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How to Buy an Apartment or House in Spain?

How to Buy an Apartment or House in Spain?

15.12.2024

Investing in property is a reliable way to grow your capital and generate passive income. Spain is also an ideal destination if you dream of relocating to a sunny country. Discover the process of buying a flat in Spain and the costs involved.

Contents:

How do you buy a apartment or house in Spain?

How do you buy a apartment or house in Spain?

Required documents and permits when buying a house in Spain

Required documents and permits when buying a house in Spain

Buying a flat in Spain: taxes and fees

Buying a flat in Spain: taxes and fees

Planning to buy a property in Spain? Keep these things in mind

Planning to buy a property in Spain? Keep these things in mind

The most common mistakes when buying a house in Spain

The most common mistakes when buying a house in Spain

A home loan with a Spanish bank. Does it pay off?

A home loan with a Spanish bank. Does it pay off?

More and more Brits are choosing to invest in property abroad, with Spain being one of the most popular destinations. Whether you’re buying with cash or securing a mortgage, there are essential legal steps to follow. Want to know more? Read our comprehensive guide on how to buy a flat in Spain.

How is housing purchased? Differences between UK and Spain

The biggest difference lies in Spain’s holiday flat market, which is highly attractive to foreign investors. According to recent data, foreign buyers purchased over 87,000 properties in 2023, making up 21% of all transactions.

Another key difference is the state of development in the primary (new-build) market. In the UK, properties under construction are sold at various stages, but buyers cannot move in until completion. In Spain, however, a property marketed as "completed" often refers to a turnkey finish, meaning it is fully ready for occupancy.

There is also a significant difference in payment methods. In the UK, transactions are typically completed via bank transfer, whereas in Spain, banker’s cheques are the standard payment method, and cash transactions are prohibited. Additionally, when purchasing a new-build property from a developer, you may be required to provide documents verifying the source of funds for compliance with Spanish financial regulations.

The biggest difference is the Spanish holiday flat market, which is of great interest to foreign investors. According to available data, foreigners bought more than 87,000 properties in 2023, accounting for as much as 21% of all transactions!

The second issue is the importance of the development state in the primary market. In UK, it is simply one of the stages of construction, which, however, does not allow you to live in the property. It is different in Spain, where it is considered synonymous with the so-called turnkey finish.

There is also an interesting difference in the method of payment. In Poland it is mainly by bank transfer, while in Spain there are bankers' cheques and a ban on cash transactions. In addition, if you buy a flat from a developer, they may require you to provide documents confirming, for example, the origin of the funds for the purchase of the property in Spain.

The biggest difference lies in Spain’s holiday flat market, which is highly attractive to foreign investors. According to recent data, foreign buyers purchased over 87,000 properties in 2023, making up 21% of all transactions.

Another key difference is the state of development in the primary (new-build) market. In the UK, properties under construction are sold at various stages, but buyers cannot move in until completion. In Spain, however, a property marketed as "completed" often refers to a turnkey finish, meaning it is fully ready for occupancy.

There is also a significant difference in payment methods. In the UK, transactions are typically completed via bank transfer, whereas in Spain, banker’s cheques are the standard payment method, and cash transactions are prohibited. Additionally, when purchasing a new-build property from a developer, you may be required to provide documents verifying the source of funds for compliance with Spanish financial regulations.

Required documents and permits when buying a house in Spain

Required documents and permits when buying a house in Spain

How to Buy a Flat in Spain: A Comparison with the UK

The first key document in the property-buying process is the preliminary sales contract, which serves as a reservation agreement for the property. This is somewhat similar to the exchange of contracts in the UK, as it sets a binding timeline for signing the notarial deed (title deed transfer).

One key difference is the type of deposit agreements in Spain:

Arras confirmatorias – A standard advance payment confirming the agreement.
Arras penitenciales – A refundable deposit, where the buyer can withdraw but loses the deposit, and the seller must return double if they cancel.
Arras penales – A form of indemnity covering potential losses if the sale does not go through.

