For people coming into Spain from Northern Europe, the Gulf States and the USA buying a property in Valencia is a great way to find a good place to live at a decent price and still be able to afford a lifestyle when you get here.
What you pay for the house though is not your only cost. You also have taxes, costs, commissions and legal fees. We have written before about how it actually works out cheaper to buy a property in Valencia long term despite the upfront costs because the ongoing costs are low. You can see that post here.
In this post though we will look at your total upfront costs when you buy property in Valencia. After all, if you are buying a property for 200,000 Euros that is not your only cost. Let’s take a look.
Taxes on buying property in Valencia are 10% across the board for new builds or resale properties. (In very rare cases you have to pay 21%, when the property is considered a business premises – be careful with anything described as a “loft”) In the rest of Spain prices vary from 4-11% for purchases, of which there is more below.
That 10% is usually paid along with the following costs to the notary on completion of purchase.
Remember though it is not in your interest to underdeclare the real price paid, sometimes sellers will ask you to do this, firstly because it is illegal and secondly because on any future sale this will increase your Capital Gains Tax, see our article here about costs of selling your Spanish property.
Registry, Notary and Gestor Costs
You pay the Notary to make sure there are no debts on the property and all of the previously checked paperwork, your lawyer’s job see below, is still valid on the day of sale.
You pay the property registry to make sure the property is transferred into your name correctly after the purchase
You pay the Gestor to do the legwork to make sure that all of the papers from the Notary’s office get to the right places in the time period allowed and the above taxes get paid correctly.
All of these costs are made in one payment at the Notary’s office or in the days following the sale to the account provided by the Notary. The Notary makes sure that all payments are made correctly from that single amount and that the tax is paid within the 30 day time period allowed. At the end of the process the Notary or your lawyer will inform you that you can come in and pick up the finalized paperwork where all of the costs will be attached in detail.
The costs of these services come to just under 1% of the sale price.
Estate Agency Commission
Estate agencies in Valencia typically charge 3% to both parties, buyer and seller. Sometimes you get told you don’t have to pay anything to the agent, believe me you do… The cost of the estate agent will be factored into the sale price and the agency isn’t working for you in those cases. They are doing everything they can to maximise the price received for the owner, the person paying them. Inevitably you finish up paying a higher price in those cases.
Equally, if you are buying from a developer many times there will not be an agency fee, developers attract estate agencies by offering them higher commissions or in some cases developers have their own agency to sell their promotions.
The only exceptions to this is if you are buying properties directly from a bank. Banks also have their own estate agencies now. Generally they are worse than useless, unable to find keys, unable to answer questions regarding the property, unable to get an answer to any offer you might make and crucially not doing any searches to help you purchase safely as they are working for the owner, the bank. Many people find that after buying from a bank and trusting the bank there are legal issues to the property which haven’t been sorted because the property came into the bank’s hands originally through a flawed repossession process.
Legal Fees For Conveyancing
Let’s get this straight, you should be using an independent lawyer when buying property in Valencia or Spain. Always. See our article here about lawyers in Valencia. The Notary checks the paperwork again on the day of the signing but your lawyer should be checking things before you put down any money as a deposit. If you don’t take this step then you might well wave goodbye to your deposit.
Legal costs can be anything from 800 Euros for simple conveyancing but most lawyers charge up to the maximum allowed cost of 1% on purchases over 100k, they will also have a minimum on lower cost properties.
Optional Costs on Purchase
You may have a few prior costs before you place a deposit and sign to purchase your property.
Architect and Survey Costs
If you are buying a villa then it is advisable to get a surveyor or architect round to check out the property for issues. This cost comes before deposit and is paid upfront. This costs can be anything from 400 Euros for a basic walkthrough report up to thousands for larger villas and a full report. Spanish architects provide this service but we also have RICS Surveyors who can do a full report. Ask for details.
Mortgage Fees and Valuations
If you are purchasing a property with a mortgage then you will have fees to cover from the bank for giving you the mortgage. Check out our article here about those fees. The good news is that mortgage lenders now have to cover the costs of the mortgage deeds in the notary a cost previously placed on the applicant for the mortgage.
However you may have to get a mortgage using a broker. This is generally a good idea as they work with all of the banks and will get you a much better deal generally than you will be able to get yourself walking into a bank off the street. Check out the linked article above for our recommended broker in Valencia.
Interest rates are really low currently so getting a mortgage may well be a good idea even when you don’t particularly need one. It can help you to cover the fees involved in purchase at a very low interest rate. Fees for the service of a mortgage broker start at around 495 Euros and it is paid upfront after you get your pre approval from an initial study.
Remember too that you will be asked to pay the fee for the valuation by the bank in order to give you the mortgage and that is a percentage of the valuation but standard valuations cost around 300-400 Euros. You will be asked to deposit this money before the valuer goes around to visit the property.
To complete the purchase of a property in Spain you take along a bank draft to the Notary’s office and swap it for the keys with the owner. This bank draft will cost you money and that amount can be a lot, anything up to 1% or more in some banks. You can avoid the vast majority of this cost by arranging beforehand to use the services of a Currency Company to transfer your money into the bank and making sure the bank are clear about how much they will charge for the drawing up of the drafts. See our article here about the cheapest and most efficient ways of doing this.
In total a typical purchase of property in Valencia will cost you whatever you pay plus 15%, give or take half a percentage point. Your ongoing costs such as property taxes, community fees, council taxes for rubbish collection etc… are really low meaning once you stump up the money for the initial cost your ongoing costs are low so make sure to factor in both areas into your calculations.
Other areas of Spain have a different initial tax on purchase as the tax on resale properties is levied at a regional level and this can vary from an exceptional 4% in certain regions for social housing up to 11% for luxury properties in other areas such as Extremadura. The Balearic and Canary Islands have bands from 6% to 10% depending on the value of the property.
In other areas of Spain the seller pays the agency fees meaning it is factored into the price. We have heard of 8-10% of the price going to the agencies in other areas and an exceptional 12% in one case. Remember as a buyer even if you are not being charged directly by the agent, they are not working for you and YOU PAY THIS! If you are going to use an agency always use a buyers’ agent rather than an agent who says they are not charging you anything. It’s worth it.
Just click on the images below for more articles about costs of buying a house or apartment in Valencia.