage you decide to pull out of the deal, you lose the deposit. You must therefore be absolutely certain that this is the correct purchase for you. On the other hand, if the owner decides to pull out of the deal, then he or she has to compensate you with double the 10% deposit. This tends to make it very unusual for sellers to pull out of a sale because they have received a better offer from other potential buyers.

 

 

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Q6. What extra expenses should I bear in mind apart from the price of the house itself?

 

 

A6. The extra expenses involved in buying a house in Spain tend to add up to about 10% of the purchase price of the property itself and will depend upon whether you are buying a new or resale property as different taxes apply to each.
 
 Expenses include:
  • Taxes (re-sale, new property, plusvalia tax)
  • Legal fees (lawyer and notary)
  • Property register fee
  • Other fees (translation of documents, presence of translators during negotiation and contract-signing. 
 
The breakdown is as follows:
 

Transfer Tax or IVA (a value added tax)    
7.0%
Stamp Duty (payable on a new property only)
0.5%
Plus Valia Tax 
0.5%
Notary Fees
0.5%
Property Register Fees
0.5%
Solicitors Fees
1.0%

 
We work backwards from your overall budget and allow for at least 10% of the purchase price to cover these costs.
 

It is in your best interests to obtain the services of an English speaking lawyer, preferably one who comes with a recommendation from his/her previous clients. Your lawyer should also have obtained proof that any outstanding debts and all community fees, electricity, water, telephone bills and rates are paid to date. These items are the responsibility of the vendor up until the day of the signing of the escritura by the new purchaser. The Escritura (title deeds) confirm that the people who claim to be the owners really are. Your lawyer will also check the Nota Simple. This document from the Land Registry office shows who the legally registered owner of the property is. It also shows if there are any mortgages or other encumbrances registered against the same. The names on the Nota Simple should match those on the Escritura.

 

 

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Q7. Can I get a Spanish mortgage?

 

 

A7. Many guides about buying property in Spain assume that potential buyers actually have the money available, but if you are considering buying a house in Spain because you live and work here, or because you simply want to invest in real estate in Spain, you may want to consider taking out a mortgage with a Spanish bank. Whether you want to buy a finca, a holiday apartment or a new home, taking out a Spanish mortgage may be the right solution for you.

 

Interest rates in Spain vary, but are generally much lower than in the UK, and competition between Spanish banks is fierce. If you are interested in a property still to be built, you may find that the constructors already have an agreement with a certain Spanish bank for all mortgages and you are left with little choice. If not, you would be wise to shop around for the best deal. Don't accept the first offer. Ask for a copy of the first offer and then take it to a different bank to see if they can improve the offer - they often will. Then take the improved offer back to the original bank and see if they can improve their original offer!

 

You will be expected to prove ability to pay (i.e. wage slips from the last 3 months and bank statements of the last 6 months or, if you are self-employed, copies of your last 3 years accounts (with an auditor's stamp) and copies of you last 12 month's business bank statements and your last 6 months personal bank statements). Proof of payment based on your ability to pay with income received from renting the property will not be taken into account by Spanish banks. You will also be required to have a NIE (see above) in order to buy or sell property in Spain. Whether you intend to borrow in the UK or in Spain, it is a good idea to get at least a preliminary confirmation that you will be able to borrow what you need before you go looking at properties. You know how much you have to spend, and being an instant buyer can also give you a tactical advantage when bidding for, or negotiating the price of the property.

 

 

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Q8. Should I buy property in Spain as an investment?

 

 

A8. If you're buying a Spanish property as an investment, rather than as a permanent home, you'll probably be looking for a villa or apartment with good letting potential to enjoy the income it can generate. Many owners make a very decent living solely from letting their holiday homes. Location is everything especially when it comes to holiday letting. A private or communal swimming pool is essential for successful letting as is easy access to the beach, shops and nightlife. Your holiday let will also need to be within easy reach of an international airport with regular charter flights. One of the secrets of a successful letting villa or apartment is to include extra comforts such as central heating, log fires and thick rugs which enable the property to be let at almost any time of the year. Christmas, New Year and Easter bookings can bring in as much income as the high season lets. Quality and comfort will be appreciated by your guests. They'll probably come back year after year and tell all their friends about your villa.

