Costa Tropcal info

Problems when buying Property in Spain

The price of property here in Spain does not have any regulation other than the fact that the seller decides the price.As a consequence property can be severely over priced.

The government are now trying to regulate property prices and valueations so they have some control over the black money payments that still happen .

To guard yourself from paying more than you should, look at similar properties and compare the prices. Don’t be afraid to haggle it could save you thousands. Always start with a low offer and work up.

Are you thinking of buying some land to build on?

Take care because the law changes depending on the area. In some places you will need a minimum of 5000 sq m in others it can be 10,000 or even 20,000 sq m before you can get planning; this in its self is not guaranteed to get you planning. If in doubt, ask an English speaking Spanish solicitor or at the town hall. An architect is also a good source of information.

Unscrupulous estate agents (there are a few) will tell you anything to make a sale, so don’t take their word for it. Don’t listen if you are told you can build a small building on any plot that exceeds the sq m for building, without permission. This used to be a way around the planning laws here. A few years ago you could build a shed on a plot that exceeded the sq m for that area. Then apply for permission to extend and then after some time, do the same again until your building was the size you needed. Others may tell you that you can build what you like and if you get a visit from the Guardia you will only have to pay a small fine. This not true. If you are caught building anything without permission it will be Bulldozed.

Always check that the property you are thinking of buying is owned by the person selling. This sounds an obvious question; it is surprising how many don’t ask it. I say this because it is not unusual here in Spain that one or more rooms in a house can be owned by different people. Something you don’t need, (after you have bought your dream home in the Sun, and settled in), is a knock at your front door and a person telling you that they have come to claim their old room, that their father had given them a few years before. If you use a good lawyer you should not have a problem.

Searches on property here do happen but not unless you ask, unlike in the U.K where it happens every time you buy a property .

So always ask the near neighbours about any plans they might know about, new buildings that are going to be built in the close proximity. If necessary pay an interpreter to ask for you. It could be the best 30 euros you ever spend.

Buying Property here can be a mine field.

So long as you check and double check all should be well.

Buyer beware of the Black Money. It is still common practice here in Spain for the vendor to hide the real sale price of a property. This usually happens on second hand properties and is done to defraud the Tax office.

Some estate agents will encourage you to pay the black money in cash because they may have a deal with the vendor that they will get paid their commission in cash when the deal is done.

The payments made in cash are invisible and are not shown on the deeds this is why it is called black money.

If you go along with the purchase of a property using black money you will gain nothing. The vendor gains by not having to pay so much capital gains tax.

When you sell the property you lose by paying more capital gains tax unless you are willing to break the law.

Over the past few years the laws have been changing and new restrictions have been put in place to counteract money laundering. These laws and restrictions have been targeted at Tax advisors, lawyers, Spanish Notaries, bankers and financial advisors in relation to advice given on setting up companies and the property market.

The fore mentioned professionals are now duty bound to notify any underhanded dealings to SEPBLAC (Servicio Ejecutivo para la prevencion del Blanqueo de capitales - Bank of Spain) Failure to report these dealings these professionals can be prosecuted and even sent to jail.

This article was made available by Rural Spain.info. For more information and to see a check list when buying property in Spain visit http://www.ruralspain.info/buyingpropertyinspain.htm

The negative side of buying property in Spain

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