Glossary of Terms

Abogado -	Lawyer
Escritura -	Title Deed
Escritura de compraventa -	The Purchase Contract
Escritura Publica -	The Official Registered Title Deed
Hacienda -	The Tax Office
ITP -	A type of VAT on resale property (7% on property/land with property or 16% on land only)
IVA -	VAT on new property (i.e. bought from a developer). Currently 7%
Nota Simple -	A copy of the property deeds available from the Property Registry that will show details of any mortgages. Your solicitor will use this to prepare his searches on the property. This is not the same as the actual deeds (Escritura), which will be needed for completion to take place.
Notary -	An official who will witness the signing of the contracts, and who will satisfy him/herself that the contracts are valid and that the people who are signing the contracts are who they say they are.
Plus Valía -	Local Capital Gains Tax
Poder -	Power of Attorney

 

 

• At CasaCalida Properties SL we offer property on the Costa Blanca South, Costa Cálida & Costa de Almeria.

• The coast is lined with many beautiful 'blue flag' beaches, most of which have lifeguards on duty during the high seasons, offering facilities such as beach bars and restaurants, toilets, showers, children's play areas and even crèches.

• The Mediterranean is usually a calm sea which makes it relatively safe for all ages, and although tides do exist, they are rarely noticeable. The coastline is dotted with marinas, and Alicante has an international harbour from where one can take boat trips to the islands.

• There are many salt lakes along the coast, the area being one of the most important salt producing areas in the world, and the oldest in Europe. These help to preserve the micro-climate enjoyed by this region.

• A little further south along the coast you will find the Mar Menor ('small sea'). Strictly speaking this is a lagoon (nowhere is it deeper than 7 metres), although so large (170 square km) that is seems almost like a real sea. The Mar Menor is protected from the Mediterranean by a narrow strip of land known as La Manga ('the sleeve'), with just two small channels connecting the two seas. La Manga Golf Club is headquarters to the European PGA (Professional Golfers' Association).

• Alicante, Cartagena and Murcia boast many attractions, with many buildings of historical interest & beautiful shopping areas, with huge department stores.

• In the evening one can find lively nightlife, choosing between many restaurants and bars. There are busy night markets selling goods from all over the world.

• During the daytime there are lively street markets where one can buy fresh fruit and vegetables. The rich Mediterranean soil and mild winter weather is ideal for agriculture, and many vegetables are grown here on the Costa Blanca & Costa Calida and then exported to the UK for sale in supermarkets there.

• There are many traditional Spanish villages waiting to be explored just a short drive inland. With their traditional village squares surrounded by little bars and restaurants they are the perfect place to stop for refreshments.

• Costa Blanca & Costa Calida enjoy very mild winters. The daytime temperature in January is often in excess of 16°C (60°F) and by mid March this has risen to about 23°C (73°F). In August, the maximum temperatures peak at around 35°C (95°F).

• If you are here during one of the many religious festivals you really must go to see the processions. The streets are beautifully decorated in many colours with a carnival like atmosphere and at the end of the evening there is often a big fireworks display.

• There are all the usual activities available in the region (e.g. cinemas, bowling, casinos etc..) but the area is particularly well-known for the many golf courses available and the excellent watersport facilities.

• We act as an estate agent, and we will do our best to help you find the property of your dreams. Once we have found that property, you will enter into a contract with the owner of that property.

Resale Property

• If the property is a resale (i.e. previously owned) your contract will be with the current occupant/owner. With a resale property, a deposit of 3000 euros will secure the property, the balance being paid on completion, normally after two months, or sooner if both parties are in agreement to bring the completion date forward. There is no gazumping in Spain, as after accepting your deposit, the seller is legally obliged to sell you the house at the agreed price. Normally, 5% of the contract price will have to be paid by you to the tax office in case the seller forgets to pay his capital gains tax! This is NOT an extra 5%; it merely means that you pay only 95% of the contract price to the seller, and he has to fill out the forms with the tax office to get the other 5% less his capital gains tax. If this sounds complicated then don't worry: your solicitor will look after all this for you.

