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BUYING GUIDE

BUYING GUIDE
 

Buying costs

Allow 10 per cent of the purchase price of your intended property to cover buying costs. Buying costs include the notary’s fees, Land Registry fees, mortgage fees (if applicable), legal fees and transfer tax. No transfer tax is levied on new build properties but VAT is charged at 10 per cent. So, if you are looking at a re-sale property that is being sold, for example, for €300,000 then please understand that, one way or another, it will cost you around €330,000 by the time all the costs have been paid.

The buying process

 
There are a number of different ways to reach the signing of the Escritura (“Completion”) at the Notary’s office, however the following is a sensible way to proceed and allows you to reduce your risk.  Do not listen to selling agents who tell you that the way they do it is the only correct way, and their “legal department” will handle it all for you.    It is essential for your protection that you instruct your own independent legal adviser to act for you.
 

1. First, agree through us a deal with the seller in principle for the property you want on a “subject to contract” basis. This will include not just the purchase price but also what is included (such as any furniture and fittings), together with some idea of when Completion will take place. We recommend that an inventory listing items included/not included is prepared.
    
2. At the same time, you will need to pay a deposit (deductible from the sale price) to us, as a sign of good faith.  The amount of the deposit will vary depending on the price, but will normally be in the region of €5,000 to €10,000. This deposit is fully refundable, should the sale fall through for any reason. (Please note, some other agents will insist on you paying a non-refundable deposit, but we think this is inappropriate at this stage, before you have taken legal advice).
    
3. We then advise your and the sellers’ (if any) legal advisers of all the details of the sale. We do this by issuing a Confirmation of Sale document to all parties.
    
4. At this stage, nothing is legally binding on either party but normally the seller will agree to stop actively marketing the property for a specific period (typically 14-28 days), until the signing of the contract (contrato de compraventa).

5. Your lawyers will carry out their investigations - these will confirm whether everything is in order, for example that the vendors are indeed the lawful owners and that there are no charges, encumbrances or legal problems with the property. They will also check to see if all taxes have been paid.

6. You can then proceed to the next step which is the signing of the contract (contrato de compraventa/arras) by both parties and payment by you of the balance of the 10% deposit. The contract will state the definitive deal, include the inventory mentioned above and state the date of Completion, which can be an “on or before” date.  If the seller then refuses to sell to you, he will have to compensate you by paying you twice the amount of the deposit you paid him. If you do not proceed to Completion, you lose your 10% deposit.

7. The signing of the Escritura on Completion must be done in front of a Notary, whose duty it is to certify the Escritura and to ensure that all is in order, including the description of the property and confirmation of payment by you of the purchase price to the seller. This is done, where necessary, with the aid of a translator. The Escritrura is the only conclusive proof of transfer of ownership. The notary requires all the original documentation relating to the identification of both the vendor and purchaser and all property documents and proof of tax and other payments.
    
8. Wherever possible you should attend Completion and the signing of the Escritura, although your lawyer can do this for you under a Power of Attorney. At the signing of the Escritura, you will pay the remaining purchase money to the seller (with relevant funds being paid to discharge any mortgage owed by the seller) and receive the keys to the property and immediate access to it.  If you are having a mortgage, your Bank will also attend.

9. Ensure your lawyer registers the Escritura with the Land Registry. This ensures that there is clear, unequivocal, public proof of your ownership.

10. Finally, make sure that you have insurance for your property, ensure all service contracts are in your name (telephone, water, electricity etc.) and register your residence at the property (empadronamiento – the equivalent of a local census database) with your local Town Hall (ayuntamiento) – all of which your legal adviser can help you do.

 
Requirements

You must have an N.I.E.  You cannot buy a property in Spain without an NIE number (Numero de Identificación de Extranjero), which is an identity number for non-Spaniards.   We can put you in touch with an adviser who can help you apply for your NIE number. Although the application process is simple, it can appear complicated, as the application form is of course in Spanish and you will need assistance at the appropriate office.

Applying for “Residencia” is a separate process and is NOT required for property purchase. For “Residencia”, please see below.

You must have a local Spanish bank account.  There are a number of different banks in Lanzarote, including some well-known international and UK banks. Some banks specialise in providing a service to English speakers.
We can give you a choice of suitable banks, who can speak English and are used to looking after our clients.
 
Tips: make sure that all your banking communication is in English (bank statements, internet banking etc.). Always check the costs of maintaining your account (as these can vary greatly between different banks) and particularly investigate the charges associated with transfers of money from the UK to Spain and their receipt into your Spanish bank.
 
We can also recommend currency exchange specialists, where you will you will normally get the best rates available and much better than your bank will offer you.
 
Mortgages
 
Mortgages are available but the variety and type of mortgages on offer have decreased markedly over the past few years, along with the percentages being lent by the banks. Currently, Spanish non-tax residents are normally being lent a maximum of 70% of the “lower of ” valuation or purchase price. Tax residents in Spain are normally being offered a maximum of 80%. However, to achieve the maximum percentage you have to be an A1 client with ‘spotless’ documentation, most probably a permanent employment contract and a low debt/income ratio, so it is wise to expect a lower offer.
 
Residencia
 
To buy a property, you must have an N.I.E. - see above. However, having an N.I.E. does not mean that you have “Residencia” or are tax resident.
 
These are the stages towards full tax residency:-
 

1. Empradronamiento - (local census database)– you will need this to obtain your N.I.E, and you will need to produce documents to show that you are living in the relevant municipio, e.g. rental contract. Applications are made at your local ayuntamiento.
    
2. N.I.E. - (Numero de Identificación de Extranjero – “foreigner” registration ID number - needed for any financial transactions) – application must be made with the appropriate completed forms and documents at the office in Arrecife.
    
3. Residencia - (mainly for Canarian resident discounts) - again the relevant forms need to be completed and documents produced. You must get an appointment at the office in Arrecife and this at times can be up to three months ahead.
    
4. Tax Residency - It is essential that you fully understand the difference between being resident and being tax resident in Spain. They are quite different and can have a profound impact on your finances and rights, including healthcare and taxes, which include inheritance tax. This is a complex subject, where you will need expert advice – we can recommend a tax consultant for you.

 
We can arrange assistance for you on all the above. Unless your Spanish is of a high standard, we do not recommend you attempt to do it on your own!
 
Volcánica Properties
November 2017

 
These are general guidelines only and you must take expert advice before taking any action