Buying a property in Spain is an exciting process, especially if you opt for an ‘off-plan’ purchase. When buying off-plan, you purchase a property that is still under construction or has yet to be built. This approach offers many advantages, but there are also points of attention that you need to take into account. In this article, you can read everything you need to know about buying off-plan in Spain, so that you start this adventure well prepared.
What is buying ‘off-plan’?
Buying off-plan means buying a property before it is finished. You will often be given the opportunity to view floor plans, renderings or a model home. Many new build properties in Spain are sold this way, as it offers buyers the chance to acquire a modern home in an attractive location.
The advantage is that you often pay a lower price than for an existing property. The disadvantage is that you have to be patient, as it can take months or even years before you can actually move into your new home.
The benefits of buying off-plan
Lower prices and increased value
Buying off-plan often offers lower entry prices, as developers want to attract capital in the early stages.
The value of your home may increase by the time it is completed, resulting in a potentially attractive increase in value.
Personalisation
You can often choose from different layouts, materials and finishes. This gives you the opportunity to completely customize your home to your taste.
Warranty and modern building standards
New homes in Spain must meet strict building regulations. This means better energy efficiency and higher build quality. You also get legal guarantees, such as a ten-year construction guarantee.
Energy-efficient living
New-build homes are often built using modern techniques and materials, which means you have lower energy costs and can live more sustainably.
Modern amenities
Many new construction projects have additional facilities such as swimming pools, sports fields, playgrounds and green areas, which provide additional living comfort.
Potential risks and challenges
Delays in delivery
Construction projects can be delayed by permits or bad weather conditions, for example. Take this into account in your planning.
Financial risk
When buying off-plan you often pay in installments. If the developer goes bankrupt this can cause problems. Your lawyer will therefore always ask for bank guarantees or insurance policies.
Deviations from the final result
The final result may differ from what you saw on the drawings or in the model home. This may involve materials used or minor adjustments in the layout.
Fluctuations in the real estate market
The value of real estate can change. This can affect your profit or loss in the event of a sale. But this also applies if you buy an older existing home.
Legal aspects of buying off-plan:
Check the permits
Have a lawyer check whether the developer has all the necessary permits, such as the building permit (Licencia de Obra).
Bank guarantee or insurance policy
All payments must be covered by a bank guarantee or insurance policy. This protects your investment in case of problems with the developer.
Purchase contract
Make sure the contract includes all important details, such as the delivery date, specifications of the property and penalties for delays. Have an independent lawyer check the contract thoroughly.
Title Deed
Upon delivery, you sign the title deed at the notary. This makes you the official owner and ensures registration in the property register.
Steps in the purchasing process:
Reservation and deposit
Start with a reservation agreement and a deposit (usually between €3,000 and €10,000).
Due diligence
Have a lawyer perform a comprehensive legal check on the project and the developer.
Signing the purchase contract
After booking, the purchase contract follows, for which you usually pay 20-30% of the purchase price.
Installment payments
During construction you pay in phases. These payments are linked to specific construction milestones.
Inspection of the home
Check upon delivery whether everything has been carried out as agreed and draw up a list of any defects. This will be done free of charge by your broker.
Delivery and transfer of ownership
Once everything is in order, you will sign the title deed and receive the keys to your new home.
Important documents:
Reservation Agreement: Preliminary agreement to secure the property.
Purchase contract: This contains the agreements regarding price, delivery and guarantees.
Construction Specifications: Document detailing materials and finishes.
Title Deed: This officially makes you the owner.
Bank guarantee: Protects your payments in the event of bankruptcy of the developer.
Tips for a safe purchase:
Choose a reliable developer: Check their reputation and previous projects.
Hire an independent lawyer: Never use the developer’s lawyer.
Hire a good real estate agent who has the necessary certificates and permits (RAICV number and BIV number)
Plan flexibly: Take possible delays into account.
Budget for additional costs: Expect to pay approximately 14% on top of the purchase price for additional costs such as taxes and notary fees.
Conclusion:
Buying off-plan in Spain can be a great way to achieve your dream home. With a reliable developer, a good agent and a good lawyer plus realistic planning you can maximise the benefits of this method and make your Spanish dream come true. Good luck!
Sublicasa always works with an independent lawyer who defends your interests, in your own language.
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