Brexit has finally finished and the UK is formally outside the European Union. One of the most frequent questions we have been asked recently is how has this changed the purchase process for British buyers. The simple answer is, it has not.
There is no difference in the purchase process for EU citizens and those outside the EU. Once a suitable property is found, this process can be neatly broken down into three steps:-
Step 1: Sign Reservation Contract
Signing a Reservation Contract effectively removes a property from the sales market and secures it for a prescribed period of time – usually 30 days. This allows your solicitor time to conduct their due diligence on the property to ensure all permits and licences are in place, the seller is entitled to sell the property, and there are no debts registered against the property.
The Reservation Contract, signed by you (or your solicitor if Power of Attorney is given) and the seller, confirms the agreed sales price. It is essential that, when travelling to Spain to view properties, you have funds available to pay the Reservation Deposit. This is usually €6,000 and can be paid by credit card or bank transfer to your solicitor.
To draw up the Reservation Contract, we require a copy of the passport of all the buyers and, if obtained, NIE numbers. If you do not have your NIE numbers already, which is a little like a National Insurance number, inform your solicitor so they can apply for these.
Step 2: Private contract
This is the point at which a sale becomes legally binding and we firmly recommend a local, independent lawyer is used at this stage if you have not done so already.
In Spain it is customary that the lawyer representing the seller will draw up the terms and conditions of the contract. Your lawyer will check these conditions on your behalf.
The contract should include payment terms and an estimated completion date. Your lawyer will also conduct a full conveyance of the property and will outline the total costs of the sale, having calculated fees and taxes. The fees are generally as follows:-
Stamp Duty: 8%
Solicitors Fees: 1% +VAT
Notary & Registry Fees: 1%
As such, we advise buyers at allow 11% of the purchase price to cover purchase costs.
Step 3: Completion, the Public Notary
The formalities of a purchase are completed before a Public Notary, an independent referee who oversees the sale and ensures the parties have complied with legal requirements including payment of appropriate taxes. This is the day the agreed balances are paid, the taxes and fees are paid, and you take ownership of the new property.
You will receive the keys to the property this day and become the legal owner. Final registration of the title deeds is likely to take between 2 to 3 months from the time the Land Registry receives all the paperwork.
Finance on Spanish Property
British buyers will see a difference if they require a mortgage though. EU citizens can generally obtain finance up to 70% of the property value subject to their status. For non-EU citizens, which now includes those in the UK, the maximum loan is 60%. As such, this will limit options for those who are not cash buyers; taking purchase costs into consideration as to, buyers will need at least 50% of the property value in cash to purchase.
If you are planning to move to Spain full time, once here you will need to apply for residency and switch your driving licences to Spanish licences but this is separate to the house buying process and again something your solicitor will be able to assist with at the suitable time.