The Definitive “How to…” Guide to Buying a Property in Barcelona
Our customers often recommend the services of Urbane to people thinking of buying a property in Barcelona not just because of our excellent property portfolio but because they appreciate the assistance and service we provide throughout the whole purchase process. We always advise our clients that thanks to our experience we hope that buying their new home in Barcelona should be something stress free. To this end we felt it was fruitful to write down the steps and the process as we see it. Here we
The Property Search
There is a moment, a conscious act of will, where we move from dreaming about buying a property in Barcelona to deciding to go ahead and do it. This is an exciting moment and is when we really begin to assess possibilities and start to wonder where we can buy and what we can get for our money. The search usually begins in front of a computer, armed with pen and paper.
Property Portals and Magazines
In recent years we have seen tremendous growth in property portals. A property portal is not an estate agent nor are they linked legally in any way to people offering property for sale in Barcelona or any other part of the world. A property portal is an online “showroom” of properties from many different agents that provide the browser with relatively advances tools for searching for property within different areas, price ranges and typology. It is almost impossible to say which property portal is better to find a property for sale in Barcelona – what we can tell you is that once you have decided on a city or an area you can make a short list of propeties and then contact an agent.
You can also find magazines, both more directly advertising properties in Barcelona or with articles and other information on properties in Barcelona. All of this is useful research material to help build an image of what you are looking for.
One thing to take into account is that property portals, due to their online nature, tend to have properties that are updated regularly whereas magazines are usually showing propeties from at least a quarter ago.
Barcelona Estate Agents
The property portals only showcase some of the property that agents actually have. In our case, here at Urbane, we have around 60% of our portfolio on the portals. This is often due to short term projects, such as four unit small projects, that will almost sell to our existing database without having to put them on any portal. For this reason it is good advice to read up on different agents and then choose one.
In a market such as the Barcelona real estate market, the majority of reputable agents have access to just about everything on the market – exlusives do not really exist so much since the recession. Once you identify a couple of likely candidates write to them and ask them to explain why they can help you. The reason we advise people to pick just one agent is because this agent can then always contact others for you with the advantage that the first agent can give open and honest opinions on everything. If you choose to work with two agents then each one will be almost forced to “knock out” what the other agent is saying, setting up conflictive advice. The more agents you work with the more confusing the stories can get. Trust your instincts and go with one agent, after all you need the professional assistance and advice from someone who does this regularly, unless you are a professional propety buyer, this is usually the safest route – however remember that you are always in charge and you call the shots! This should always be fun and flexible and you don’t need to progress to the next step until you feel comfortable and safe on the step you are currently on.
Selecting Property to View
Our advice based on more than two decades of experience is not to get to hung up on what you are going to view before arriving in Barcelona. Of course you have to start somewhere, so we advise looking at an “Ideal World” situaiton of location and price and then arrange a trip. However avoid trying to plan the whole trip before arriving as 99% of people change their minds once they come into contact with the properties. Trying to take property decisions based on photos can be hugely misleading, the dark arts of marketing can make average apartments look wondeful, wondeful apartments can sometimes have a “bad hair day” and not look as good in photos and others just need to be seen to be understood.
Our suggestion is usually to meet first in the office, go over the first two or three properties to be viewed and then after these stop and take stock. Why not enjoy a few tapas and a glass of wine or a coffee while reflecting on what you have seen? As the trip progresses you will be taking on board and rejecting options as you go. Be fearless! Remember if you stick to one agent then they will not lose out at all if you are rejecting things, you are merely setting them a better incentive to find your dream home. Once again if you are with more than one agent then you run the risk of each one knocking your other options for no other reason than that they won’t derive any benefit from the sale. You need people working for you, not against you! Which brings us to the next crucial step.
Legal Advice
To ensure that you are taking the firmest and safest steps it is vital to use a Spanish lawyer. We can provide a list of lawyers working in the Barcelona real estate space, all of which are fully qualified, members of the Barcelona bar association and completely independent. We would not recommend the use of any lawyer that is an agent’s “In House” lawyer, however little they charge. Normal charges for a lawyer in Spain can be from 1-1.5% plus VAT at 21%. This may seem like a high price but it is money well spent for the peace of mind you obtain from using a good lawyer.
The lawyer will be the one responsable for double checking the land registry for ownership documents, revising the different contracts you will have to sign and ensuring the process is totally, and we mean totally, risk free. The main services the lawyer will provide are:
- Checking over the property documents, confirming the vendor has the legal right to sell and that the conditions of sale and purchase are correct.
- Requestingn and obtaining your NIE – Foreign Identification Number. This is a legal requirement and becomes your identification number before the Spanish authorities.
- Revise the title deeds and liaise with the notary and the vendor and their legal reprentative.
- If you have issued a specific power of attorney then the lawyer can also open a bank account for you and even sign the title deeds in your name to save you making the trip to sign for a property you can not stay in yet.