New or Off-Plan Property

• If the property is new, then your contract will be with the company who is building the property. We deal with many builders and all of them have slightly different terms as to when they would like to receive their staged payments. These terms can be varied a little to suit the individual circumstances of the purchaser if these changes are agreed when the contract is drawn up. All the builders will, however, be expecting to receive payments along the following guidelines :-

• The initial deposit payment required to hold a property whilst contracts are drawn up is usually 3000 euros (£2000). This non-returnable deposit will mean that the builder will: - a) Withdraw the property from sale to anyone else for a period of up to two weeks, and b) The price of the property will be frozen, and will not rise should the builder increase his prices. The value of this deposit will come off the final payment.

• Within one month a payment is required of between 25 - 50% of the total cost, depending on the developer. The final payment of the balance will be due when the property is completed, usually 12-18 months after the initial deposit is paid.

• One possible problem that could occur with a contract requiring large amounts of money to be paid at dates far into the future is that whilst the UK remains outside the Euro, there could be a change in the currency exchange rate that means those future payments will be more expensive in pounds sterling than you currently expect (they could also be cheaper). There are ways to prevent this problem. One way would be an early transfer of funds into a Euro account (either in Spain or in the UK) thereby making your money immune to currency fluctuations. Another method would be to book your £/euro transfer at today's exchange rate.

• We will be happy to introduce you to a currency exchange expert based in the U.K., such as FX Solutions Ltd., who will be able to advise you on the options you have and explain the procedures involved.

• The initial deposit of 3000 euros will need to be paid in cash or with a Visa card.

• The first thing, of which you should be aware, is that you have to pay VAT (known as IVA in Spain) of 7% on all new property, and a transfer tax (known as ITP) of 7% on resale property. Either way, new or resale, the transfer tax is 7%.

• Then there is the solicitor's fee, which is usually about 1%, but can be more if there are complications. If you do not want to make a journey to Spain especially to sign the contracts on the day of completion, then you may wish to give Power Of Attorney so that your solicitor can sign the necessary documents and make the necessary payments from your bank account. This will incur an extra fee, but you will probably save more than this on flights and hotel bills.

• There is the Notary who will check that the documents are in order, that the parties to the contract are who they say they are, and who will witness the signing of the contract. The fee for this will be about 1% (which will include the 0.5% Stamp Duty), but will be higher if there is a new mortgage to be registered at the same time. The Notary cannot give you and is not allowed to give you advice; any questions you may have should be directed towards your solicitor who is there for that purpose.

• You will normally be expected to pay the Plus Valia. (This is a capital gains tax levied by the local town hall and will vary upon the locality and on how long ago the land was previously sold). A typical amount would be 120 euros, although if you are buying a resale property that has been owned by a family for many years, this could be significantly higher. In theory, this tax is the responsibility of the seller of the property. However, because non-payment of this tax results in a charge being placed by the state upon the property (which the new owner would then have to clear), it is now the acceptable norm for the payment of this tax to be (quite legally) contracted to the buyer so that the buyer will know the status of this payment on conclusion of the purchase. In the event that the seller is offering to pay this tax, your solicitor may advise you that you should pay this instead and request to have the same amount deducted from the price of the property.

• You should allow 150 euros each for the connection charges for the water and electricity. Occasionally, if there is a lot of work required in order to achieve connection, then the cost could be closer to 300 euros each.

• These are separate fees and will need to be paid for separately by you (or your solicitor on your behalf if you have set up a Power Of Attorney).

• Let us take an example.You buy a property for 120,000 euros. The approximate costs will be:

 

Item	Amount in Euros
Lawyer's Fees	€ 1200
Value Added Tax (IVA or ITP)	€ 8400
Notary's Fees	€ 1200
Plus Valia	€ 100
Connection of Utilities	€ 300
TOTAL	€11,200

 

 

• Total € 11,200, or just under 10% of the value of the property. This is just an example and each sale is different. However, if as a rough "rule of thumb" you allow about 10% for all these other costs (12% for properties under €70 000), then you are unlikely to be very far out.

 

• THE RIGHT ESTATE AGENCY Choosing an effective Estate Agent can make property purchase a pleasure from the start. The agency should offer a good selection of properties and provide assistance to help you become familiar with the area. Selecting a professional agent, like CasaCalidaProperties, will save you time and money

• REAL ESTATE TAX RECEIPT Once you have chosen your property, review the important legal details. Check the receipt for the paid IBI, (Impuestos sobre Bienes Inmuebles) the annual real estate tax. This receipt gives the all-important Valor Catastral, the official assessed value of the property, on which your property owner's income taxes will be based. Check with the local Town Hall that the receipts have been paid.

