Purchasing a property off plan in Spain means you paying partly in advance for a property not yet built!
The costs associated with purchasing a new property are slightly different to those for a resale. ITP (transfer tax) is no longer applicable since you are purchasing from a developer, and instead you pay 10% of IVA (VAT) and 1.5% of AJD (stamp duty). Both taxes are based on the purchase price. The “plusvalia”, as previously mentioned, may be payable by the buyer or the vendor, as agreed in the contract. Other costs are the same as the resale property, i.e. the notary and land registry fees.
It is very important to appoint a legal representative when purchasing “off plan” so that this representative can check that all the necessary licences are in place. The good news is that a new Andalusian decree has been introduced to protect the consumer. Since February 2007, all developers are obliged to supply a complete information package to a prospective buyer.
The documents include papers identifying the builder, the planner, the project manager and the developer and any other intermediary involved in the sale. It also includes the floor plans, building specifications, dimensions, delivery date, terms and conditions of the sale, property registration details, and information on the building insurance that protects the buyer should the builder not complete the project.
Spanish law requires that the purchase contract must contain the delivery date with a penalty clause, specifying that the property must be handed over within “x” days of the first occupation licence being issued.
The developer must also provide bank guarantees for the payment made when private purchase contracts are signed and any further payments made during the construction period. Your lawyer or property consultant will request and check the following:
- The construction specifications
- The specifications of the materials used
- Details of the communal areas
- Bank guarantee details
- The contract
- Whether the developer or purchaser will pay the plusvalia tax
- Whether the developer can offer a mortgage
- If the 10 year insurance policy covers defects on the property
The developer is responsible for attending to defects at the moment the property has been handed over:
- Up to 1 year for any snagging defects
- Up to 3 years for any minor defects
- Up to 10 years for any structural defects
Source: Costa del Home