Buying a property, made simple...
Buying a property is always an exciting time but it is important to know some
basic information before you start your search. We have put together some information that you
should find useful and help avoid any unpleasant surprises during your purchase.
Should
you need any further information or help with finding your ideal
property, please contact us where a member of the team will be happy to
help with any queries you may have.
Which Area is Best For You
If you live
here or your a frequent visitor, you probably know where you want to buy your
new home. But if that is not the case don't waste your own time, or the time of
the owners by visiting homes without knowing anything about the location they
are in. We would suggest taking a look around the island first before deciding
your desired location. We would recommend you to register your
requirements regarding your new home so we can do some of the hard work for
you. Do you enjoy golf, are you a beach lover, is being situated close to
the airport a necessity for you? All of these things will help us
in finding the perfect location and property to suit you.
How to Buy...
If you are a cash buyer then great! If you
require a mortgage generally a resident is permitted to borrow up to 80% of the
mortgage companys official evaluation as opposed to the amount you are actually
going to pay. A non-resident can lend in between 60% and 70% of the evaluation
over a maximum period of 15 to 20 years. To apply for a mortgage you will
require your passport, a reference from your bank in your home country and proof
of income. On average a mortgage can be arranged in-between 3 and 4 weeks.
Also take into consideration that you will need approximately 10% on top of
the purchase price to cover all purchase costs.Click here for more mortgage
information
NIE
Numbers...
All EU non-residents require a personal
identification and tax number to either buy a property or a car here in Spain.
This is know as an NIE number. Once applied for this can take up to six weeks to
be issued so we recommend you apply early as you must have this number within
one month after completion for the payment of taxes or you will be liable for a
fine of 5% of the total amount of taxes to be paid. Please note this does not
affect your status in the UK. You can either apply for an NIE yourself at the
Department of Estranjeros or through your chosen legal advisor.
For a fee of approximately 100 euros we can provide you with a
recommended hestoria who will do all of the work for you.
Your New Home...
Once you have found your new home and
your offer has been accepted an Option Contract will be signed which can be in
as little as 2 days. However,we recommend you
ascertain the following information prior to making an offer (we will help
wherever possible):
* Ask if the owner is aware of any
extensions or renovations made without the relevant building permissions, if
there has been extensions ask to see the certificate of approval. If there are
known issues with planning permission ask your legal representative to contact
the owner. If nothing is declared your mortgage provider or legal representative
will ask to check the Land Registry certificate which will answer your
questions.
* What property taxes are currently
being paid by the owner as there is an annual tax on the value of the property
(IBI) which usually often has no relation to the value of the property but
obviously the lower the better
* What, if any, are the community
fees?
* What is the stated price
on the Escritura (Deeds) as this is usually lower than the price you will be
paying but check that it is not to low.
* Check the supply of water and electricity and ask for the
last few bills.
* Before you make
an offer make sure your mortgage application has been pre
approved.
* Included Items, it is
important to clarify what items are going to be
left. Dishwasher, washing machine light fittings etc, all these
need to be negotiated into the price before you offer.
Option Contract...
Once all the questions to the above
have been answered and you are satisfied, if your offer is accepted you will be
asked to sign an Option Contract. This is normally drawn up by the buyer's legal
representative. Normally this can be anything from 2-7 days after the offer has
been accepted.
You will then be expected to put down a 10% deposit of the
agreed price at the time of signing or within an agreed time period, again
normally this is within a week of signing the Option. The Option Contract
details the specifics of the agreement, the parties involved and the agreed
price and the agreed date of completion. In addition it should
state that the property is to be sold free from charges, tenants, town hall
fines and forced sale orders, and where appropriate that the water and gas are
legally connected.
Also at this time have a list made of all the agreed item to be left
in the property.
Make sure you read it through carefully, get your bank to
study it or your chosen legal representative. Then all you have to do is make
sure to get the final balance to them on time, otherwise you could lose your
entire deposit. Equally, if the seller decides to back out, they are required by
law to pay you up to twice the deposit.
Legal
Advice...
Spanish Law is very complex and forever changing, ask your
mortgage provider's lawyers or your chosen legal representative to look at the
Escritura (Deeds), you want to buy a house that is free from tenants or family
members! At the same time they will look to see if all of the additions to the
property are legal, and whether there are any outstanding debts, as here in
Spain you can be liable for the previous owner's debts if these go undetected
during your purchase. If there are any discrepancies within the Escitura (Deeds)
that you or your legal advisor are not happy with, it is possible to cancel the
option contract.
Completion...
Completion can
take place on what ever date you and the seller agree upon, from as little as
one week up to one year if needed. This date will be detailed in the Option
Contract.
If the purchase is financed by a mortgage, the bank
representatives will be present in order to authorise the new mortgage and pay
the seller. If you are not able to attend on the specified date you are able to
grant your lawyer power of attorney so he or she can complete on your
behalf.
Completion will take place between the relevant parties in front of a
Notary who will witness the signing and transfer of the title deed. The Notary
acts for neither party but is a government official responsible for the
execution of public documents. They will confirm the identity of both parties,
and will check the Land Registry to verify legal ownership and that there are no
out-standing debts or orders against the property.
The balance of the
purchase price will be paid to the seller at this time, and any remaining
purchase tax and fees will also be paid if going through a mortgage provider The
Escritura will then be registered by the lawyer in the corresponding Property
Register. Once the Deed is signed you will be given the keys to your new
property and a copy of the title deed, until the formal deed comes to you from
the land registry or your mortgage company if they have acted on your behalf.
Transfer of utilities...
After completion you
need to instruct your legal representative or mortgage provider to transfer all
utilities into your name and arrange direct payment through your bank account
here in Mallorca.
Buying
Costs...
As mentioned above, we suggest you keep 10% on
top of the purchase price to one side, as you will endure purchasing costs. The
total amount is usually in-between 7% and 10%. In the Balearics it is known that
the buyer pays all costs, below is a breakdown of these:
Legal fees - allow between 1-3% of the
purchase price for Notary fees, legal fees and property
registry.
Plusvalia Municipal - a
municipal tax paid each time a property changes hands, usually paid by the
buyer. Complicated to calculate, it directly relates to the length of ownership
by the seller and increase in value on the land, but is usually less than1% of
the price
Vat/Tax - New homes
carry 7% IVA + 0.5% stamp duty, and resale homes carry a 7% transfer tax. When
determining the amount to be declared on the Escritura, the purchaser should
ensure they do not under declare. Guidelines have been laid down by the tax
office for the minimum value they will accept, approximately twice the rateable
value quoted on the latest rates invoice for the property ( IBI ). If it is
deemed too low, they may reassess its' value and send a demand for the
additional tax due. It may be difficult to argue against this. We recommend you
ask the advice of a legal advisor.
Plots with multiple sub plots with
building permissions, 16% IVA + 0.5% stamp duty is due. Otherwise the normal
taxes apply.
Mortgage Fees - your
mortgage lender will detail their fees, this is normally between 0.5% and
1%.
There are also annual property taxes such as refuse collection and
street lighting etc, the cost of this can vary between 1000 and 2500 euros but
this depends on the size of your home and the municipality in which you
live.
Don't forget we're here to help with every
aspect of your purchase and to ease some of the pressure
envolved with
purchasing a property. If you have any queries or concerns, please don't
hesitate to contact a member of the team.