• Any outstanding balance may be requested of the vendor. For new properties, ask the seller to show you the Declaration de Obra Nueva (the declaration of new construction), together with a copy of the Declaración de Alteración de bienes de naturaleza Urbana (the declaration of alteration of property of an urban nature), which both demonstrate that the property has been registered for eventual payment of I.B.I..

• PROPERTY OWNERS COMMUNITY The community of owners is the legally registered body, which administers the urbanisation or apartment building. Check the latest receipt for the payment of monthly or yearly maintenance charges - cuotas de comunidad - and discover how much you will have to pay. Ask the President or the Administration for a copy of the meeting minutes and the community regulations. The minutes should highlight problems, such as failing water supply and the regulations will confirm your rights.

• INSTRUCT A LAWYER A local lawyer must be instructed for your protection. CasaCalida Properties can provide a list of experienced lawyers fluent in the language of the client who will undertake all the necessary checks, carefully and swiftly. Most lawyers will tell you in advance what their fee will be. This could be about €700 on a purchase of €120.000, although more if things get complicated. Allow 1% of the purchase price. Using a lawyer in your home country could double or triple the bill!

• CHECK THE PROPERTY REGISTRY The Registro de la Propiedad, the land registry office, is very important. The title owners of the property or land are registered here and are available to public inspection. Use it to find the name of the registered owner of the title deeds to the property. Any mortgages or claims against the titleholder will normally be registered in the Land Registry. Thus consult the registry to find out whether there exists a mortgage or embargo on the property. Do not buy a Spanish property until you have obtained a current Nota Simple (an extract from the title) from the Registro de la Propiedad.

• CARE WITH CONTRACT Within a month of securing your property with say a 10% deposit or 3.000€, you should be ready to make a conveyance deed, called in Spanish Contrato de Compraventa. Ensure that it contains an assurance by the sellers that the property is sold free of charges, tenants and mortgages. The buyer and seller, or their authorised representatives must sign this contract in the presence of a Spanish Notario, who certifies that the contract is officially made. The Notary does not certify that all statements are true, only that the parties have sworn to them.

• FEES AND TAXES Spanish property purchase attracts fees and taxes, which total around 10%. The notary's fee scale is fixed by law and will be a minimum of €300. The property registration fee, for inscribing the property in your name in the registro de la propiedad, should be about €120 to €300. Either transfer tax on resale properties is charged at 7% of the new Escritura value, or on new properties, sold by a promoter, a different tax, I.V.A. (VAT) is charged at 7% of the selling price, plus 1% stamp duty. Another tax is called plusvalía (local municipal tax) and varies widely. The tax is based on an officially assessed increase in the value of the land, since the last time the property was sold. Usually small for an apartment, but expensive on houses with large plots, not sold for years. Find out the exact amount from the town hall. Do not confuse this tax with the seller's capital gains tax on his profit on the sale.

• The sale is considered completed when the public deeds are signed in front of a Spanish Notary, the agreed payment for the property made, and the possession of the property (the keys) given to the purchaser.

• Costs involved in purchasing property are as follows: 7% TRANSFER TAX (I.T.P.) payable by the buyer for the purchase of any Real Estate (villas, flats, land, commercial premises, garages), provided the vendor is not a developer or normally trading in the business of re-sales.

• 8% (7% VAT and 1% STAMP DUTY) for any VILLA, TOWNHOUSE, APARTMENT or GARAGE annexed to an apartment where the vendor is a developer, promoter or habitual trader in these properties. This covers virtually all new construction and re-sales where, for example, one is purchasing from an investment company who purchased for resale.

• 17% (16% VAT and 1% STAMP DUTY) for PARCELS OF LAND, COMMERCIAL PREMISES, or COMMERCIAL GARAGE SPACES, where the vendor is a developer, promoter or habitual trader. This covers virtually all NEWLY URBANIZED LAND PARCELS and NEWLY BUILT COMMERCIAL PREMISES, and re-sales only where the vendor falls in one of the above mentioned categories.

• Notary and Property Registry fees: These two fees should amount to no more than approx. € 700 for smaller properties up to for example €90.000 in value, and, as the value of the property increases, the percentage of these costs diminishes - i.e. a € 180.000 property may cost in the area of € 800 for Notary and inscription fees, and for properties above this figure the fees are increased only nominally. (Notary and Property fees: Never higher than € 1.500).