 

 

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Q9. Should we retire to Spain?

 

 

A9. Many thousands of retired couples have successfully made a new life in Spain, enjoyed some of the happiest years of their lives here and just wished they'd made the move when they were much younger. The mild year-round climate, an active outdoor lifestyle and the company of like-minded couples are among the many attractions which induce so many pensioners to retire in Spain. Many older people have found that the climate, especially in areas such as the Costa Blanca, has worked wonders for their health and improved various ailments such as arthritis, rheumatism and asthma.

 

If you think you may be one such couple (or even if you're both convinced that moving to Spain is the right thing to do), discuss the proposed move in sufficient depth before taking the step of buying in Spain. Consider your own state of health and that of your partner. No-one likes to think about the possibility of a long term illness, much less their own mortality, but these are facts which have to be faced and it's better to do it before you move to a foreign country and culture. If either of you is in poor health you'll need to consider the availability and proximity of appropriate medical services. Maybe you should consider buying property in an area with all amenities on your doorstep in case one or both of you is unable to drive in the foreseeable future.

  

A good idea is to rent a villa or apartment in your chosen area for at least a few months before you buy anything. Get a real feel for the place and the way of life - all year round, preferably, not just in high season when resort areas are quite different than in the winter. You may decide that the lifestyle really doesn't suit you at all, that one or both of you is too homesick or that you like Spain but you've chosen the wrong area. All good reasons for dipping a toe in the water before you take the final plunge. Long term rentals are easily available in all the popular resorts. Many rentals are available at a cheap rate during the winter months so "try before you buy" - get to know other retired couples in the area and glean valuable information from those who've gone before you.

 

 

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Q10. Can I save money by buying inland?

 

 

A10. At the moment many small Spanish towns 15-20 minutes inland are extremely popular as the coast is becoming crowded. These country towns are recognising their popularity and are putting into place plans for the future. However, think about what you really want from your new property, if you are buying a property for your own pleasure and a rural retreat is your thing, fine. However, if investment is your main aim, you need to consider your target audience and look at whether the property has easy access to shops, bars, beaches - things that are all crucial when appealing to holidaymakers. Buying in the countryside also involves other considerations. If there is already an existing old farmhouse or cottage on the land and it is your intention to refurbish it rather than build a brand new home, there will almost certainly be restrictions on what you can do. If the plot is isolated, the cost of putting in services such as water and electricity may be prohibitive. If you are relocating to Spain, you may think you want to be living full-time on a complex, but with part-time residents always coming and going, and holidaymakers splashing in the pool every day in the summer, maybe this is not for you? Think with your head, not your heart, and don't get carried away.

 

 

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Q11. If I buy an off-plan property and my completed home turns out to be smaller than expected or is lacking certain facilities like the shared pool, what legal action can I take?

 

A11. In theory you should be able to either gain compensation from the developer or withdraw from the sale entirely, with your funds returned in full, plus interest. However, it depends on upon the scale of the discrepancy and the private contract you signed with the developer. This shows how important it is to insist on detailed and watertight contracts when buying off-plan. Without these it can be difficult to prove that the developer has not delivered a property with the characteristics that you agreed to buy.

 

 

Also, make sure that you keep all brochures and other sale material given to you at the time of buying off-plan. These can be used as evidence as to what you were led to expect from the developer, but many people throw this material away once they have signed a private contract.

 

 

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Q12. What is an Abogado?

 

A12. An abogado is a lawyer, one who is trained and licensed to practice law generally.

 

 

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Q13. Can I buy a car in Spain to use when I go to my apartment every now and then?

 

A13. Foreigners not living permanently in the country may buy a new car in Spain as long as they do not use it for more than 6 months in any one year (it does not have to be a continuous period). To buy you need to present your NIE and one of the following (although two would be on the safe side):-

  • An NIE number
  • Residence card
  • Rental contract on a Spanish property
  • Certificate of Residence from Town Hall where you are registered
  • Passport (and copy)

When you buy make sure you get all the necessary legal papers from the dealer. These should include:-

  • Vehicle circulation permit
  • Technical sheet referring to the car you buy
  • Guarantee/warranty
  • Instructions and handbook for that model
  • Proper invoice stating total price paid 
Also bear in mind – You will need to pay VAT (16%) and vehicle circulation tax – as in the UK.

