The Buying Process

The Deposit

When you see a property you wish to buy it is usual to pay a deposit of 3,000 Euros (£2,000 approx) which secures the price of the property, giving you the chance to receive contract details and review before making a full legal commitment to buy.

Your Purchase Contract and 1st Stage Payment

Usually one month after placing your initial deposit you will be expected to pay the first stage payment and sign the contract. This first stage payment varies but is usually between 25% and 50% of the total property value. Once you have signed this Contract you are legally bound to buy the property.

Subsequent Stage Payments

You will agree the amounts and timings of your further stage payments before signing your contract. Typically the final 50%-60% payment on completion of the property. The stage payment terms can vary between developers.

Completion

When the property is completed you will need to pay all the outstanding monies, taxes and legal fees. After signing, your lawyer will pay the tax and lodge the Deed, although it may take a little while for the Land Registry to formally register title. You will now own your property and will receive the keys and you can start enjoying your new lifestyle.

Additional Costs

In Spain you should allow between 10% - 12% of the property purchase price to cover all fees and charges involved in the process through to completion. This includes:

• IVA – tax is 7% of the declared value
• Stamp Duty – 1% of the declared value
• Notary Fees – 0.5% of the declared value
• Solicitors Costs – Registration and Conveyancing

In Italy you should allow up to 15% of the property purchase price to cover all fees and charges involved in the process through to completion.which includes for Purchase Tax on the property of 10%.

UK Mortgages

Some buyers prefer UK mortgages for reasons of peace of mind, familiarity or because they have a good relationship with their particular bank. It is fairly common to borrow money against your UK property to raise equity either for the deposit or to pay the full amount. At the time of writing the UK interest rates are towards the lower end of their range over the last 20 years making lending inexpensive. Obviously rates can change, so it is a good practice to allow some room for manoeuvre in case rates start to move upwards.

Euro Mortgages

The benefit to having a Euro Mortgage is because of the lower interest rates available. Euro interest rates are competitive compared to UK rates (currently 4% as at April ‘08) fixed for one year, then variable. Subject to criteria, mortgages are readily available. Generally mortgages are granted for up to 80% of the value of the property and over a period of up to 25 years. Occasionally it is possible to obtain higher amounts. The documents you typically require when applying for a mortgage are:

• Income Tax Returns (Form P60)
• Proof of Earnings (last 3 payslips/pension statement)
• Copy of Passport
• Copy of Purchase Contract

We can help you find a mortgage that is right for you. Please contact us and we will discuss the options for purchasing your Overseas property.

Bank Account

If you are buying a house in Spain or Italy you will need to open a local Bank account. In order to do this you will need to provide your passport. It is advisable to open your Bank account as soon as possible following your purchases. We can assist you with this process.

Choosing a Solicitor

Your solicitor or legal representative should act for you first and foremost. Choosing a locally based solicitor is normally safer because they are close to the development, know the country and its laws extremely well, and have a good local knowledge. You should request a solicitor who can speak good English and it is better still to find someone who is used to dealing with UK clients as they will be sensitive to any cultural differences with the British methods of working.

Recommendation from friends or your independent property adviser is often the best way to find the right representative. It is not usually advisable to deal with a UK solicitor who has no previous experience of overseas property transactions, as this can give rise to complications over the language and laws of the country concerned. This may also slow things down as they could be trying to learn the process as they go along.

Your solicitor will help to arrange your NIE number in Spain known as Numero de Identidad de Extranjero (Foreign Identification Number) or in Italy your Tax Identity Number known as the Codice Fiscale required by all non-residents when purchasing in either country and is required for all official dealings. After you have completed on your property your solicitor will become your fiscal representative and will look after all your tax needs whether you are a resident or non-resident of of the country in which you have purchased.

For further information, please call us on 0845 838 7477, email us at info@salamancavillas.com or complete our online enquiry form