Signing the Notarial Deed (Completion in Spain vs the UK)

In Spain, the final step is signing the notarial deed (Escritura Pública de Compraventa) in front of a notary public, making the transaction legally binding. In contrast, in the UK, completion takes place via solicitors without a notary being required.

To complete the purchase in Spain, you will need:
✔ A valid passport or national ID card
✔ An N.I.E. number (Número de Identificación de Extranjero – the tax identification number for foreigners)
✔ Proof of a Spanish bank account (for making payments and paying taxes)

How to Buy a Flat in Spain: A Comparison with the UK

The first key document in the property-buying process is the preliminary sales contract, which serves as a reservation agreement for the property. This is somewhat similar to the exchange of contracts in the UK, as it sets a binding timeline for signing the notarial deed (title deed transfer).

One key difference is the type of deposit agreements in Spain:

Arras confirmatorias – A standard advance payment confirming the agreement.
Arras penitenciales – A refundable deposit, where the buyer can withdraw but loses the deposit, and the seller must return double if they cancel.
Arras penales – A form of indemnity covering potential losses if the sale does not go through.

Signing the Notarial Deed (Completion in Spain vs the UK)

In Spain, the final step is signing the notarial deed (Escritura Pública de Compraventa) in front of a notary public, making the transaction legally binding. In contrast, in the UK, completion takes place via solicitors without a notary being required.

To complete the purchase in Spain, you will need:
✔ A valid passport or national ID card
✔ An N.I.E. number (Número de Identificación de Extranjero – the tax identification number for foreigners)
✔ Proof of a Spanish bank account (for making payments and paying taxes)

How to buy a flat in Spain? The first important document is the preliminary sales contract, which is equivalent to the reservation of the property. It looks and works in a similar way to the one in Poland and specifies the date by which the notarial deed must be signed. Importantly, the contract may include an advance payment (arras confirmatorias), a deposit (arras penitenciales) or an indemnity to cover possible losses if the sale does not take place (arras penales).

The next step is to sign the notarial deed. For this you need:

an identity card or passport,
your N.I.E. number (tax identification number for foreigners),
confirmation of the opening of a bank account in Spain.

If you are financing the purchase of a flat in Spain with a mortgage, the bank may ask you to provide your tax declarations for the last 2 years information on any liabilities or your bank or BIK statements.

How to Buy a Flat in Spain: A Comparison with the UK

The first key document in the property-buying process is the preliminary sales contract, which serves as a reservation agreement for the property. This is somewhat similar to the exchange of contracts in the UK, as it sets a binding timeline for signing the notarial deed (title deed transfer).

One key difference is the type of deposit agreements in Spain:

Arras confirmatorias – A standard advance payment confirming the agreement.
Arras penitenciales – A refundable deposit, where the buyer can withdraw but loses the deposit, and the seller must return double if they cancel.
Arras penales – A form of indemnity covering potential losses if the sale does not go through.

Signing the Notarial Deed (Completion in Spain vs the UK)

In Spain, the final step is signing the notarial deed (Escritura Pública de Compraventa) in front of a notary public, making the transaction legally binding. In contrast, in the UK, completion takes place via solicitors without a notary being required.

To complete the purchase in Spain, you will need:
✔ A valid passport or national ID card
✔ An N.I.E. number (Número de Identificación de Extranjero – the tax identification number for foreigners)
✔ Proof of a Spanish bank account (for making payments and paying taxes)

Buying a flat in Spain: taxes and fees

As in UK, buying a flat in Spain involves additional charges. One of these is tax, which is sometimes included in the offer price of a property. Most often, however, sellers quote a net rate, to which must be added:

secondary market: between 4 and 10% ITP (Impuesto de Transmisión Patrimonial) transfer tax. For example, on the Costa Blanca we will pay 10% tax,
primary market: 10% VAT (IVA).

Furthermore, the purchase of property in Spain from the primary market involves the payment of an additional IAJD, i.e. tax on documented deeds. Its amount depends on the Autonomous Community, but is a maximum of 2% of the price of the flat (Murcia rate).

Other fees include the services of a notary and the registration in the land registry. These depend on the value of the property and are determined top-down by Spanish law. This means that you do not have to be guided by price when looking for a lawyer - you will pay the same at each law firm. Also bear in mind the additional costs associated with opening a bank account and a possible mortgage.