 

 

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Q14. How does the exchange rate affect my purchase?

 

A14. The Sterling to Euro exchange rate changes all the time, so if you are buying property in Euros, this can mean the price of your property will increase or decrease as the currency changes. A difference of even one percentage point can make a difference of thousands of pounds overall. A specialist currency dealer often offers better rates than high street banks so it pays to shop around and get the best deal possible. All the major currency dealers advertise regularly in property magazines and local expat newspapers and are always pleased to help and offer advice so don’t be afraid to shop around for your currency.

 

 

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Q15. Should I use the lawyer recommended by the builder?

 

A15. It is always advisable to use the services of a lawyer acting independently of the builder’s office to avoid any conflict of interest.

 

 

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Q16. Should I have a penalty clause inserted into the contract
 

A16. It is a good idea to have a penalty clause inserted in the contract stating that if for any reason the vendor does not complete on the contract and wishes to withdraw, he must pay the purchaser an indemnity of double the amount paid as a deposit for the purchase of the property. A good lawyer will do this automatically but it is worth checking it has been done before you sign.

 

 

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Q17. Should we consider downsizing when we move to Spain?

 

 

A17. If you are moving to Spain on a permanent basis, this may be a good time to reappraise your accommodation needs. A smaller home with lower maintenance costs and less day-to-day upkeep may actually suit the Spanish lifestyle you are expecting more. It could well be worth looking at townhouses or low-rise apartments with gardens as well as villas with pools as these types of property very often offer easy access to restaurants, supermarkets, doctors and hospitals.

 

 

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Q18. Do we need to learn Spanish?

 

 

A18. Not necessarily as most expatriate communities are multilingual and the Spanish people in the towns and tourist areas like to think they have a good command of the English language and enjoy conversing in English. However, if you are thinking of living near a village or in a remote area, a fairly decent understanding of the Spanish language will be necessary. Of course even basic language skills will enhance your enjoyment of the country and its people and help you become integrated. A common misconception is that certain phrases sound like the English equivalent, but this is not always the case:- For example, ‘estoy constipado' means ‘I have a cold' and ‘estoy embarazado' does not mean ‘I am embarrassed' but ‘I am pregnant'!

 

 

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Q19. Do the Spanish still have a mañana, mañana philosophy?

 

 

A19. Yes they do! If you buy a property for renovation, it is a mistake to think that the work will be finished on time or that the builders and plumbers will turn up when they say they will. Even just shopping for a loaf of bread can take a lot longer than you are probably used to, as what we often consider a chore the Spanish appear to think of as a social event, taking ages to pay for purchases while chatting to other people in the queue. If you are prepared for delays, then you will not be disappointed. It is important to be patient and generally adopt the same pace of life as the Spanish have lived for thousands of years.

 

 

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Q20. Is it easier to buy straight from the developer and architect?

 

 

A20. Not necessarily as they are often limited in what they can show you. Try and look at the quality of developments built previously by the same developer if possible. Has the development matured well and stood the test of time? Most architects will have ‘drawing board' designs of standard villas. They should be able to show you ready-built villas conforming to their standard designs, so you can then see in advance what you are likely to get. If they can’t then avoid them! If you have specific ideas on design, you should be able to liaise with the architect and design a purpose-built property. A reputable agent will show you the builders' price lists as you visit various developments and you will be able to see the properties for yourself. Your lawyer will draw up a builder's contract, which will give a complete specification, reflecting the cost per square metre for tiles, the models and types of sanitary fittings, taps, doors, windows and so on, and a completion date should be fixed with a penalty clause for late completion.

 

 

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Q21. How do I know what I am allowed to build?

 

 

A21. To ensure that you will be able to build on the land you are buying, your lawyer should obtain a document called an Informe from the local Town Hall. This tells you exactly what the planning authorities will allow you to build, the total square metres that can be built and the maximum height of the building.

 

 

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Q22. When is the best time of year to buy?

