Properties
Buyer's Guide
Costa Tropical
Services

"Our initial briefing to Martin was simple - "This is our budget, we want a villa, pool, garden, in the mountains", and here we were two pensioners wanting an easy life!  Martin took us through a full and comprehensive questionnaire that raised many questions and made us start thinking that we had been ignoring our own frailties. Living in an apartment gave us a new outlook on life and after several excursions into the hills we changed tack and out went the villa, pool etc."
E & A BULTITUDE – LA HERRADURA
 

Selling can be fun?

Browsing through the web sites of various estate agents no one can be surprised by the ways in which some homes are presented. You will see beds unmade, or rooms filled with clutter; empty white-walled rooms impossible to scale their size, and perhaps the most popular of all scenes - the view from the terrace. Rarely do you find Spanish property agents employing professional photographers, or offering detailed room descriptions and sizes. It is therefore important to consider when selling your Spanish property what your agent will do for you.

Times are changing; and with the advent of new consumer legislation in Spain then it is important that the seller provides as much information to the agent as is needed. Here the key words are sincerity and transparency - to give confidence for any buyer - it is vital that you work with your estate agent to comply with these new laws. It is no longer a simple case of arguing over the commission rates, the promotional details and the flowery descriptions [#1]. Today, in order to be compliant with decreto 218/2005 of the regional Andalucian government, any real estate agency worth its salt will ask you to supply the following basic information:

Copy of passports / NIE of owner(s) plus all contact details

Copy of IBI contribution receipt and full address of property(ies) for sale

Copy of Community fees receipts and latest minutes (where applicable)

Copy of the latest nota simple (no less than 3 months old) and also a copy of the Escritura (title deed) 

Copy of building regulations, plans or licenses where applicable (building consents from the town hall where the property is less than 10 years old should be available)

Copy of last water, electricity and rubbish collection bill

Copy of Inventory (if being sold full or part-furnished)

Copy of Certificación de la Eficiencia Energética de los Edificios - EPC

From this information your agent will be able to identify the "health" of your property, and also to give a realistic market valuation [#2]. By their part too the agent will then produce an information pack (in Spanish) that can be given to any interested client prior to viewing. Supplementary information may be also worth providing if you wish to be ahead in the selling game - provide details of room sizes, descriptions, inventories (if sold furnished) and also additional assets like irrigations systems, air-con/heating, pool pump, gas boiler, alarm, solar panels, etc can be made even more attractive if the vendor supplies some basic guides to age and use prior to the exchange. Much of this information costs nothing but time to produce; and a serious buyer will be asking for it in any case, so why not be ahead of the game and have this available from the start.

As of April 5 2013 the Spanish law finally came into force in regards the establishment of the European norm for the introduction of Energy Performance Certificates (EPCs) - Certificación de la Eficiencia Energética de los Edificios - for all properties which are built, sold or rented. If you are currently selling your Spanish property or you are holiday home owners, then you must order an EPC for potential buyers and tenants before 1st of June 2013. After which date owners will be fined if they cannot supply the certificate; and if selling, and the completion date is from June 1 then the notary will ask that you present the certificate at the point of exchange.
The EPC will contain information about a property's energy use & typical energy costs, include proposals about how to reduce energy use & save money, and add suggestions on measures that should improve the performance of thermal installations, lighting systems, or for the incorporation of renewable energies in the building. The EPC will provide a property an energy efficiency rating from A (most efficient) to G (which represents low performance) and it is only valid for 10 years. Consequently, a typical new builds that was built to all the current regulations will be rated on the limit between C and D.
EPC's must be issued and stamped by legally qualified building engineers who are also registered with the college of Spanish Engineers in their region; and the cost depends on the size of the property and is generally agreed to follow these bands…
Up to 100m2 - 250€ + IVA
Between 100m2-200m2 - 375€ + IVA
Between 200m2 - 300m2 - 500€ + IVA
Over 300m2 - 630€ + IVA
It is important to have the certificate in place as soon as you can because the regional authorities (ie Andalucia) will apply external controls and introduce infraction penalties for non accreditation or for deficient low performing properties. Caution: Since being introduced there have been many organistaions and individuals offering to perform the EPC at low cost/slashed prices - but from our experience these documents do not inlude either the registered stamp of the technical architect appropriate for the province, nor do they offer to regsiter the EPC details with the Junta de Andalucia registry body. The costs to correct this omission can be as much as 70 Euros.
A recent industry report suggested that selling a property should be no different to selling a packet of frozen peas... and although we are considering an asset that is clearly a million times more expensive the product should nevertheless, without inconvenience or surprise, provide what it says on the label. Therefore if you are serious about selling be serious too with your choice of agent; take the agents advice to realize your market potential; not all properties in Spain are sold on English websites by English brokers to English people. There is the home market, the European market and the Global market too to consider. Another useful tip is to do those niggling minor repairs to the property, keeping the house generally clean and tidy, and be available for on-the-spot viewings, too. Believe me this really will help to give your property the edge! And if your likely to be out of the country for some time, or not easily available, then consider giving 'power of attorney' to your lawyer or Spanish legal representative who can then act on your behalf in signing the initial private contract. This too will speed up the selling process.

