Buying apartment - Fees

Hi, 

We are buying an apartment for £47,000 and have been told that we will need an additional £8700 This is £4000 for legal fees and 10% of the property value which comes to £4700. It seems alot of extra money to pay , does this sound about right?

Emelia

Emelia welcome to EOS

That does seem rather a lot. You can do a google search yourself and find out what exactly all the taxes and fixed fees are. A Spanish lawyer’s fees can be anything they like and they frequently make them up depending how green you look and how skint they are.

A word of warning, never use a lawyer associated with the estate agent or seller.

You don't say where in Spain you are buying. The transfer tax varies according to region, but can be up to 10%. The areas most Brits buy in (Alicante, Andalucia, Murcia) it's currently 8%. So your tax is most likely to be about £3,760. Legal fees should be around 1% but your lawyer may apply a minimum. £4,000 seems EXTREMELY excessive to me. Either included in their fee or in addition you will have to pay notary fees and land registry fees, but these are more likely to be hundreds rather than thousands. 

Ask for a precise breakdown and for how the amounts quoted have been calculated. And as the previous poster says, avoid any lawyer introduced to you by the estate agent AT ALL COST.

Alicante and all the  Valencia region is 10% and has been for a few years as are Catalonia, Asturias and Galicia.

However, another 4 grand on top seems quite excessive even with land registry, notary, solicitor and utility connection fees. Saying that, I did read a property site that listed the cost as;

Notary fees between 600 and 1000 euro
Land Registry fees 400 to 600 euro
Property transfer tax 10%

So I suppose it all adds up when you stick the solicitors fees and utility connection fees on top.

Expensive business buying and selling over here.

It seems far too much to the point where there must be either a misunderstanding, or you're being over charged.  I would be asking for confirmation of the breakdown in writing.  

You need to really check out the quality of the solicitor and ensure they are really independent.  The rules here are nothing like UK.

You will need to know that the property is debt free - your solicitor should do this, but they may need prompting.  They should also obtain accounts and ensure your solicitor speaks with the President of the urbanisation to ensure there are no debts, or problems you inherit with the purchase.

We own a property which is on a Spanish urbanisation and recently without warning the Administrator started debitting our bank for an extra charge.  In turned out that this was to pay for solicitors to chase the debts of others!  Apparently this was agreed at an AGM to which we received no invite, or copy minutes!  So we clawed back the amount and cancelled the direct debit.  We will now pay the quarterly Service Charge by cheque.

In reality it's should be fine.  Conveyancing is generally better now than it was 10 years ago, but don't take anything for granted and ask for everything of importance to be confirmed to you in writing.  If that doesn't happen take the intiative and do so yourself.

Hope this doesn't put you off - it shouldn't. It's a great country, but be on your guard.  The "professionals" here are wrongly labelled.

Thanks everyone, I think I will look around for some independent law firms and get some quotes. The place we are buying is Benejuzar, it's on the costa blanca.

It's pretty nerve wracking to be honest! :-)

Emelia

Thanks mariedav for correcting me - Alicante is of course part of Valencia province so transfer tax will be 10%.

Emelia, definitely get other quotes from independent lawyers; don't be afraid to ask for recommendations from others in your area. And remember, lawyers in Spain will usually answer any questions you have, BUT no lawyer in Spain will tell you what questions you should be asking, so feel free to ask any other questions here, even if they seem silly. We've all asked them at some point ourselves!

Is not just the buying fees  of around 12% on top of the purchase price you should be looking at.. don't forget to ask how much the yearly community charges are especially if it is an apartment ..they can be very expensive ...as you would need to contribute to the upkeep of the complete building/grounds/swimming pool/and so on ..you apartment sounds very cheap this could be the reason why good luck enjoy.

Well, if Emelia's nerves aren't wracked enough already, I suppose one should mention the huge cost of selling a property in Spain as well, in case things don't work out as expected. Oh, and private medical insurance to deal with the stress, in the case of a no deal Brexit ;-)

Well I don't recall being at all stressed when I bought my first place in Spain - but that may be due to the fact that I was mesmerised by all the weird extraordinarily fast series of weird happenings - brown envelopes included.

But of course Emelia is buying a flat which tend to be located in more built up areas where there are less land and planning problems.  The bigger issue can be the attitude of the neighbours towards behaving reasonably and paying their share of community costs.

Some Spanish folk seem to have this idea that they can put the property in the name of a limited company and avoid community fees.  When they are finally sued they pass the asset to another company. 

I asked a Spanish property manager how this worked, as of course the debt should stay with the property and therefore the incoming purchaser becomes liable for the earlier debt.  But the reply was that it just delaying tactics in the hope that the debt will go away. 

It like some kind of game.  But for sure you don't need neighbours like that, but you do need to be sure that the Administrator is on the ball to avoid this getting out of hand, of course many are not.

Quite right acer

‘’The bigger issue can be the attitude of the neighbours towards behaving reasonably’’

The whole thing can be a person’s ability to change from the UK culture to Spanish culture. As most resident expats know Spain can be like the Wild West in some places with the authorities enforcing very little control

Let’s hope that  Emelia dosen’t end up with the 2 barking mad Rottweiler’s next door. I’ve just got new neighbours’ who think it’s great fun to race their quad bikes at night up and down the street like formula one, and that’s on a quiet urbanisation of mainly large villas.    

Thanks everyone, the legal stuff seems to be sorted out. The price was not just for legal but also for notary, power of attourney and other things like IE numbers etc... 

