Whether you are considering moving to Spain or have already moved, owning property will become your strongest bond with the country and, possibly, your largest investment.
We have heard too many horror stories about foreigners losing their Spanish property due to various legal issues. In many of those cases what I call DIY buyers were the victims. Not having the right professionals on your side may cost you dear. Property buyers ofter get in touch with an estate agent and let them do all the paperwork. This may prove cheaper, but has quite a lot of drawbacks.
To begin with, estate agents are not regulated in Spain. In fact, anyone without formal training can be an estate agent. Lack of regulation affects their fees, as it is written nowhere whether these are paid by the seller or the buyer, and how much they will charge. Besides this, you need to take into account that in practice most estate agents will be working for both the seller and the buyer. This means they lack any incentive to act in your interest and, in fact, will mostly seek a quick sale so they can cash their fees as soon as possible.
Another aspect of buying property in Spain is the costs involved. According to Zoopla, in the UK estate agent fees range from 1% to 3.5% of the sale value. When you are used to that kind of fees, Spain will be shocking, as the average is 5% of the sale value. Also, whereas in the UK estate agent fees are paid by the seller, in Spain it is not so clear, and you will find that it is not uncommon to see fees paid by both the seller and the buyer. I recently witnessed the sale of a €120,000 property where both seller and buyer paid a €5,000 fee each. The estate agent made a healthy €10,000 from a property sold for €120,000!
Taxes are another money blackhole when buying Spanish property. Whereas in the UK properties up to £250,000 are exempt from stamp duty (reduced to £125,000 from April 2025), there is no such exemption in Spain, and newly built property carries VAT at 10%. Add to this the so called “Documented Legal Acts Tax” which ranges from 0.5% to 1.5% (in the most popular areas for foreign residents, Valencia at 1.5% and Andalucía at 1.2%). For pre-owned property VAT is replaced by a Property Transfer Tax ranging from 6% to 10% (again, in popular expat areas such as Valencia, 10%, and Andalucía, 7%). On top of this you also pay the Documented Legal Acts tax as in newly built property.
For illustration purposes, a €300.000 property could cost you an additional €7,500 in estate agent fees (in the assumption they charge 5% and costs are shared between seller and buyer) plus €34,500 in taxes. That is a shocking €42,000 on top of the €300,000 purchase price. Allow for approximately an extra €2,000 for deeds and registry costs and that is the final price you have to pay.
Beyond high purchase costs, recurring costs must be taken into account. We can separate these in two different categories: taxes and private fees. Among the latter, the main fee will be that of service charges. These usually apply to flats in a block of flats, and depend on the services available and the size of the property. They should, nevertheless, be clearly reflected on your purchase documents, potentially ranging from €30 to €150 per month. The owners’ association may decide by a majority to increase the fee or raise funds for specific purposes, hence, increasing what you pay.
There is also a tax similar to Council Tax in the UK, and it will be assessed on the cadastral value of the property (a monetary value that authorities give each property, usually lower than market value). Different councils, though, have different rules for the valuation, but nevertheless this particular tax will usually be lower than UK Council Tax.
We have looked at how estate agents work in Spain (and this includes UK estate agents established in Spain) and the costs involved in owning Spanish property. In future posts we will discuss the purchase process, what must be checked about a property before committing to buy it, and whether we are buying at a fair market price.
In the mean time, if you are seriously considering buying a property in Spain, we can offer genuine legal services towards ensuring that you get what you pay for and become the owner of a trouble-free property.
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