A guide to the biggest mistakes when moving to Spain, and some tips on how to avoid them.
The Spanish property market is a popular choice with UK buyers, with around 800,000¹ British nationals owning a home somewhere in the country. But if you’re looking to move house, or sell an investment property, how complicated is the process?
If you own a Spanish property and it’s time to sell up, read on. We’ve put together a complete guide to selling property in Spain. This includes all the info you need on the selling process, fees, taxes, timescales, legal requirements and much more.
Plus, a handy tip on the most cost-effective way to transfer the proceeds of your property sale back home to the UK. Use Wise and you won’t lose money to high transfer fees and poor exchange rates.
But more on that later. First, let’s get your Spanish property on the market.
The global Covid-19 health crisis has had a big impact on property markets around the world.
In Spain, property prices have remained broadly stable despite the pandemic, and have even increased in areas such as Madrid, Navarre, the Basque Country and the Valencian Community.
Property prices have also grown in some of the more rural and coastal areas of Spain, as well as in smaller towns. This can potentially be attributed to more Spanish people looking to move out of city centres to the countryside, due to the pandemic.
National demand for apartments is down, while rustic farmhouses and villas are more popular.
Due to the current uncertainty in property markets, housing prices in Spain are predicted to fall by between 3% and 3.5%. However, if you can wait until the second half of 2022 to put your property on the market, growth in property prices is expected to pick up.
So, how does the property sales process actually work in Spain? Let’s run through the main steps, so you know exactly what to expect.
You don’t have to use an estate agent to sell your property in Spain, and listing it on an internet property site yourself could save you some hefty commission fees.
However, an estate agent could be a smart investment. Not only do agents have the local knowledge and expertise to sell your property at a good price, but they can take care of time-consuming tasks like showing buyers around the property.
To choose an estate agent, it’s a good idea to look for English-speaking agents with experience of working with UK sellers and expats. A personal recommendation from someone you know is ideal.
Otherwise, you should look for a licensed, accredited agent who is registered with a professional body such as the Official School of Estate Agents (Colegio Oficial de Agentes de la Propiedad Inmobiliaria or API)³. Other trustworthy associations include AIM, MLS and ACI.
Now it’s time to put your property on the market and advertise it to potential buyers. Some preparatory work to spruce up the property, along with taking great photos, is essential. Next, your estate agent will play a central role in advertising the property, but you can also list it on popular property sites such as⁴:
It’s not mandatory, but it’s a very good idea to appoint a solicitor to give you advice and oversee the legal and administrative aspects of the sale. A personal recommendation is ideal, but you can also find a list of English-speaking property solicitors on the UK Government website.
In Spain, el notario plays a crucial role in managing the paperwork, taxes and registering the sale with the Land Registry. They play a neutral role in the transaction, and are there to make sure everything is done according to the letter of the law.
Once you’ve accepted an offer, you’ll need to agree on a notary with the buyer. There are around 3,000 notaries in Spain and they all charge the same standard rate.
Here’s what you (or your solicitor) will need to have ready to make sure the sale proceeds smoothly⁵:
- The property’s title deeds
- Copies of utility bills
- Receipts for local municipal tax (IBI) paid for the property
- Your residency card (if applicable)
- An inventory of furniture and other fixtures which will be included in the sale
- Details of any relevant community statutes.
Once the buyer’s solicitor has completed all the necessary due diligence checks, it’s time to sign the deposit contract. This preliminary contract will be prepared by the buyer’s solicitor, and both parties will sign. A date is specified for the completion of the purchase.
At the same time the preliminary contract is signed, the deposit will be paid by the buyer. Just like in other parts of the world, the deposit is used as a firm sign of commitment to the transaction. We’ll cover how much a deposit typically is in Spain, and what happens to it if either buyer or seller change their mind, in just a moment.
To finalise the sale, a meeting will be held between the buyer, seller and their respective legal representatives. The notary will also be present. This is where the contract of sale (escritura de compravento)
The notary then informs the Land Registry of the sale and sends over copies of the title deeds. The final balance is transferred to you, and the buyer gets the keys to the property.
The typical deposit in Spain is 10%, just like in many other countries including the UK. But what happens to the deposit if either party changes their mind?
- If you (the seller) pull out of the deal, you may have to pay the buyer twice the amount of deposit they paid. This is seen as a form of compensation.
- If the buyer backs out of the purchase, they will lose their deposit.
The time it takes between putting your property on the market and finally handing over the keys can vary in Spain. It depends on where your property is located, and demand for your type of property in the market.
