Your guide to buying a home in Spain - part one

MANCUNIANS planning to buy a home in Spain are following a well-trodden path. It's a hugely popular destination - and justifiably so. The climate is lovely, there is a great rage of property to buy and lots of flights to choose from.

Spain has a stable, mature property market. The Central Bank of Spain recently reported that house prices had risen by 48 per cent in three years. Although price rises are slowing down in parts of Spain, in other areas, large capital gains are still being reported. Despite this, Spanish property costs around 65 per cent of its equivalent in the UK.

Developers cannot legally build without being backed by a financial institution. There is extensive legislation regarding consumer security on bonded developments and Spain complies with every EU directive.

Getting Started

Before beginning your search, there are several things you need to have a good, long think about. Narrowing your search criteria as much as possible at the initial stage will save time, money and leg work in the long run.

AFFORDABILITY
Do your sums and work out exactly what you can afford to spend. Bear in mind the following:
One-off costs
Notary fee - approximately £325
Land registry - approximately £200
Plus valia - a sort of municipal capital gains tax. Usually small (approx. £150) but can be several thousand
Transfer tax and stamp duty - varies but approximately six to eight per cent of the property price
Legal fees - approximately one per cent of the property price.
As a rule of thumb, set aside 10 per cent of the purchase price for associated costs.
Don't forget that once you own a home you will also have to pay insurance, local taxes, maintenance costs and a monthly service charge on some developments

LOCATION
Spain offers a wide range of environments to the prospective purchaser. Have a think about the following:
* Do you want to be in a bustling or peaceful location?
* Do you prefer neighbours that are predominantly Spanish, British, from northern Europe or cosmopolitan?
* Do you want to be near a beach?
* Is the quality and accessibility of local schools/hospitals relevant for you?
* Do you have any hobbies such as golf that you would like to indulge in regularly?
* Does the property need to be near an airport with regular flights from the UK?

Guy King, editor of Viva España magazine, advises: "Take several holidays or rent for an extended period in your potential areas. Try the local lifestyle on for size. Is language an insurmountable problem? Is there enough to keep the kids occupied?"

PROPERTY TYPE

New-build advantages:
Modern facilities (bathrooms, kitchens, central heating, double glazing)
Ready to move into
Low running costs
Often comes with a builder's guarantee against defects

Older property advantages:
Comes complete with history, character and charm
Mature grounds
Often larger than new properties

Villa advantages:
Generally better value and larger than apartments,
Often come on a large plot with garden and parking
Lots of privacy and seclusion
Low maintenance and running costs
Instant community and social opportunities

Buying off-plan
If you are not in a hurry to move you can make substantial savings by buying off-plan. This means purchasing the property from the developer before it has been built.

NEXT STEPS

FIND A SOLICITOR
You need a lawyer familiar with Spanish law who will be able to advise you about such matters as:
* Who should own the property?
* How it should be paid for?
* Minimising tax liabilities
* Legal requirements for developers
* The buying process itself

ARRANGING A MORTGAGE
It is also a good idea to have a mortgage in place before you begin hunting for a house. Lending institutions in the UK are offering increasingly flexible options for mortgaging and re-mortgaging.

You could consider taking out a Spanish mortgage. Banks in the country freely lend to non-residents, and mortgage rates are significantly lower than here in the UK, though a hefty arrangement fee can negate this advantage. Generally, it's sensible to take out a mortgage in the currency in which you earn.

FINDING A PROPERTY
Now the fun begins. It's time to start looking. There are many ways to find your dream property; below are a few of them:

Exhibitions
Overseas property exhibitions are excellent research resources. You can chat to the exhibitors, see the range of property available and get a feel for the market and prices.

Agents and developers
Thousands of agents and developers from Spain market directly to the UK and Ireland. Many will have an office in the UK staffed by English-speaking sales staff.

Private ads and word of mouth
Read the classified adverts in the back of overseas property supplements. It may be worth targeting a town directly and asking around for property for sale.

Inspection Trips
While talking to an agent or developer, you may be offered an inspection trip to view any properties they have in the area that interests you. Basically, you will be offered discounted flights and accommodation to your chosen destination in return for a few days looking around local properties with a commission-based sales rep.

BUYING YOUR PROPERTY

THE CONVEYANCE PROCESS
As in the UK, your lawyer will do much of the work, including offering advice, undertaking a land registry search, drafting a contract of sale, arranging the completion of the purchase in front of the Spanish Notary Public and arranging the transfer of funds. While your lawyer is hard at work, there are certain tasks you can undertake to speed up the process and make sure nothing is missed out.

In Spain contracts are not `subject to survey' as in the UK. You should still commission a survey and check you are happy with the results before you sign.

Tax identification number
If you own a property in Spain, you will need a Número de Identificación de Extranjeros (NIE). This identifies you to the tax authorities and allows them to calculate your tax liability. You can get it from Spanish police stations.

Insurance
Once the purchase has been completed, get the property insured. If you are using the property as a holiday home or rental property be sure to let your insurance company know.

Completion
Once all the legal checks have been carried out you will be expected to sign a private purchase contract stating the price and full conditions of the sale. This can be signed in the UK. From this point on you are legally bound to the sale.

You will also be expected to hand over a deposit, typically 10 per cent of the asking price. You cannot pull out of the sale without forfeiting it. Equally, your seller cannot pull out without matching it.

To complete the sale, it is necessary for you to sign the title deed recording the purchase in front of the Notario.

At this point the full purchase price is handed over to the seller (or the seller confirms to the Notario that the money has already been handed over). Proof of payment is then incorporated into the deeds of the property.

Once the formalities with the Notario are complete, your lawyer should arrange to pay any taxes due. He should also send the signed and witnessed Escritura to the Land Registry and pay the appropriate fees.

When the deeds are returned to you the process of registration is concluded. Should you be unable to travel to Spain to sign the Escritura you can give someone the `power of attorney' to do it on your behalf.

Glossary
Notario - Spanish public official. His job is to witness signatures and ensure that certain legal requirements have been met and taxes paid.
Abogado/a - Lawyer
Contrato Privado de Compraventa - private purchase contract (the agreement to buy/sell)
Escritura de Compraventa - the key document; the deed of sale
Escritura de Propiedad - title deed

For Part Two of our guide, click on the link below.

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