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Purchase Process
STEP 1 - SOURCING
It is straightforward for Kuwaitis to buy property in Spain. After finding the perfect property the buyer makes an offer through Great Portland. If this is accepted, then the buyer and seller sign a preliminary contract (contrato privado de compravento) and the buyer pays a deposit, typically 10 percent of the purchase price.
As you don't need to be resident to purchase a property, you can buy an apartment before you arrive! However, this naturally comes with certain risks and we strongly recommend that you view the property you want to buy and don't cut corners on the process.
The buyer then arranges any mortgage they require through our finance partners in Spain. The contract of sale (escritura de compravento) is usually signed in front of a notary, at which point the full sale price, taxes and other costs become due.
Buying off plan or a new-build
When buying a new-build or off plan apartment, at minimum you should:
- Check the seller's company exists and is officially registered; check online at www.registradores.org (Spanish only).
- Ensure that the project is registered with the land registry.
- Check that planning permission has been granted by enquiring at the local city hall.
- Do not sign a contract you don't understand.
- Ensure that any translation is done by an independent party.
- Demand proof that any sums paid (e.g. a deposit) are being held or correctly.
- Proof of insurance/government scheme that will refund your money if the property is not built.
STEP 2 - SURVEYS + CHECKS
At Great Portland we highly recommend, at minimum checking:
- The credentials of any lawyers used
- the land registry (Registro de la Propriedad)
- that appropriate planning permission has been obtained (if applicable)
- that there are no outstanding debts attached to the property, such as a mortgage;
- that the property is as described and structurally sound (either a surveyor or an architect can do this).
Most of this information can be provided by the land registry and accessed by making a request by email, phone, fax or in person. You can find the appropriate land registry office by visiting the national website: www.registradores.org
STEP 3 - LEGAL REQUIREMENTS + TAX
The services of a notary are not legally required to complete the sale, but it is advisable and required by many mortgage providers.
Paying the costs and taxes associated with buying a home can be completed by the buyer or their agent. It is the buyer's responsibility, however, to ensure taxes are paid.
The buyer is also responsible for registering the property. The notary may provide this service for a fee, and/or may notify the registry office that the sale has taken place, without completing full registration.
Fees and charges
Costs are primarily paid by the buyer, and vary from region to region. Many are negotiable – there are no fixed fees for lawyers or agents. Costs paid by the buyer are typically around 9 –14 percent of the property value and include:
- Property transfer tax 5–10 percent (existing properties);
- VAT (or IVA) at 10 percent (new properties);
- notary costs, title deed tax and land registration fee 1–2.5 percent;
- legal fees 1–2 percent (including VAT).
Capital gains tax
Spain has a capital gains tax of 21–27 percent and is paid on the profit of selling your property, i.e. the difference between the listed purchase price and the listed sale price. Thus if you pay €200,000 for a property and sell it for €250,000 you will pay capital gains tax on €50,000. However, if you previously accepted to list the purchase price as €150,000, you will then be required to pay a capital gains tax on €100,000.
Choosing a reliable lawyer
Any lawyer practising in Spain should be registered with the local bar association (Colegio de Abogados). They will have a registration number that you can ask for and then verify with the bar association.
STEP 1 - SOURCING
Most private investors from Kuwait buy newly built apartments or houses. There are various reasons for this. New properties are likely to be cheaper to maintain and more energy efficient, some offer a porter or concierge service and are often finished with the latest fittings.
They also have attractive payment plans in place where often only 20% is required on exchange of contracts, 10% 6 months after exchange and 70% on completion.
If the property is registered with the National House-Building Council (NHBC), it will come with a 10 year warranty and protection scheme. There are also specialist companies that provide warranties and insurance for new homes. Once you’ve found a home you like, your advisor will contact the seller with your offer.
Think About costs - Remember, you will have to cover not just the property purchase price, but expenses such as mortgage fees (typically anything between £0-£2000) and Stamp Duty on properties costing more than £125,000.
STEP 2 - SOLICITOR
After your offer is accepted, you will need to exchange solicitors details with the seller. A solicitor is a lawyer specialising in buying and selling properties that will prepare for you a contract for sale. They will also notify the Land Registry that you have bought a property and deal with your title deeds as well as carry out all necessary searches to make sure there are no planning or local issues that might affect the property’s value.
STEP 3 - SURVEY
If you’re buying with a mortgage, your lender is likely to conduct their own valuation. But even if you are paying cash, an independent survey is worthwhile to uncover any major faults before you invest. There are two main surveys available for those buying a property: a Homebuyers report and a full building survey.
A Homebuyer’s report is the cheaper option and is likely to be adequate if the property is in a reasonably good condition. The full building survey is more expensive as it assesses the property’s condition in more detail. So it’s a sensible option if the property you’re interested in is much older or has listed status.
If you are buying in a new build development, consider hiring what is known as a snagging company, to catch any faults or hitches before you move in. These could range from poorly fitted cupboards or more serious issues with the building’s structure. Spotting these problems before you buy the property, and asking the builder to correct them – could save you money – and months of hassle.
STEP 4 - FINALISE OFFER + MORTGAGE
Once the survey is complete you might want to renegotiate the purchase price.
There are two reasons for this:
- Your survey might uncover problems with the property that will be expensive to fix. You can use this information to ask for a reduction in price.
- The lender might value the property at a lower price, leaving you with a shortfall. This means you won’t be able to match the asking price or what you originally intended to offer.
STEP 5 - EXCHANGE CONTRACTS
If there are no delays, then you should receive the contract to sign and complete the sale right away.
Before signing the contract, go through it with your solicitor to check that all the details are correct.
Make sure you understand what the seller has agreed to leave in the property and that all your queries have been answered.
At this stage, you and the seller are committed to the sale.
The seller might also ask you to pay a holding deposit to show intent.
Once you’ve exchanged contracts you’ll need buildings insurance in place to cover the structure of the property.
STEP 6 - COMPLETION + FINAL STEPS
- The remaining money owed to buy the property is now transferred from your solicitor’s account to the seller’s solicitor’s account.
- You will now need to pay your solicitor’s bill (minus the deposit and local searches if you’ve already paid them). Typical cost: £500-£1,500 plus 20% VAT.
- Your solicitor will register the sale with the Land Registry for properties in England and Wales. In Northern Ireland it needs to be registered with Land and Property Services and in Scotland with Registers of Scotland.
Buyers of residential property will have 30 days from the completion date to pay Stamp Duty. Your solicitor will usually arrange this for you.