How to Buy Property in Spain:
A Guide for Expats
Getting Started: NIE, Bank Account, and Budget
Before you even begin looking at properties, you need to prepare the basics.
Obtain a NIE (Número de Identificación de Extranjero)
This is a mandatory foreigner tax identification number required for any property purchase or tax payment in Spain. Apply for it early at a Spanish consulate or a local police station, as the process can take a few weeks.
Open a Spanish Bank Account
You'll need a local bank account to handle payments, including the deposit, taxes, and ongoing utility bills.
Plan Your Budget
Spanish lenders typically expect a 20–30% deposit, and you must also factor in significant closing costs. Save at least 25–30% of the purchase price to cover the deposit and these fees. It's also wise to monitor currency exchange rates if you're transferring large sums to avoid unexpected costs.
Finding a Property and Choosing an Agent
You can search for properties on popular websites like Idealista, Fotocasa, and Kyero, or work with local agents. While a reputable estate agent can be a great help, exercise caution:
Dual Agency
Many agents in Spain work on a dual agency basis, representing both the buyer and the seller. Clarify their role and confirm their impartiality.
Commission
Agent commission, typically 3–6%, is usually paid by the seller. However, confirm this upfront, as some buyers may be asked to pay a small fee (1–3%).
Credentials
A good sign is if the agent is a member of the local Colegio de Agentes de la Propiedad Inmobiliaria (COAPI).
When viewing properties, try to visit in person, inspect the interior and exterior thoroughly, and talk to neighbours if possible. An independent lawyer can also help you vet deals from the outset.
Making an Offer and Reservation Contract
Once you've found a property, you'll make a written offer. If it's accepted, you'll typically sign a reservation agreement and pay a small deposit (often €1,000–€5,000) to take the property off the market for a short period (e.g., 1–4 weeks). This time is crucial for completing due diligence.
After due diligence, you'll sign the main purchase contract (contrato de arras or option to buy contract) and pay a larger deposit, usually 10% of the price.
Due Diligence and Legal Checks
This is a critical step where you hire a Spanish property lawyer (abogado) to review everything. Key checks include:
- Property Title ("Nota Simple"): Your lawyer will get this official document from the Land Registry to verify the registered owner and check for any mortgages, liens, or debts on the property.
- Building Legality: Ensure the property was built with the correct permits. For new builds, check for the licencia de primera ocupación (occupancy licence). For older or rural homes, verify that any extensions or changes were legally permitted.
- Physical Condition: Consider a structural survey or architectural inspection to identify any hidden defects.
- Licences and Certificates: Your lawyer will confirm all necessary documents are in place, such as the Energy Performance Certificate (Certificado Energético) and up-to-date municipal tax receipts (IBI).
The notary, an impartial government officer, will also verify this information at closing, but your lawyer is your personal representative and is essential for protecting your interests.
Signing Contracts and Notary Completion
The final step is to formalise the sale at a Notary's office. All property transfers in Spain must be done via a public deed (escritura pública) signed before a Notary.
Mortgage (if any)
If you are getting a mortgage, the loan documents will also be signed at the Notary. Non-residents are typically limited to borrowing 60–70% of the property's value.
Notarial Appointment
At the Notary's office, the official reads out the deed terms, confirms identities, and ensures all taxes and fees are calculated. You then sign the deed and pay the remaining balance.
Deed Registration
The Notary will submit the new ownership to the Land Registry. You are only the formal owner against third parties once this registration is complete, which can take a couple of months.
Costs and Taxes
Budget for significant additional costs, which typically amount to 10–15% of the purchase price.
New Properties
- VAT (IVA): 10% on new homes or IGIC in the Canary Islands 7%
- Stamp Duty (AJD): 1.5%
Resale Properties
- Transfer Tax (ITP): 6–10% (varies by region)
- 6.5% in the Canary Islands, 7% in Andalusia, 10% in Valencia
Additional Costs
- Notary and Registry Fees: 0.1–0.5% and 0.1–0.25% respectively
- Lawyer Fees: Often 1–2% of the price, plus VAT
- Other Costs: Agent fees (if applicable), bank valuation fees, prorated community fees
After purchasing, you will have ongoing tax obligations, including the annual municipal property tax (IBI) and, for non-residents, a yearly non-resident income tax (IRNR) on the imputed rental value of the property.
Mortgages and Financing
Spanish banks lend to foreign buyers, but with different terms than for residents. Non-residents can typically get a mortgage for up to 60–70% of the property value, with fixed interest rates. You must provide proof of income, assets, and credit history.
Post-Purchase and Registration
Once the deed is signed, a few final tasks remain:
- Ensure the deed is registered with the Land Registry
- Update the ownership records with the town hall for IBI tax and with utility companies
- If in an apartment building, register with the community and understand the community rules
- If you plan to live long-term, apply for the necessary residency or visas
Regional and Property Type Considerations
Spain's 17 autonomous regions have different tax rates and property rules.
Urban vs. Rural
City and coastal properties are often more expensive but usually have clear legal status. Rural land can be cheaper but often has strict zoning laws, and illegal constructions are a risk.
Holiday Rentals
Be extremely careful if you plan to rent out your property short-term. Each region has its own licensing requirements, and some areas have strict bans or high fees on tourist lets.
Pitfalls to Avoid
Skipping Due Diligence
Always hire an independent lawyer to verify ownership, debts, and licences.
Underestimating Costs
Budget for the 10–15% in additional fees on top of the purchase price.
Ignoring Licences
Failing to check for proper building or rental licences can lead to legal problems and heavy fines.
Rushing
Take your time with viewings and checks. Buying "sight-unseen" is a major risk.
The Role of Lawyers and Notaries
In Spain, a Notary is legally required for the transaction, but a lawyer is not. However, a lawyer is highly recommended as they represent your personal interests, while the Notary's role is to ensure the legal compliance of the deed impartially.
Your Lawyer
Performs all due diligence, reviews and drafts contracts, and can represent you with power of attorney.
The Notary
Confirms identities, calculates taxes, and issues the public deed that makes the sale official.
By engaging both a local lawyer and the Notary, you ensure the purchase is valid and your investment is protected. By following these steps, you can navigate the process with confidence and enjoy your new home in Spain.
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