As in UK, buying a flat in Spain involves additional charges. One of these is tax, which is sometimes included in the offer price of a property. Most often, however, sellers quote a net rate, to which must be added:

secondary market: between 4 and 10% ITP (Impuesto de Transmisión Patrimonial) transfer tax. For example, on the Costa Blanca we will pay 10% tax,
primary market: 10% VAT (IVA).

Furthermore, the purchase of property in Spain from the primary market involves the payment of an additional IAJD, i.e. tax on documented deeds. Its amount depends on the Autonomous Community, but is a maximum of 2% of the price of the flat (Murcia rate).

Other fees include the services of a notary and the registration in the land registry. These depend on the value of the property and are determined top-down by Spanish law. This means that you do not have to be guided by price when looking for a lawyer - you will pay the same at each law firm. Also bear in mind the additional costs associated with opening a bank account and a possible mortgage.

As in UK, buying a flat in Spain involves additional charges. One of these is tax, which is sometimes included in the offer price of a property. Most often, however, sellers quote a net rate, to which must be added:

secondary market: between 4 and 10% ITP (Impuesto de Transmisión Patrimonial) transfer tax. For example, on the Costa Blanca we will pay 10% tax,
primary market: 10% VAT (IVA).

Furthermore, the purchase of property in Spain from the primary market involves the payment of an additional IAJD, i.e. tax on documented deeds. Its amount depends on the Autonomous Community, but is a maximum of 2% of the price of the flat (Murcia rate).

Other fees include the services of a notary and the registration in the land registry. These depend on the value of the property and are determined top-down by Spanish law. This means that you do not have to be guided by price when looking for a lawyer - you will pay the same at each law firm. Also bear in mind the additional costs associated with opening a bank account and a possible mortgage.

As in UK, buying a flat in Spain involves additional charges. One of these is tax, which is sometimes included in the offer price of a property. Most often, however, sellers quote a net rate, to which must be added:

secondary market: between 4 and 10% ITP (Impuesto de Transmisión Patrimonial) transfer tax. For example, on the Costa Blanca we will pay 10% tax,
primary market: 10% VAT (IVA).

Furthermore, the purchase of property in Spain from the primary market involves the payment of an additional IAJD, i.e. tax on documented deeds. Its amount depends on the Autonomous Community, but is a maximum of 2% of the price of the flat (Murcia rate).

Other fees include the services of a notary and the registration in the land registry. These depend on the value of the property and are determined top-down by Spanish law. This means that you do not have to be guided by price when looking for a lawyer - you will pay the same at each law firm. Also bear in mind the additional costs associated with opening a bank account and a possible mortgage.

Planning to buy a property in Spain? Keep this in mind

If you are interested in buying a new-build property in Spain, it’s essential to research the developer’s reputation and ensure they have the necessary licenses.

In Spain, your funds are protected during the purchase process. Developers are legally required to provide a bank guarantee (aval bancario), ensuring that your deposit is safeguarded. The developer only receives full payment once the notarial deed (Escritura Pública de Compraventa) is signed, securing your ownership.

Importantly, you can complete the purchase remotely without traveling to Spain. To do so, you must grant power of attorney (poder notarial) to a trusted representative, such as a solicitor or real estate agent, who will handle the formalities on your behalf. This must be notarised in the UK and legalised with an apostille to be valid in Spain.

The most common mistakes when buying a house in Spain

How to buy a property in Spain? If you need help with financing your investment, you can apply for a loan (hypoteca) of up to 70% of the value of the flat or house. However, this comes with additional costs.

In addition to the taxes and fees mentioned earlier, you must pay for a commission and an independent valuer, who determines the market value of the property in question. Most banks also require non-residents to take out a life insurance policy and home insurance.

You can take out a mortgage for a maximum of 20-25 years, but the bank sometimes offers a shorter term (depending on your age). Is it worthwhile? The average interest rate on a hypotec is 4%, which is almost half that in Poland. Nonetheless, the very use of the bank involves additional fees, to which interest must also be added.