 

 

A22. There isn’t really a perfect time of year. If you have the luxury of time, consider renting in an area you think you like so you can get to know if you really do like it before you buy or visit out of season. We all know Spain is hot and sunny most of the time, but what is it like in November or February? Will you still like it? Don't try to buy in the summer tourist season, choose an alternative time of year when there are fewer people around and the weather is milder. However tempting it may be, don't buy the first property you see! Once you think you've found the property for you, go back to it at least three or four times at different times of the day before you make your final decision.

 

 

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Q23. Will I be able to find work in Spain?

 

A23. There is a high level of unemployment in Spain, and it is often difficult for foreigners to find work. There is often temporary and seasonal work available for example in bars and restaurants in tourist areas. Work can also usually be found as an English Teacher in one of the many language schools, although the better jobs will go to those with a qualification such as TEFL. A good knowledge of Spanish is normally essential for most long-term jobs.

 

Job centres in the UK have details of vacancies throughout the EU, supplied to them through the EURES network, which supports free movement of workers within Europe. As well as UK job centres; EURES can be contacted through Job Centres in Spain (Oficinas de Empleo). For more information visit  http://europa.eu.int/eures/ call 0114 259 6190.

  

Employees may wish to seek legal advice before signing any contract for work. Companies with over fifty employees will normally have a trade union representative who can advise on basic rights and recommend a labour lawyer.

 

Those looking for work are expected to support themselves while doing so. Unemployment benefit may be transferable to Spain for a limited period. Spanish benefits are not usually payable to non-Spanish nationals.

 

Further information: INEM (National Employment Office). INEM: c/ Espartinas 10. 28001 Madrid. Tel: 91 576 89 02 
 
Q24. How much does the estate agent charge?
 
A24. As in the UK the estate agents fee is included in the sale price of the property and is often asked for in cash at the time of completion. Some unscrupulous estate agents do indeed add extortionate levels of commission if they think the property is well priced and they can get away with it. This is another reason why having a broker working for you, the buyer, makes sense as we look after your interests and not those of the seller. We only deal with reputable estate agents and they have an industry standard commission of 5% of the sale price achieved. We in turn derive our income by sharing the estate agents commission for the introduction of the buying customer. Remember the estate agent has a vested interest in selling you a property on their books, we have no such vested interest.  We strive to find you the property that most suits your total requirement and if you purchase we not only receive a commission but make a new friend and we will still be there for you after you move in to help with any problems.
 
Can someone put in a offer of less? Unlike in the UK estate agents do not look for sole representation when selling a property and it is quite normal for a property to be marketed with multiple agents. We have seen properties for sale in at least a dozen agencies and often at different prices. The price difference is usually that one estate agent is asking a higher commission than another and part of our service is to find the agent that has the property at the lowest price. Just now it is a buyers market in most of the Costa's with more properties for sale than there are buyers and the asking price may well be negotiable. We can check on the prices achieved for similar properties, how long has the property been for sale, is a quick sale required and any other reason that may lower the final price.
 
Q25. How do you provide a service FREE of charge? 
A25. We get our income from the sales commission included, by the vendor, in the purchase price of every property. This is the equivalent of estate agents charges in the UK. The estate agent will earn a commission whether you use our service or not but what could be better than having that agent pay us to look after your interests. See also A24.
 
A26. The national public holidays in Spain are as below but there are also many other local public holidays

Jan 1              Día de Año Nuevo (New Years Day)

Jan 6              Dia de los tres Reyes (12th night, when Christmas presents are given)

Mar 19          San Jose (Father’s Day)

Variable         (Viernes Santo (Good Friday)

Variable         Dia de Pascua (Easter Sunday)

May 1            Dia de Trabajo (Labour Day)

June 24          San Juan (St.John’s Day)

Variable         Corpus Christi

June 29           San Pedro y San Pablo (St. Peter & St. Paul)

Jul 25             Santiago (St. James, patron saint of Spain)

Aug 15           Asuncion (Assumption)

Oct 12           Dia de la Hispanidad (Columbus Day)

Nov 1            Todos los Santos (All Saints Day)

Dec 6            Dia de la Constitución (Constitution Day)

Dec 8            Inmaculada Concepción (Immaculate Conception)

Dec 25          Día de Navidad (Christmas Day)


 


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