Do´s and don´t when buying property in Spain

dos-and-donts

 

 

 

 

 

 

 

Do’s & don’ts when buying in Spain.

DO’S.

  • Make your budget.

Apart from the price of the property you should consider other costs related to the transaction such as follows:

  • Taxes, Notary and Land Registry: You should consider 10%-12%.
  • Spanish Lawyer fees*
  • Surveyor** although it is not mandatory to ask for a survey, we would recommend to have one in order to be 100% sure about what you are buying.
  • Real Estate Agency fees: if you are using a real estate agency for the search they will charge a percentage of the price, depending on the region although the norm is that this is paid by the seller.
  • * although it is not mandatory to instruct a lawyer when buying in Spain, because the Notary carry out the main checks (charges etc) we strongly recommend you to instruct one to ensure that your interests and investment are properly protected.
  • Ensure you have 30% for the mortgage deposit plus 10% for the Notary, taxes and Land Registry fees.

Nowadays, most of the banks are not offering mortgages which exceed 70% of the price, so you will need to ensure you are able to pay a deposit of 30%, as well as paying the costs.

  • Decide what and where you want to buy.

Spain has different regions with big differences between them in terms of weather, lifestyle, tourism, etc and most importantly, in terms of price. We would recommend that you visit in winter so that you can get an idea of the way of life outside tourist season.

Once you decide where you are going to buy, you should consider the different types of properties you can buy, i.e. brand new, old property, off-plan property, urban or rustic land, and obtain legal advice to ensure you are fully advised on all aspects of being a new owner.

  • Check different options of mortgages.

Make sure you fully understand the mortgage agreement you are going to sign. We would recommend to ask for the mortgage deed to be reviewed by a lawyer in order to ensure it does not contains abusive clauses.

Look for the mortgage which is most appropriate for your capabilities and needs. There are a range of mortgages on offer and you should pay special attention to the interest rate and repayment period, fees for setting up the mortgage as well as early repayment and cancellation fees.

  • Reserve the property and sign a “contrato de arras”.

If you find “the” property, you will have to reserve it while your lawyers are dealing with all the checks that the transaction needs to ensure that you are buying safely. You will need to pay a reservation fee of around 3000 Euro which will take the property out of the market. Then, once your lawyer is happy with the legal documentation, you will be asked to pay a deposit of around 10% with the signing of the purchase agreement (contrato de arras) and the rest will be due on completion.

Signing an “arras” contract means that both parties have the right to withdraw:

If you decide not to proceed with the transaction you will lose the deposit, but if it is the seller who withdraws, or if the property has been misrepresented, you will be entitled to claim for double of the deposit.

  • Consider engaging a surveyor.

You may consider that the property needs to be surveyed by a professional with appropriate experience and qualifications. That is very sensible, but you will find that some Spanish estate agents will discourage this.

  • Find out about the annual expenses of owning a property in Spain.

Be certain of the likely annual expenses you will incur, including service charges, property tax (IBI), non-residents income tax, wealth tax if applicable, electricity, water, gas, etc.

  • Hire a Spanish lawyer.

All of the above-mentioned advice can became a terrible bureaucratic fight if you do not engage the expertise and help of an independent Spanish lawyer.

A Spanish lawyer will guide you through the entire process, avoiding extra costs and which is more important, ensuring that the property you are going to buy, has all it needs to be transferred (no charges), no development plans affecting it, etc.

You can use a Spanish Lawyer based in Spain or in the UK. Please note that there are several UK law firms with an in house Spanish lawyer able to provide legal advice without you having to go to Spain.

  • Make a Spanish Will.

We would recommend to sign a Spanish Will when acquiring a property in Spain.

DON’TS.

  • Do not be forced by the bank to get their insurance or other bank products.
  • Do not sign any document if you do not understand them.
  • Do not pay more than what was agreed.
  • Do not sign any document without a Spanish lawyer.
  • Do not buy a property without taking legal advice.
  • Do not pay large amounts of money to developers who do not offer you the security of a Bank Guarantee for these payments.
  • Do not be tempted to declare a lower property value than the actual purchase price.

In the past it was quite common to declare a low value for the property in order to minimize the transfer tax. Nowadays, the Spanish treasury will prosecute anyone who declares a lower price. The wrongdoer will be punished and additional interest will be applied. On the other hand, when you decide to sell this property, you will be liable for Spanish capital gains tax on any profit made and, you will be liable for tax on a much larger profit when you sell later. The safest way is to ask at the payment office of the nearest tax agency and they will give you the exact value of a particular property.

By Claudia Font & Antonio Guillen

Tell me more about Gunnercooke!

http://http://www.telegraph.co.uk/finance/businessclub/business-club-video/legal-sector-videos/12213217/gunnercooke.html

What is Gunnercooke? Very often I get asked this question by clients and contacts. They have heard that we are a diffent law firm to the standard, traditional and rigid law firms. However they do not know what makes the difference between us and other law firms.