• The Plus Valía tax has been described above and can be as little as a couple of Euros or as much as several thousands of Euros on a property with a lot of land that hasn’t changed hands in many years. This tax must be quantified and negotiated with the seller during the negotiation stage.

• In Summary, the total official costs involved in purchasing property should be around 8% - 10%, more or less for re-sale properties, or 8 - 11% if VAT is paid of the purchase price, plus the Plus Valia if applicable. Lawyer’s fees are in the order of 1% - 1,5 % of the selling price, depending on the lawyer. The seller pays agents unless otherwise agreed. Locating and purchasing a property in Spain can be as simple or as complicated as one wants to make it. Using sincere and well-recommended professionals always helps to save time, money and trouble.

Getting a mortgage for your Spanish Property

• If you need a mortgage to assist you in buying a property in Spain, then you have two options:

• 1. Re-mortgage or increase the mortgage on your home in the UK,
• 2. Take out a new mortgage with a bank in Spain on your new home.

Re-Mortgage your UK home

• We would recommend the first option as being the best as this will definitely be cheaper regarding arrangement fees, although interest rates in Spain have proved to be a little lower than in the UK over recent years. Another advantage in re-mortgaging your UK home is that you can make the necessary enquiries before you come to Spain, so that when here, you will know that you have your finance already in place.

A Spanish Mortgage

• Mortgages are available through Spanish banks for non-residents for periods of between 5 and 15 years. If you are a Spanish resident then you can get a mortgage for 20 years.

• It is normally possible to get a mortgage for up to 70% of the surveyed value of the property, although mortgages of 50% and 60% are more normal. If you choose to have a mortgage of 50% then the costs involved in purchasing the property can be added to the amount of the mortgage. In some special cases it may be possible to get a mortgage of 80% - 95% , but this will incur a higher arrangement fee normally 2.5% of the mortgage.

• A mortgage has to be fully repaid by the time the borrower is aged 75. If you are aged 64 at the commencement of the mortgage, then you will only be able to get a 10-year mortgage.

• When assessing your application, the bank will want to see your last three months wage slips (your most recent P60 will be useful as well), or if you are self employed then the most recent three years of accounts plus an official tax statement. If you can bring with you copies of your bank statements for the last six months and/or a letter of recommendation from you UK bank, then this will also help. The exact list of the documents required will depend upon your circumstances, but we will be happy to give you individual advice on documentation prior to your visit to Spain.

• When applying for a mortgage, the household income is assessed, and so if you have a spouse who is working, the bank will want to see their payslips/accounts as well.

• In Spain, Banks can only release mortgage funds when you own your new home, which for a new property can only happen after the house has been completed. A new property may not be ready for several months and yet you will be expected to make payments of up to 75% of the value of the property at various stages before completion. To overcome this problem, the mortgage bank will give you a letter of intent to present to your own bank in the UK or your bank here is Spain (we will help you open a bank account). This letter of intent should be sufficient to arrange temporary bridging finance for the staged payments.

• If your mortgage is for less than 50%, then it may be possible for us to negotiate one big final payment on completion with the builder to avoid the necessity of a bridging loan.

• Approximate monthly cost for a mortgage of 90,000 euros:

• Interest rate = 3.5%
  
• Monthly repayment = 404 euros

• You should expect the costs of setting up a mortgage (set up fees, registration fees, valuation, Notary, etc) to come to about 3.5% of the amount of the mortgage if the mortgage is for over 50,000 euros, or a about 5% if the mortgage is under 40,000 euros.

• Whilst the UK remains outside the euro, there is the added danger of a currency movement against you that will cause the monthly payments to rise. However, if you are planning to rent out the property for much of the year, then the currency change will be in your favour with regard this income thus offsetting the rise in monthly payments, and thereby minimizing the risk to currency swings.

• The following is a guide to the approximate costs of running a property in Spain. It is assumed that the value of the property is 120,000 euros. Only the standing charges are assumed for the utilities, as when you are staying in Spain, you will not be using these services back in the UK. Water and electricity are about the same price here as they are in the UK. All costs can vary, and this is only a representative example.

 

Item	Amount in euros
Urbanization Fee -	400
Property Tax -	250
Contribution Urbana -	200
Insurance -	125
Fiscal Representative -	125
Utility Standing Charges -	100
Total =	1270

 

 

» Murcia Information • Find out more about information on the region of Murcia, click here...

» Buying Procedures • Information about purchasing a property here in Spain, glossary of terms, click here...

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