Are you looking to purchase a property in Spain?  If so, you would need to be aware of the expenses you would need to add on top of the purchase price of your chosen property.   Our colleagues at Chestertons Atomiun have put together a useful guide to the costs of buying a home in Spain which you may find helpful.

Nota Simple

The nota simple is used to check if the property is free of encumbrances. Its application is not mandatory, but it is one of the most important expenses when buying a home if you want to avoid complications in the future. There are several companies through which you can request a nota simple online and its price is around €20.

Valuation

There are specialised companies whom can appraise any property, such as Tinsa, or Euroval, although banks often include the price of the appraisal among their management fees when taking out a mortgage. To give you an idea, this amount can be around €500 for a 90 m² apartment.

Taxes

It is time to talk about taxes. Let’s see what weight they have in the total expenses we must consider when buying a home:

• Transfer Tax (ITP). This is a tax that is only paid when buying a resale property. This is a percentage applied to the price that appears in the deed and also depends on the autonomous community. However, it is almost always between 6 and 10%, with some exceptions where it may be reduced, such as in the case of large families or subsidised housing.
  
• Value Added Tax (VAT). VAT is payable only when buying a new home and its value is 10% of the amount of the transaction, except for subsidised housing, which will be 4%.

Property Registry

Property registry fees are actually borne by the bank when a mortgage is taken out for the purchase of the property and represent between 0.1 and 0.3% of the mortgage liability. However, the buyer will be responsible if they do not require a mortgage and in this case its cost usually ranges between €24 and €100, depending on the price of the property, according to the rates governed by Royal Decree 1427/1989.

Mortgage origination fees

The mortgage origination fee is an expense that you must assume if you take out a mortgage with a bank. This commission is paid only once and includes all the expenses that the entity may claim for the study, processing and granting of the loan. Its value ranges from 0.5 to 1.5% for variable-rate mortgages and can reach 3% for fixed-rate mortgages.

Home insurance

Home insurance is mandatory in the event that you acquire a mortgage, including at least the basic coverage. 

Renovations

Renovation costs can vary considerably, depending on the condition of your home, your aspirations and the budget of the renovation company you choose. It should be noted that kitchen and bathroom renovations tend to have a higher price tag.

Expenses that are the bank’s responsibility when buying a home

There are a series of expenses that traditionally passed on to the buyer with the purchase of a house or apartment when taking out a mortgage. However, since the entry into force of Law 5/2019, the legal text makes it clear that such expenses must be assumed by the corresponding banking entity. It is important that you also know them.

Notary

Notary fees are paid by the bank. They can usually reach €800, depending on the value of the property. These are notaries’ fees and the cost is regulated by the State. However, if the client requests a copy of the deed, he/she will have to assume the cost, which is usually around €20.

Gestoría

The agency fees are not mandatory and correspond to a service that is usually contracted only in the case of acquiring a mortgage in order to process the corresponding paperwork. The banks are responsible for hiring a management company that charges them around €300.

Documented legal acts (IAJD)

This expense is a tax corresponding to the use of notary and registry services. Its value depends on each autonomous community, although it is usually between 0.5% and 1.5% of the amount of the purchase-sale.

Here is an example for purchasing a property priced at €100,000 with a fixed-rate mortgage.

In the example above, the expenses are around €540 and that the ITP in your autonomous community is 8%, you would have to pay €8,000 in taxes. To this must be added a 3% mortgage arrangement fee of €3,000. Thus, the total expenses associated with the purchase of the home would amount to approx. €11,540. And to this figure you would have to add the price of the insurance and the renovation, which will depend mainly on the state of the house and your preferences.

Our colleagues at Chestertons Atomiun in Madrid would be happy to advise you further if you have any questions.

You can view properties available to purchase in Spain via Chestertons Atomiun here