- Pay your taxes for you (See “Additional Costs” below) and ensure your property is properly insribed in the land registry etc.
- Sign up your utilities, gas, water and so on.
You do not need to pay a lawyer until they begin working for you and indeed you do not pay the whole amount until their work is finished. Many lawyers work to a 50% at the beginning and 50% on completion ratio. However this may vary.
The Contractual Steps
After you have made some successful of properties for sale in Barcelona you will hopefully decide one of them is for you and you may wish to get into the actual purchase itself. This begins with a simple document, which is the offer and reservation document. We will detail the steps here below:
- Offer and reservation: In spite of its name it does mean that everyone in Barcelona is willing to negotiate. We find that many private vendors do not wish to entertain too many offers, this notwithstanding, you are totally free to put together an offer, better if backed with some earnest money, and then allow the agent to try and negotiate a final sales price. The reservation document is essentially you shwoing your intentiopn to buy and the vendor’s intention to sell and sets out the road map to the signing of the provate contract and ultimately the title deeds.
- Private Contract – This is known as a “Contracto de arras” in Spanish and is the moment when you properly gain the rights to purchase and the owner the rights to be paid. In spite of what some people believe there is no clear rule as to how much deposit is paid on “arras”, anything from 10% to 40% can be put down or demanded by the vendor. Placing a larger deposit does not weaken your position, it actually improves it, making it far more risky for a vendor to pull out.
- Title Deeds – once eerything has been finalised on the legal side and all sides are happy then the property can be legally signed over to you. This takes place before a Public Notary and is when you will take full legal title and gain the keys to your new home in Barcelona.
Additional Costs
It is sometimes surprising to find customers who are not aware of the different costs associated with buying a property in Spain. It is vital to know these costs before you begin the search as it will condition your purchasing power.
There are some small regionals differences in ITP between regions but for the basis of this article, focused on buying property in Barcelona, we will give the figures for Catalunya.
The costs associated with buying a property in Barcelona are easy to understand and vary only according to if the property is a new build property or a second hand property. However there is a diference of about 1.5% and we generally recommend to budget for around 14% on top of the price of the property. To assist here is a complete breakdown of the associated costs.
New Build Property
New build property attracts the following assocated costs:
- Spanish VAT, called IVA (Impuesto sobre el Valor Añadido – the same name as in English). This is the same in all of Spain and is currently at 10%.
- Actos Juridicos Documentados (AJD) – this is essentially the “setting up” of the property with regards to government paperwork and is currently 1.5%
- Notary – 1% approx. This is an approximate figure and is usually a little less than 1%. Budget on 1% to be safe.
- Solicitor – as already suggested it is best to budget for 1% to 1.5% for your legal representative.
- Mortgage stamp duty – if you are thinking of obtaining a Spanish mortgage then allow for up to 1% for this.
Total for a brand new property: 14% (assuming you opt for a lawyer at 1.5%). Add around 1% if you require a mortgage.
Second Hand Property
For a second hand property there is little difference except that the main tax that is levied is not VAT but a tax called ITP. As the property has already undergone it’s first ever inscription in the land registry there is no payment of AJD. The costs are:
- ITP: Impuesto sobre transferencias patrimoniales: This is a tax imposed on transfer of assets and is currently at 10%
- Land Registry 1% – same as before.
- Solicitor fees: as detailed above at 1% to 1.5%
- Mortgage stamp duty – if you are thinking of obtaining a Spanish mortgage then allow for up to 1% for this.
Total for a second hand property: 12.5% assuming you use a lawyer at 1.5%. Add around 1% if you require a mortgage.
Mortgages for Buying a Property in Barcelona
Nearly all of our customers come out with a budget for a property in Barcelona and in many cases they then buy something for a different, often higher, price. However yuor investment profle can change quite considerably if you require a mortgage. Taking out a mortgage with a Spanish bank is a very real possibilty and may help you achieve a higher purchase price.
In Spain the days of the 80% mortgages are almost entirely behind us. These levels of loan to value are more common for residents only. However it is very realistic to expect a 70% loan to the value of the propety. However this “value” will be the price of the property or the valuation that the bank gives, whichever is lowest. In simple terms if you buy a property for one hunded thousand Euros and then bank values the property at ninety thousand Euros then the loan will be 70% of the ninety thousand Euro valuation, which is sixty three thousand. By the same token if the bank valuation comes in at one hundred and ten thousand then the loan will be 70% of one hundred thousand, which is the selling price.
You will need to take into account the additional time required for the mortgage study and approval process. This can take as much as 90 days.
Buying a Property in Barcelona: Conclusions
As you can see the process for buying a property in Barcelona is not very different to the process of buying a property in many other countries. It’s worth remembering that all properties in Barcelona are sold freehold. For further information please contact us on info@beurbane.co.uk
Our Urbane team will be happy to help you find the house of your dreams. We have a large collection of real estate in Barcelona