When sending money abroad am I better off using my UK bank account or a currency service? The estate agents in Spain suggested Currency direct and they have phoned me but I am unsure if it's wise or not. 

It will be at least 6 weeks I imagine before the deal goes through anyway. 

I am not too concerned about noisy neighbours as I have read lots of independent reviews on the place I am buying and people who have rented there have said now quiet it was.

The commuity fees are 400 euros a year but that includes a stunning rooftop pool and private parking space so am happy with that.

I have asked that the municipal tax is debited from the price of the property and said I will pay it as I read that sometimes the vendor neglects to pay it, is that right?

Thanks

Emelia

You will almost certainly save money by using a transfer company instead of your bank. Tip: check that your Spanish bank won't try to charge a fee for receiving funds! (They'll try to charge you just for opening an account if they can) I have used Currency Fair and would be happy to recommend them. They have an easy to use app, and you can even set your preferred exchange rate using their peer to peer marketplace: https://www.currencyfair.com/how-it-works/marketplace/ 

Useful leaflet to read first about currency transfers: https://mascdn.azureedge.net/cms/final-sending-money-safely---english---may-2011.pdf 

If you are imagining 6 weeks because that's how long conveyancing normally takes in the UK, don't be surprised if the vendor expects to complete much sooner; in Spain the deal can be completed within 48 hours sometimes!

Community fees sound very reasonable. If possible, ask your lawyer to obtain a copy of the minutes from the last AGM to make sure there are no unexpected nasty surprises coming up that may incurr additional expense (e.g. painting the building, new lifts etc.) Very few people do this, but if you can get a copy it may be worthwhile. With regards to the "private parking space", make sure that it's included in the escritura (deed) and that the vendor hasn't just told you it's theirs when they don't in fact have exclusive rights to it. And don't let my suggestions worry you unduly: I'm just a firm believer in checking everything and then double checking etc. You can never be too careful, and it sounds like your lawyer is charging plenty, so make him work for it!

Not sure if by "municipal tax" you mean the IBI (or SUMA), the equivalent of rates, payable annually, or if you mean the plus valia tax which is the vendor's responsibility when selling a property? I suspect you mean the IBI, which is normally the responsibility of whoever owns the property on the 1st of January, even though bills aren't usually issued until the second half of the year. If it's that, then I think it's a good idea to agree to do as you have asked (deduct from the sale price and you pay it when the bill comes)

One other thing: Power of Attorney? Personally, I would always recommend that you attend in person if possible to sign at the notary - even if you think you won't have a clue what's going on. You will learn a lot, and feel more in control of your own big decision to buy this place. If it's purely to avoid the cost of flights, or to save days off work, I would say that you are going to spend plenty of time & money in the coming years to get any benefit of owning the property, so a little sacrifice at the beginning is well worth it. Just my humble opinion ;-)

Read this first then do as you want.

https://news.sky.com/story/police-investigate-after-britons-lose-holiday-home-cash-in-10m-company-collapse-11492763

I think reading the leaflet I linked to in my previous post is more useful and less likely to raise the blood pressure!

"Alicante is of course part of Valencia province so transfer tax will be 10%."

It may well be 10% but if they think the property is worth more than the purchase price (usually because it sold for more last time) you may well find yourself paying 10% of a nominal amount somewhat (about 65% in my case) higher than the price you are paying.

You are supposed to be able to claim this excess payment back but my lawyer has been trying for 4 years now.

True, but the buyer's lawyer, if he's doing his job properly, should be able to advise the buyer of this possibility/likelihood beforehand. The tax authority usually work on a known multiple of the valor catastral; if their figure comes out higher than the purchase price, that's the one they will apply. 

Hi Emelia,

The costs still seem very expensive - a written breakdown of costs would be good - your comment implies that you have not asked for this.  Don't assume that Spanish solicitors have the same ethics or code of conduct that they do in the UK - they really don't.  In the UK, the Law Society dictate that a solicitor must write to you detailing the service they will provide and all the costs.  Of course you can obtain a fixed price on fees - not here!  

Roberto is of course right that the whole transaction can be completed in 2/3 days, but it may be far better to insist on 2/3 weeks or longer.  

You need time to check out lots of aspects.  In addition to all the paperwork it's good to visit the property on different days at different times - and have a few casual chats with your prospective neighbours.  You can't do all this in 2/3 days as the vendor may of course prefer. 

You need to be sure on so much.  If you agree to a quick completion you'll please the vendor and probably your solicitor too - but it would be a leap in the dark, you lose control.

For sure using a specialist money transfer firm, like HIFX or World First will save you money and is usually a lot simpler than using a bank. 

The one thing I have always had difficulty understanding is disbursements.  You get a quote for legal fees then at the end they are added on to your bill (made up) and in many cases without any itemisation. If you ask you usually get told stamps, envelopes, toilet paper, parking fees.

Imagine getting a plumber or electrician to do a job and being charged for these in addition to his quote.

Thanks,

I recieved a breakdown on costs now and it lists everything so hopefully no shocks at the end! 

I am a bit confused about all the different taxes we have to pay annually. I am not sure how much to budget for.  I know there is non residents tax , community fees and sometimes they can charge for bins? I actually thought I had researched this well but keep getting surprises! :-) 

I also don't know which will be the best way to get UK TV. I would want a fast internet connection regardless so not sure whether IPTV is the route to go or some other way?

Emelia