Gecko Towers
Update 09.04.24: An announcement has been made by the leader of the Socialist Government in Spain, that his government plans to amend or repeal the “Golden Visa” legislation. Currently no timetable for these changes has been suggested and there is opposition to any revision. That said, this discourse, that started in May 2023, may result in some material changes. We will endeavour to keep you up to date with these as we are made aware of them and their precise impact.
Are you the kind of person who likes a checklist? Yes, me too. There’s a order of sorts to follow when “Buying a Property in the Marbella Region” which we should try and stick to. There will be frustrations along the way, there will be things you’ll question and not understand but most will attest to the end result being so well worth the process!
This is not an exhaustive checklist….but here goes:
1. VISIT – There’s no substitute for putting your feet on floor, seeing available properties, locations first hand and with your own eyes. Expert as they may be, estate agent’s well-produced walk through videos are largely intended as a teaser to get you to come and visit. They work and you’ll want to see a number of properties. Some will feel just right, others wont.
2. LOCATION – Where does your new property need to be situated? Will you be using it for family holidays or will you be seeking to relocate? The latter may embrace the need to consider schooling and access to transport hubs motorways/airports etc. Do you have a location that you are familiar with and like or are you looking to discover the new? Many people are attracted by familiarity, favourite urbanizations, beaches, bars and restaurants. The reason given by a number of agents for sales during the Pandemic is they managed to make sales “off-video” as the buyers were very familiar with the location and knew exactly where in a particular block, for example, they wished to purchase. Sounds easy but logistically difficult if a buyer cannot travel to even initiate buying process, handle bank account openings or issue a Power of Attorney – of which more below.
Whilst talking location I’d like to share a piece of my wife’s particular insightful knowledge. Given that the coast road, still called the N340 by many, is a main artery along the coast it matters not only which side of the road your property is located but also where you are in relation to an ability to change direction. Called a “cambio de sentido” – literally “a change of direction” – these are slip-roads off the N340 where you may cross, on one of the flyovers, to travel in an alternate direction. If you live miles from one of these you may have travel far in one direction to be able to switch to the opposite. While this may not sound too arduous, if you do a regular journey in one “wrong” direction to have to make the switch it can become tiresome.
3. CONFIGURATION – If you are purchasing for family holidays or the use of yourself and friends, you’ll need to carefully select the property the best suits your needs. An apartment or small townhouse will provide year round opportunities to use – and even consider some rentals to friend, families or others – but with minimal gardening and maintenance it will maximize on your time to be enjoyed at your property.
For those planning to relocate, who may want to enjoy a stress-free remote working environment, a larger property with pool and, above all, and excellent WiFi service, may be much more suitable. It should be noted that Marbella has just completed municipality wide installation of a 5G network which, when combined with the available fiber optic up and down load speeds that are increasingly available, will be comparable with any major tech hub elsewhere in Europe.
4. OLD V NEW – Aside from the aged centre of the town, the so-called “Casco Antiguo” in Marbella, which comprises many smaller and very much older and rather pretty properties, the vast majority of property stock on the Costa del Sol dates from fifty years old to significantly less. Of this you get several large developments dating from the 1970’s and 80’s but whole regions such as Los Arqueros, La Heredia and much of La Cala de Mijas and Nueva Andalucia have been built within the last ten to twenty years. There are also a goodly number of new developments that are either being completed or are due for completion within the coming year.
Naturally, the qualities of these vary as you would not expect to find underfloor heating in a property built in the 1970’s for example, that’s not to say it couldn’t be retro-fitted. An off-plan purchase for some may be considered a little brave, you may be investing in an area yet to be fully developed. That said, there are legislative guarantees to protect your cash and experience has shown that buying off-plan does deliver a new property often with some customization at a commercially attractive price when seen with local comparable properties.
I am attracted to older properties as they give real scope for renovation to get the property you really want. There are several good building teams and so long as they are properly project managed they can deliver a home as spectacular as a new build. I believe this represents a material part of the available property stock going forward but you have to be flexible and be able to act quickly. You will also benefit from a pro-active estate agent who can sniff out these prospects.
5. PRICE – Negotiations over the sales price will largely depend on the seller. A motivated seller is perfect, they have a price expectation and you’ll either need to match or exceed it to be successful. Where the seller is uncertain as to the property’s market value they will push to see how high you’ll go. Set your budget and try to stick to it. There are those in the market who always have their property for sale just waiting for the right bidder. While most agents know that such a seller lacks seriousness they can slip the net.
