Thinking about selling your house in Spain? Fine. In a hurry? Forget about it. Snail-racing is more exhilarating than selling a property in Spain. Property valuation company TINSA carried out some research and found that it typically takes almost 10 months to go through the process. The good news is that careful preparation and smart decisions on your part can help speed up the process and help ensure a sound transaction.
Is now the time to sell your place in Spain?
That really depends on your motivation for selling. And when you bought. Although they’ve not recovered from their pre-crash 2007 peak, property prices in Spain is are generally on the up – 3.8% year-on-year. But this figure disguises huge variations across the country. Prices in the capital increased by an eye-watering 17% in the first three months of 2018 but actually fell slightly in some regions. If you’re not sure if this is the right time to sell, you might consider renting out your property instead.
How to choose an estate agent
A good starting point is to ask for recommendations from people you know who have used an estate agent recently. Failing that, make sure you talk to a few before choosing one you feel comfortable with. Look for someone with experience of working on behalf of people from the UK and, in any event, choose someone who belongs a professional body such as the FNAIM, SNPI or UNPI.
Estate agent fees can be anything from 3% to 6% or even higher when the market is particularly buoyant and in the more upmarket areas. Make sure there’s clear agreement about any other charges you may be expected to pay on top of the fee.
There’s nothing to stop you using more than one estate agent but if you enter into an exclusive contract you should be able to negotiate a smaller commission. Set a time limit on any exclusivity clause so that you don’t get tied in to a relationship that isn’t working. If you go with more than one estate agent, make sure they all put the property on the market at the same price to avoid confusing buyers.
Do I need to use an estate agent?
No, you don’t. In theory you can put up your own ‘Se Vende’ signs and post the details on an internet property site – most of the major ones such as fotocasa and idealista have English language versions. Selling the property yourself will save you money on the hefty commission fees if you’ve got the time and patience to show people round the property. But – love them or hate them (does anyone love them?) – estate agents do have the skills, knowledge and infrastructure to take a lot of the stress out of selling a property.
Finding a solicitor
Although it’s not compulsory, you’ll probably want to engage the services of an English-speaking solicitor to oversee the sale and advise you on tax issues and so on. Again, seek out someone recommended. The UK Government publishes a list of English speaking lawyers in Spain.
Get thee to a notary
You and the buyer will need to agree on a notary whose role it is to rubber-stamp the paperwork, check that all applicable taxes are paid, and register the property with the Spanish Land Registry. Unlike your solicitor, the notary is neutral, acting neither in your interests nor the buyer’s. The notary’s role is simply to ensure that everything is done correctly. Both legal professionals and civil servants, there are 3,000 notaries across Spain and they work to a standard rate card so there’s no need to shop around.
The buyer and you (or someone to whom you have granted power of attorney for this purpose, such as your solicitor) will need to meet with the notary to go through the paperwork. They will go over everything with you and confirm that it’s all in order before you sign the documents. The notary will inform the Land Registry of the transaction and send them a copy of the title deed.
These days it’s common for the buyer to pay all of the notary’s fees which are based on the selling price as stated in the deeds.
Having your documentation in order will help things run faster and more smoothly.
- The title deeds to the property
- Receipts for the local municipal property tax (impuesto sobre bienes inmuebles or IBI)
- Copies of utility bills
- Details of the community statutes
- A list of any items of furniture etc which will be included in the sale
- Your residencia card if you have residency status
The good news is that the buyer and their solicitor will end up doing most of the work.
Having conducted the necessary due diligence checks, and being satisfied with the outcome, the solicitor will prepare a deposit contract for both parties to sign. Payment of a deposit (typically 10% of the agreed sale price) assures each party of the other’s commitment to the deal and specifies a date for the purchase. If the buyer pulls out, they lose their deposit. If you as the seller renege on the commitment, you might find yourself obliged to pay your would-be buyer twice the amount of the deposit by way of compensation.
The closing of the transaction comes in the form of a meeting at which you, the buyer, their legal representatives and the notary will all be present. If you can’t attend, you’ll need to grant power of attorney to a legal representative so that they can do it on your behalf. The notary who will inform the Land Registry of the sale and send them a copy of the title deed.
Costs and fees
As the seller, you can expect to have to pay:
- Estate agency commission (typically between 3-6%)
- For an energy performance certificate (between €150-€500)
- Capital gains tax if you are selling for more than you the price you originally paid (see below)
- Plusvalía tax (see below)
Also don’t forget that if you are transferring the money from the sale back to the UK, WorldFirst personal foreign exchange solutions might be able to save you time and money when doing so.
Capital gains tax
Capital gains tax (CGT) is effectively a tax on the profit you’ve made on the house – the sale price minus whatever you paid for it. The costs involved in selling it such as the estate agent’s fees can be deducted before the calculation is made. There’s also an annual allowance which is calculated by the tax office. The CGT rate varies between 19% and 23% depending on the size of the gain.
You may be exempt from paying CGT if you have lived in Spain for three years and you reinvest your money from the sale of your main home into another main home (which you must then live in for the next three years). This home can be in any EU member state. Take financial advice.
Plusvalía is a local municipal tax calculated on the rateable or ‘cadastral’ value of the land and the number of years since you bought it. The seller is usually liable for paying the plusvalía which is a relatively modest amount of a few hundred euros.
Non-residents and taxes
If you’re not an official resident of Spain, the buyer is obliged to forward 3% of the purchase price to the tax authorities on completion of the sale. This will be offset against any taxes you end up owing in respect of capital gains tax. You need to pay any balance owning within 30 days of the sale, or you can apply for a refund where appropriate.
Speeding up the sale of your property
It’s definitely worth putting some thought and effort into things in order to get that average time-to-sell down from 10 months to something sensible:
- Dress the home: remove personal items, declutter, redecorate in neutral colours, add mirrors and plants. Make it as light as possible and remove all signs of your pets.
- Price your home realistically. If you were unlucky enough to buy when Spanish property prices were at their peak in 2007 but you want to sell, you’re just going to have to accept the loss. Be prepared to accept an offer if things don’t move fast enough for your liking.
- Make the life of your prospective buyers as easy as possible by putting together copies of all the relevant documentation you can lay your hands on into a comprehensive sales pack.