See above an interesting video made by The Telegraph on our law firm Gunnercooke LLP which explains the ethos of the firm. It summarises quite well who we are, what we do and what we are aiming to achieve. You will note that our priority is client service. We believe that by focusing on clients, the rest (the financials, the success, the reputation) will follow eventually.

Interestingly, Gunnercooke LLP celebrated its annual symposium last week in Oxford where around 100 plus lawyers gathered to talk about the trajectory of the firm and listened to excellent speakers who talked about various subjects from business development to client quality service and even how to be happy! It was a good opportunity for lawyers from different departments to talk about what they are doing and the future of the legal profession.

oxford-college

It was also positive for us, the Spanish lawyers at Gunnercooke, to discuss burning subjects of today with other lawyers such as Brexit, the economy and how this could affect our clients and their interest in Spain.

A wonderful and enriching experience that we are eager to repeat next year. Specially in such a historic (and magical!) place as the Oxford College!!

 

 

 

 

 

Antonio Guillén and Claudia Font, Spanish lawyers at Gunnercooke LLP, at the annual Gala at the Oxford College.

People walk over Westminster Bridge wrapped in Union flags, towards the Queen Elizabeth Tower (Big Ben) and The Houses of Parliament in central London on June 26, 2016. Britain's opposition Labour party plunged into turmoil Sunday and the prospect of Scottish independence drew closer, ahead of a showdown with EU leaders over the country's seismic vote to leave the bloc. Two days after Prime Minister David Cameron resigned over his failure to keep Britain in the European Union, Labour leader Jeremy Corbyn faced a revolt by his lawmakers who called for him, too, to quit. / AFP / Odd ANDERSEN (Photo credit should read ODD ANDERSEN/AFP/Getty Images)

BREXIT AND SPAIN: TWO MONTHS LATER

WHAT WOULD AN EVENTUAL BREXIT MEAN FOR THOSE BRITISH THAT WANT TO BUY PROPERTY IN SPAIN?

How would it affect British people who own properties in Spain? And those who are in the process of buying them?

It is too early to know what is going to happen but the more immediate effect is the depreciation of the sterling pound. If you already own property in Spain then no need to panic and as the old saying states: Keep calm and carry on!

If you are planning to buy a property in Spain or have fallen in love with a specific villa and do not want to wait until there is more certainty about the future of the UK in the European Union, you can compensate the depreciation of the sterling pound with some measures. Below you will see some examples:

  1. You could offer to pay the purchase price in Sterling pound. This may prove interesting for the seller, especially if it is a British seller (something not that unusual these days). By doing this you will not be exposed to the depreciation of the pound and you will not pay a higher price for the property in Spain.
  2. If the above is not possible, you should then use a foreign currency broker who will be able to buy the Euro for a more favourable rate than the one offered by your High Street bank. Unless you are a High Net Worth Individual who has the privilege of having a bank account with a private bank, in which case you may get a similar rate to the one offered by a Foreign Currency broker.
  3. Finally, the economy in Spain and in the UK are not that stable. Use this point to negotiate a reduction in the price. In spite of an increase in property demand in certain areas of Spain, the property market is still far from recovered and the current economic and political uncertainty could help to get a substantial reduction in the price that could compensate the money that you may lose with the depreciation of the sterling pound.

These are just a few recommendations. Obviously, don´t forget to instruct an independent lawyer for your purchase. Whether is Antonio Guillen and Claudia Font at Gunnercooke LLP (or another lawyer) do not make the mistake of using a lawyer recommended by an estate agent or the seller because that could lead to a conflict of interest and eventually to a problem.

 

 

3rd Edition of Spanish Festival

FESTEJAR 2016

Festejar 2016

 

 

 

 

 

 

 

From left to right: Virginia Moreno, Claudia Font, Jesus Torre, Mariluz Simal, Antonio Guillén and Angel Miguelez.

The Spanish Desk from Gunnercooke attended last night the opening of the FESTEJAR festival in Manchester. It is the third edition of a Spanish festival in which, for four days (from the 1st the the 4th of September), visitors will be able to enjoy live music, food and drinks with the greatest “Iberian” atmosphere.

The festival brands itself as one with a “Spanish soul with a Manchester heart”, and we could not agree more.

As Antonio Guillen, Honorary Consul for Spain in Manchester, stated, he “really enjoyed the two previous editions of the festival, where Spanish food, music and drinks took over Albert’s square in a very civilised, tolerant and vibrant event”.

The festival gives us all the opportunity to check the good relations that exist between British and Spanish people, in such an international city as Manchester.

Giving the atmosphere that surrounded the opening last night, there is no doubt that the third edition is going to be probably even better than the two previous ones.

If possible, clear your schedule for this weekend and join us at FESTEJAR!