Gecko Towers
You’ve spent months researching the types of property in Marbella and on the Costa del Sol that your budget will cover. I wanted to guide you through some of the basic steps – and there are always more than you think – that you needed to tick off you ‘to do’ list in preparation for your purchase.
Today our discussion centres on Money. It can be a bit of a taboo subject but its clear that in order to complete your purchase of a property in Marbella you will need to tackle this one head-on.
The realism is, of course, what you can afford and what it will costs to buy in Marbella. It is none of my business to pry into your ability to fund you property purchase, but equally no one like to waste the time of others if the prospect of doing what you dream of doing is simply unachievable. So my message is clear, it makes sense to sort out your finances in parallel with your property search.
The cost of the purchase plus any proposed renovation costs is key but you will also need to have an eye to the costs associated with buying, and I don’t mean simply removal expenses or new lighting. I mean the actual out of pocket costs that you will need to cover to complete your purchase. Typically these include Transfer Tax, VAT (may be appropriate where the property is newly built) and the costs of registering your new title to the property.
Please see one of my earlier posts that addresses the Costs of Buying a Property in Marbella Marbella property buying costs and the Andalucia Government’s temporary incentive boost the market Great news from the Andalusian Government
If you are in the fortunate position to make your purchase with available cash there are several strategies that your Abogado in Marbella may suggest in order to mitigate the effects of certain taxes that you may be obliged to pay in order to complete your purchase. This will depend on your precise circumstances but could be attractive.
Whilst there are a variety of ways of to fund your purchase using your asset base, as an alternative to a cash purchase, many purchasers chose funding by way of a mortgage. There are several specialist and experienced brokers in the Marbella region who can handle the mortgage application process for you, but you may feel that you have sufficient knowledge to directly approach a Spanish bank.
My professional colleagues maintain good relationships with various senior local bankers and it may be a useful short cut to approach the national Spanish banks in this way. Additionally, many of the bigger high street banks in Spain have recognized the value of incoming purchasers and have place multi-lingual staff in branch to assist with the application processes not only for mortgages but also for general banking and even some low-key investment advice.
There is some considerable debate currently regarding Spanish lenders providing mortgage funding to those who earn in other currencies that may include the £ or $. Careful thought and planning needs to go into this issue as the collation of required documents and the application process can take some time. That said, interest rates on currently offered mortgages are not unattractive so there may be an incentive to borrow if you can produce the required paperwork as opposed to using available cash resources.
In essence, the earlier this process can be started the better. It would be a calamity if mortgage funding was required, you found your preferred property, but were unable to move because of the time needed to give the local lenders their time to assess your case and make a decision.
You may know that since the financial crisis of 2008 it is now rare to find a UK lender who is willing to advance mortgage funds for the purchase of a Spanish property holding the property as security. However, depending upon your relationship with your usual bankers it may be sensible to at least have a discussion with them about funding. Some banks, particularly those that provide HNWI with services offer an array of clients services and view their client’s financial needs in a more holistic manner.
As you will probably know from your homie market that since 9.11 the world over has become much more keenly aware of Money Laundering. The European dimension is one of the most stringent regimes determined to tackle this matter and your Abogado, like your professional representatives in your home market, owes a duty of care to their national regulatory bodies to ensure that they are vigilant in progressing checks on potential money laundering.
Why am I banging on about this? Well, my aim is to prepare you for the kind of intimate questions that you may not have anticipated and that your Abogado is compelled to ask you in their own “Know Your Client“ checking and in their obligations they owe to the Banco de Espana (The Bank of Spain) and the Spanish State, under the provisions of various European Directives.
As a result please don’t be offended by their questioning. It’s all very routine. Their failure to ask and get satisfactory answers to these probing questions potentially exposes your legal advisor to criminal sanctions. For this reason they will be diligent to ask and receive complete answers. I repeat its all very routine.
This issue may be exacerbated if you are purchasing a Bank repossession. Be prepared to be asked to justify the route by which the funds that you are hoping to use for your purchase came to be in your account. While this may be comparative;y simple for wages, dividends and bonuses but inherited sums or gifts may pose more problems. A deal of frustration often results from such purchases but in part the price being paid may be partial compensation for the hurdles that have to be jumped through.
Dependent upon the state of the property you purchase you may want to consider some basic renovations or a more comprehensive remodeling of your property. It should be remembered that it is usual – and there are certain exceptions – that when it comes to the subsequent sale of your property that there may well be the need to pay some capital gain tax on your profits from sale. To some extent these taxes can be mitigated by ensuring that you collate and maintain a list of all of the accounts that you settled in the renovation process. IVA invoices should be asked for from your suppliers, your builder, plumber, etc as these can all be offset against your capital gains, thus reducing the sum you may ultimately pay.
At the point of purchase of your property in Marbella it is prudent to consider the way in which you make your purchase. This requires detailed thought to ensure that your long-term interests are properly protected while any opportunities to plan for the future are also embraced. It is never going to be a particularly happy topic to address but you will need to consider what should be the treatment of your property in Marbella after you are no longer around. Preparing a Spanish Will is a vital part of that planning.
Consistent with the ownership of a property, my colleague Abogados will invariably advise that all owners and co-owners of a property in Marbella should complete a Spanish Will that deals with their interest(s) in the property following their death. Without going into substantial detail regarding the process of inheritance, I am told, it is materially different in Spain from, for example, the UK. At the outset of your purchase there is a usually an opportunity to get your estate planning in order. I am certain that your family will be grateful that you had the foresight to address this sensitive issue early on.
Should you be interested in discussing the processes 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 team of 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. They 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 2021. All rights reserved.