At SpainCostaTropical.com I aim only to offer property that meets these latest guidelines and regulations - an assurance to the seller and buyer alike that it is a property worthy of consideration. Wherever possible I will ensure that the property offered is available to view, even at short notice, and that the agent is a key holder for the property. There is nothing worse than arranging to view a property with your deadline posted only to find that the owner or the friend who holds the keys is - quote - "not available"...

As a vendor you need to be aware that as of 1st January 2012 capital gains tax laws changed in Spain. Where a non-resident used to pay 35% and a resident 15% up until 2008, this rate changed in 2010 for both residents and non-residents (it had been 18% from 2008 to 2010, then to 24% to the end of 2011). Today, the rate is banded - the first 6000 Euros is taxed at 21%, gains to 24,000 Euros at 25%, and above 24,000 Euros to 27%. It may be possible to offset some costs, these include legal fees, agency commissions, registry, etc; and even costs on improvements done to the property in order to sell (note that general maintenance is not included). In all cases I strongly recommend asking for clear advice from your lawyer as to your exact tax obligations given that you have 4 months to present a tax return soon after completing the exchange, the tax can be liable for up to 5 years from the sale, and further that it is not sufficient to be resident in Spain you also need to prove fiscal residence to be exempt from the retention or the full tax liability.

On the date of exchange and completion before the notary office, the non-resident seller will receive the sale price less 3%. The purchaser is required by law to hold 3% (prior to Jan 1 2007 the retention was 5%) of the purchase price on the sellers behalf; and so 2 payments will be presented before the notary one to the seller the other for the tax authorities (hacienda). This system was introduced to guarantee tax payable by non-residents and the sum presented is then used to offset against future liability of declaration. Failure by the buyers to ensure payment of this retention by their lawyer or agent can mean that the amount will be levied as a debt on the property [#3].

Plusvalía is the municipal charge for the increase of the value of the land from the time of purchase to the time at which it was sold. Plusvalía is calculated on the ratable value of the property and the number of years of ownership (the tax is not determined by the sale price but by the land value determined by the land register); and is paid to the local authority. Depending on the property size, location and length of ownership the amount can vary between a few hundred to two or three thousand Euros.

Finally, make sure you have your NIE (not just an NIF) and also that your certificate of non-resident (requiring renewal every 2 years) is still current.

NOTES:

[#1] In Spain, the commission rates charged by estate agents vary quite substantially. In some areas and towns this can be shared between the vendor and buyer; where each is charged a percentage above the advertised price. Here at SpainCostaTropical.com I will not add additional fees on top of the price or for that matter shock any potential buyers with hidden costs. Generally the standard commission is 5%, and I have known of agents charging more than 5% and up to 15%. Vendors may also consider to negotiate the rate if they are willing to enter into an exclusive sales contract which can be beneficial to streamline the promotion of your property. Today there are more properties for sale than buyers, and this added by growth in the international property market sector, has led to many local agents having to split commissions with third parties. This can negate your selling potential as the agent is forced to exclude a property where the rate agreed is too low to split and so make viable any inspection.

[#2] It is often forgotten that the valuation of a property for mortgage purposes is very different to that of the actual market conditions. Here in Spain it has in the recent past while interest rates were low, been possible for residents to capture a larger mortgage from lenders than was actually required for the property. In this way borrowers were able to consolidate other loans for purchases (car, furnishings, etc) within one capital payment. Further mortgage valuations, in order to be attractive and competitive, will almost always be greater to one degree or the other than the actual market price.

[#3]One of the most important documents to help the vendor or the buyer identify if there is any debt on a property is the nota simple. Costing a couple of Euros, this document is available either online from the property registration website and can be purchased by credit card at(https://www.registradores.org:444/propiedad/propiedad.jsp), or by visiting the local office of the land registry in which the said property is listed. This document shows mortgage details, unpaid fines, tax debts and also outstanding payments due by the owner to the state when they are resident and self-employed in Spain. This same document is also used to identify the property title holder(s), their legal status, the number of times the property has been exchanged or amended, its cadaster reference (land, location and distribution for taxation) and a description in full of the property relative to its location and its neighbours. In some instances, for example an apartment with garage, the property may have two entries in the land registry; one the apartment and a second for the garage. As a vendor it would be prudent to renew your nota simple every 3 months so as to avoid any surprise entries or omissions which may delay the exchange. This can happen in various ways; changes in the legal qualification of a property as dictated by the government, extensions built but not declared and written in the escritura, bank re-possessions, embargos and other charges against a property (for example, unpaid community fees), etc. In fact as a vendor it is in your very best interest to obtain a copy of this document both to ensure peace of mind and readily to arm your buyers' lawyer with an up to date version for inspection. More recently, expatriate home owners and buyers are now able to request a Land Registry certificate (nota simple) in English from the Colegio de Registradores (College of Registrars). A certificate, including the translation fee, costs €29 (plus VAT) and this can be requested online from the Colegio de Registradores website https://buyingahouse.registradores.org.

Edit 11.2013