Haggling over price does happen, often where the seller is a deceased person’s Estate or similar. There is a slight custom that the family of a deceased person will place their property on the market and if there is a lot of interest around the price marketed they will assume it has be incorrectly priced incorrectly. They may seek to increase the price above the asking. Try and remain firm to your budget as this is the opposite of gazumping and will eat into your profits from the property. That said prices do seem to be rising and securing your property is the goal even if such strategy appears a little slippery.
It’s worth finding out as much about the seller as you can pre-visit. Locking horns with an unreasonable seller is just not worth it. Also don’t be pushed by the “we just had a competing offer” ploy. If you, as a viable buyer, and your offer makes sense to the seller then you are two-thirds over the line. It’s both a buyer’s and seller’s market currently, although there is some scarcity of stock in some property categories, so you will know that should you stack up there’s a very good chance of your offer being successful.
6. SELECT YOUR TRUSTED ABOGADO – though this is sitting at position 6. in this Check List, for some this should be the first action to be taken. Particularly those hailing from the UK, the USA or otherwise outside the European Union, it makes sense to consider and decide upon your Visa options with your Abogado (Spanish Lawyer) ahead of your purchase. Indeed some, such as the Golden Visa may be linked to a property purchase where, following one route, the sum introduced by the buyer needs to exceeds €500,000. Being clear on your Visa options ahead of making a purchase is not only desirable, it minimizes disappointment.
It may be prudent to share with your Abogado the properties that interest you as their local knowledge and practical experience of many regions with doubtful planning may reduce your choice but significantly strengthen your security. Following the acceptance of your offer is when your Abogados skill will become even more important. Their role, in addition to ensuring that your interests are best protected, is to drive the transaction to ensure that all parties are ready to complete when required. This will include the seller’s side but may also include a mortgage lender if relevant. At each stage you need to have 100% confidence that your Abogado is working in your best interests and your relationship with your advisor needs to thrive on honesty and integrity. He/she also needs to be able to impart good and bad news alike to strengthen your faith and trust in their vital role.
7. NEED A MORTGAGE? If you need a mortgage to complete your purchase you have a series of choices:
A. You can seek funding from your own bank. If you have accumulated assets in say, the UK, depending on your Bankers – it’s likely a private bank will take a more holistic view – they may agree to fund your purchase on the basis of additional security or guarantees in your usual market. However, this should not be assumed it should be pre-cleared through early discussion.
B. In Spain a solution may arise from you meeting local banks, many of whom have engaged foreign language speakers, including English, to act as a productive interface between the potential new clients and the bank. Your Abogado, who will usually have access to various more senior members of the larger banks, is a good call to assist this process. You will need to satisfy the bank’s KYC and anti-money laundering protocols but seeking your mortgage loan directly from a bank can be a positive, though occasionally frustrating, exercise.
C. Based on the Costa del Sol are several Mortgage Brokers who have varying reputations for being able to secure acceptable mortgage arrangements. This is primarily for clients who, and this is similar if you apply directly, are in relatively uncomplicated positions where relevant home bank statements, employment contract details, P60’s and the like can be produced to the banks satisfaction. Though everyone hopes this will be a reasonably swift application process, it can, through no fault of anyone visible, take many weeks or even months to close. During this time there are often requests for seemingly vital piece of additional information and materials.
D. If you do require a mortgage the lender will insist on a valuation prepared for them by a professional valuer called a Tasador. This is somewhat similar to a valuers report in the UK but it doesn’t particularly dwell on the qualities of the build, the properties state of repair or the like. It is very much more a mathematical calculation applying a sum to the total square meterage of living area, terraces and plot. The sum calculated gives the value of the property for Mortgage purposes. For your own comfort you may seek to obtain a valuation or even a full building survey from one of the RICS regulated British Surveyors who operated on the Costa del Sol.
8. EXPECTATIONS V THE UNEXPECTED In very simple terms when buying a property anywhere in the world what are your underlying concerns.
A. Will I get good, clean and full title to the property when I purchase it so that I own it outright. Is the property the subject of any adverse planning issues? Can the seller sell me the property or are there others who have an interest in it? Does the property benefit from all of the correct licenses? Is there anything relevant to the property that I should know or that risks becoming a shock to me if it is left unresolved before I buy it?
B. Does the property carry any debts that the seller needs to settle before I purchase? The point being is that many debts in Spain attach to the property and not necessarily to the person (the seller). It may be that there are unsettled mortgage debts, unpaid community-fee debts, unpaid taxes, unpaid utility accounts or other debt issues that you at least need to be aware of and have enforceable remedies in place if they are not settled by your date of purchase. One great solution is the retention of monies otherwise due to be paid as part of the purchase price. These need to be agreed in advance with the seller (this often Abogado to Abogado) and should equate to the total of all debts. This means at completion funds are paid over to the seller less the agree retained sums. These will need to be paid by the buyer to those parties holding debts over the property. In this way the control of any debt passes to the buyer who hold funds back from the payments due at completion for their settlement.
