Steps to Purchase

At the moment buying a house in England can be a very longwinded and inefficient process. From having an offer accepted it will usually take up to 3 months for completion. Even then, one third of all agreed sales do not make it to completion.

This process is currently under review and new legislation will be in place by January 2006 making it an offence to market a property without completing a sellers information pack.

Current home Buying process

• Choosing the area and type of property
• Choose a mortgage broker and arrange one in principle
• Select a solicitor
• Contact all estate agents in area, view all applicable properties.
• Make / Agree offer to buy property
• Instruct solicitor to proceed with purchase

Foreign Purchasing Steps

Once you have found your dream retirement home or the ideal investment rental property there are several steps to ownership.

As a guide line there are five steps to property ownership in a foreign country. Please check the specific country for details.

Here is a precise list of steps for purchasing in Spain.

1. SURVEY

Have the property valued, surveyed or examined by an architect.

Valuations will normally be required if you are buying with a mortgage. Costs will vary depending upon the size of the property and expect to pay around £200 for a £200,000 home. Newly built apartments will attract the cheapest valuations.

Full surveys are far less common in Spain than in Britain , but are essential if you're buying and older property that may have hidden defects. Depending on the property prices the cost will vary from £500 to £1500. If dealing with a Spanish firm you may want an independent translation of every report. This will add £100 to your bill.

2. FINANCE

There are three main options when looking to buy in Spain .

Taking advantage of UK soaring house prices, and re mortgaging current homes: this may mean paying re mortgage fees of up to £1000 if still in the redemption period. However due to the low interest rates, it is still possible to re mortgage, raise extra capital on equity of property and still have similar repayments.

If you don't want to re mortgage your home in the UK to raise the money for you holiday / investment home, you can get a specific mortgage in either Euros or Sterling .

Several big UK banks and building societies all now have operations in Spain ; one of them doubled its network there last year alone.

Borrowing in Euros can make sense if you will be letting out your property and collecting rent in Euros, along with paying all your local bills in the currency. Rates are low and overseas mortgage brokers say shopping around can find Euro mortgages up to 1.5% lower than UK .

Despite this, borrowing in Sterling could still be a better bet if you are paid in Sterling and don't want to complicate your financial affairs. Whether deciding on a Euro or Sterling mortgage, the fees are similar.

Application fees range from £200 - £400; there could be extra costs for wiring money to Spain when a purchase goes through.

A decent deposit will be required, with most lenders asking for at least 20% of the purchase price.

Finally, arrangement fees from some lenders or brokers can be as high as 1.5% of your loan.

3. PAPERWORK

Getting the paperwork right is vital for Spain , so it is essential to have a good lawyer. Many buyers rely on the official “notario” to look after their interests, but these officials are only paid to make sure the right documents are produced when the sale goes through, not to check the small print.

Failing to do the checks means you can buy a property that doesn't comply with local planning rules, isn't registered as a residence or carries debts and mortgages that pass to you on completion.

Mortgage lenders can normally help borrowers find experienced lawyers to check all this

Fees for the “notario” should follow Spanish government guideline and a £100,000 property should bring a fee of around £225. Independent legal fees can easily top £1,000 on even the simplest transactions.

4. TAXES

Spain levies a series of costs on buyers. Be ready to pay VAT - known as IVA - at 7% of the price of a new property and land, or property transfer tax of 6% on other purchases.

Stamp duty is about 0.5% of the price of new builds. Capital Gains Tax is levied on the vendors, but tends to be paid by buyers and can cost up to 40% of any gain in value since the home was last sold.

5. MAINTAINENCE

Running a Spanish home need not cost much more than a British alternative. Mainstream insurance companies won't offer you policies, but specialist deals are still competitive.

If you are buying a holiday home and won't be there on a regular basis, or if you rent it out, you will need to be sure your policy covers you. See insurance

Owners wanting to insure a £90,000 property with £10,000 contents should be able to get cover for around £250 a year. Where as a £160,000 property with £25,000 of contents will be around £500 a year.

Having a Spanish bank account will be essential to pay utility bills. These accounts won't normally charge monthly fees, but can charge when money is paid in from the UK .

Certain UK banks and building Societies have a subsidiary in Spain which can offer Spanish accounts and free transfers.

There are many UK citizens of advanced age residing overseas and it is surprising how few people have made Wills disposing of their assets when they die. Therefore it is advisable to make a separate local Will dealing exclusively with your overseas assets to prevent your heirs from becoming involved in time-consuming and expensive legal procedures in the event of your death.