The average time to sell a house in Spain in 2020 was around 6 months⁶, which increased from an average of 5 months due to the coronavirus pandemic. But be prepared, other research has found that it could take as long as 10 months⁵ for your Spanish property to finally sell.
There are a few things you can do to improve your chances of a quicker sale in Spain. Here are some tips:
- Take professional quality photos with good lighting - listing sites such as idealista.com recommend uploading as many as 25-30 photos⁷
- Make good use of online real estate listing portals, social media advertising and other digital marketing methods
- Include a floor plan in online listings
- Consider uploading a video or virtual tour of the property
- Research the market and seek expert advice to set a competitive sale price
- Declutter and deep clean the property - it’s recommended to remove personal items and ‘dress’ each room ready for viewings.
- Take time to craft an appealing property description, highlighting and ‘selling’ its best features.
Now we come to the important part - how much it’ll actually cost you to sell a Spanish property. Let’s run through the main fees and taxes you need to know about.
The good news for sellers is that in Spain, the buyer will pay many of the fees associated with the sale. But you will still have some fees to pay. These include the following⁵:
- Estate agent fee - if you use an agent to sell your home, expect to pay around 3-6% of the sale price in commission
- Fee for energy performance certificate - this can cost between €150 and €300.
If you don’t live in Spain and have a Spanish bank account, you may also face fees when transferring the proceeds of the sale back home to the UK. We’ll look at how you can avoid these fees, and get a fairer exchange rate for international transfers, later in this guide.
On top of fees, owners of Spanish properties may also have certain taxes to pay when they sell up. Here are the key taxes to watch out for:
Capital gains tax (CGT) is due on the profits made from selling a property in Spain. So, the difference between the sale price, and the price you initially paid for the property.
The rate of CGT depends firstly on your residency status. If you’re a non-resident, it’s set at a flat rate of 19%⁸.
But if you’re a Spanish resident, different rules apply. The rate of CGT is calculated on a sliding scale depending on how much profit you make. Here are the current rates:
|Profit from sale
|€6,000 to €50,000
|€50,000 to €200,000
However, there’s an important exemption which could help you avoid paying capital gains tax altogether. You can apply for it if you meet all of these three conditions⁹:
- You’re a Spanish resident
- You’ve lived in the property you’re selling for at least three years
- You plan to use the proceeds of the sale to buy your new main residence in Spain.
You may also have heard of another Spanish property tax known as land appreciation tax, or plusvalía municipal. This is a tax due on the increase in value of a property since it was last sold. It’s calculated based on the value of the property and other factors, and rates are set by the local municipality. It is often paid by the seller, but you can negotiate with the buyer over who pays it.
However, there’s important news for sellers on the plusvalía tax. In October 2021, the Spanish Constitutional Court temporarily annulled the tax¹⁰, due to a ruling that the way it is calculated is unconstitutional. Whether or not it will be reinstated remains to be seen, but for now - sellers won’t have to pay plusvalía when they sell a property in Spain.
The last but perhaps most important thing to think about when selling a property in Spain is how you’ll transfer the money back home.
Unless you have a Spanish bank account and plan to keep the money there, you’ll be considering using your bank to make an international transfer to the UK.
Pause before you do this. Banks tend to charge high transfer fees and apply an expensive mark-up to the exchange rate. With such a large sum to be transferred, this could end up costing you a small fortune.
Luckily, there’s a better way. Send money from Spain to the UK with Wise and you’ll get the real, mid-market exchange rate. This means no markup or margin - only the fair rate you’ll find on Google or currency authority sites like XE.com. Even better, you’ll only pay a small, transparent transfer fee.
Security is always a concern when sending large amounts of money between countries, but you don’t need to worry with Wise. We use sophisticated security and anti-fraud measures to protect your money. Plus, you can track your payment every step of the way.
After reading this guide, you should have a better idea of what’s involved when selling a property in Spain. We’ve covered all the essentials, from the process and paperwork to fees and taxes.
You should be all set to get your property on the market, and wait for those eager buyers to come calling. Good luck!
Sources used for this article:
- Schengen Visa Info - rights of British second-home owners in Spain after Brexit
- Virto Property - Spanish property market forecast
- Idealista - estate agents in Spain
- Houses in Spain - Spanish property websites
- World First - selling a property in Spain process
- Idealista - how long does it take to sell a property in Spain
- Idealista - how to sell a property in Spain quickly
- EA - Spanish tax rates
- EA - Spanish property tax
- Just Law Solicitors - plus valia tax in Spain
Sources checked on 2-Nov-2021.
This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.
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