It cannot be overstated how important the role of you selected and trusted Abogado is in relation to these key elements of the buying transaction. He/she will conduct investigations into title, the required licenses (many of which should be available in a “seller pack” usually provided by the selling estate agent), supplemental building consents and all relevant associated issues including outstanding debts. Become familiar with the questions to ask and be satisfied by the answers and explanations your Abogado gives. They should have dealt with many in a similar position to you so don’t feel you are becoming a pain by asking too many questions. There is much to regret when you accept that you are simply not getting complete or satisfactory answers.
C. Turning now to unexpected issues that may arise:
i. Unanticipated “bank receiving commissions”: Unless you are already holding Euros for your purchase it may be that you need to send funds from a bank account that is located outside Spain. You have a Spanish bank account and you transfer those sums you need for completion of your purchase. When they arrive you may be surprised to see that they have been subject to “bank receiving commissions”. So to avoid unnecessary stress in addition to those sums you actually need for completion you should add additional funds, calculated on the principal sum needed, that represent the commissions your bank will deduct. It doesn’t feel right paying to receive your own money into your own Spanish bank account and not all banks charge these commissions but some still do.
ii. Ensuring that you have all your paperwork needed ready for completion. If you are attending the completion in person, this will include your passport and NIE details for each party comprising “the buyer”. If your Abogado is attending on your behalf they will need to hold a comprehensive Power of Attorney to act in your stead. This will need to be drawn up and will need an Apostille under the Hague Convention (don’t ask!) to ensure that its acceptable to the Notary as you intended. The Notary – a crucial figure in your purchase or sale of a property in Spain – is a highly qualified member of the Spanish legal profession who certifies that all the paperwork (the title deeds etc) is in order for your purchase, acts like a formal witness to your transaction and certifies required documents for the registration of your interest in the property with the relevant bodies of the Spanish State.
Finally, your bank will need to prepare draft cheques for handing over at completion. Your Abogado should make sure that the bank has both the amounts going to each person comprising the seller – for individual cheques – but also they have a full break down of the retentions being made and the relevant taxes being levied. It sounds more complicated than it is but here you are very much in the hands of your trusted Abogado to get things right.
iii. If you are using mortgage funds to complete your purchase you may not be aware but there is a “14 day cooling off period” after you have attended a meeting at the Notary to receive an explanation of the mortgage obligations you are undertaking. You’ll need to build this into your completion timetable.
9. PROCESS – From finding your chosen property to signing at completion can take several weeks or even months. From the first document you may be asked to sign after your offer is accepted – the Reservation Contract – to the legal formalities of completion of your purchase you are to some extent involved in a familiar process. It’s best to say that you should sign nothing nor part with any hard cash until such time as your Abogado has reviewed whatever you are being asked to sign. This process is one that your Abogado, if they have the relevant depth of experience, will have managed for clients many, many times in the past. There is little that they should be confronted by which is either alien or strange. Above all they must be willing to report to you and to pre-warn you when you need to take particular action. I cannot overstate the importance of the transparent and trusting nature of your relationship with your Abogado. You are making a big commitment and the gravitas of your Abogado advice should reflect the seriousness of getting your transaction right.
10. COSTS AND TAXES – one of the most important elements of the property buying process is the amount of costs and taxes that you will be required to shoulder. Rather than reinvent the wheel we have covered these in two previous posts which have been updated by the good news back in December 2021 that reductions made previously in the year have now been made permanent.
Please see – The buying costs of a property purchase in the Marbella region? – and – Andalucia’s “Property Transfer Tax and Stamp Duty holiday” have been made permanent.
Should you be interested in discussing the legal process involved in buying a property in the Marbella region, we would be delighted to assist you. Our team of bi-lingual, highly experienced and wholly independent Abogados are ready to help you.
Please call me, Mark FR Wilkins, during usual business hours on +34 600 343 917 or, if you prefer, or e-mail me at mark@roslegal.es
Please note that our posts are for general interest. There is no substitute for proper legal advice tailored to your specific circumstances as provided by a qualified Abogado who is experienced in the application of the Spanish Law.
Nothing contained in this article should be seen or taken as the writer or the publisher providing legal or financial advice.
© Mark FR Wilkins 2022. All rights reserved.