This guide will walk you through the key aspects of buying off plan property in Spain, ensuring you make informed decisions every step of the way. Whether you’re eyeing a historic renovation project or a brand-new development, we’ll help you understand the process and avoid common pitfalls, making your journey to owning a piece of Spanish paradise as smooth as possible.
What is off plan property?
When buying property in Spain, off plan refers to properties that are not yet completed. These can be new builds or renovations in progress. Understanding the process is crucial, as each property will differ in appearance, licences, and timelines. It’s essential to have a lawyer review everything for you.
Our team will be happy to answer all your questions about off-plan properties in the Marbella area.
Renovation projects in historical areas
In the historical centres of the major Spanish “Costas,” many 17th to 19th-century properties need complete renovation. Developers often sell these properties once they have the necessary licences. Buying at this stage typically means a discounted price, though it requires visualising the final product.
Approved new build projects
These include newly built properties with approved projects. The number of units and layouts are pre-approved, and it’s a matter of waiting for completion. Standalone properties often allow customisation of finishes, though the core aspects remain unchanged.
Buying a plot of land or ruin
This traditional off plan method involves purchasing land and working with an architect to create a project for municipal approval. Though more complex, it can be financially and emotionally rewarding. It requires vision and patience.
Our expert team can work with you to source the perfect plot of land, as well as connect you with the finest local architects and builders to ensure that your dream house comes to life seamlessly.
From plot to finish, Luxury Property Finder Marbella can guide you through the process.
Get in touch with any questions you might have about buying land near Marbella today.
The pros and cons of purchasing off plan property in Spain
Here are some of the advantages and risks of buying off plan property in Spain.
Pros
- Customisation allows you to personalise interior design, finishes, fixtures, and fittings
- Typically priced lower than already-built homes
- You have more time to save, as you pay a percentage at the beginning and then there are staged payments as the project moves along. To give you an idea of final payments, it’s normally around 50-70% on completion, however this will depend on the property and the project’s specifications.
- Everything is brand new, reducing the need for initial repairs
Cons
- Construction can be delayed, affecting the delivery date
- There may be changes to the original project, outside your control
- It can be harder to imagine the finished property, which may not meet expectations
- Property value may change significantly during construction, affecting investment
A quick overview of buying off plan property in Spain
Here’s a clear and concise look at the steps to purchasing off plan property in Spain
Stage 1
- View show property and receive development details
- Discuss timescale, fixtures and and custom fittings
- Consult your independent Spanish lawyer before signing or making any payment
- Your lawyer reviews the contract, advises on terms, and ensures a bank guarantee
Stage 2
- Sign the contract and pay a small deposit
- Make larger payments with bank guarantees for each
- Arrange power of attorney and apply for your NIE
Stage 3
- The developer completes and registers the property
- Identify and rectify any construction snags
- Ensure the developer’s mortgage is cleared
- Attend the completion meeting and make the final payment
Stage 4
- Pay the required taxes and register the property in your name
- Your lawyer can handle these final steps for you
Now, read on for a more detailed guide.
A comprehensive guide to buying off plan property in Spain
If you’re considering investing in Spanish real estate, buying an off plan property can be an exciting and rewarding option. However, the process can also be complex and requires careful planning and understanding. This guide will walk you through the essential steps to ensure a smooth and successful purchase.
First things first, hire a registered lawyer
The first step in buying off plan property in Spain is to hire a reputable lawyer. Retaining a lawyer’s services before signing any reservation agreement or Private Purchase Contract is crucial to ensure the paperwork is in order. Using a developer’s lawyer, even if free, is not recommended. At Luxury Property Finder Marbella, we work solely for the buyer, ensuring your best interests are protected at all times.
Ensure the plot of land is under the developer’s name
One of the major risks in buying off plan property is purchasing land not registered under the developer’s name. Your lawyer will verify that the plot of land is indeed registered to the developer, mitigating any potential legal issues.
Check the development has its building licence
Before signing any reservation contract or Private Purchase Contract, ensure that the local town hall has issued a building license for the development. This license confirms that the development is legal and not on green land, protecting your investment.
Ensure there are bank guarantees
Since 1968, Spanish law (Law 57/68) has required developers to provide a bank guarantee to safeguard any stage payments made throughout the construction process, including the reservation fee. This guarantee acts as an insurance policy issued to the buyer at no cost.
However, this guarantee is only valid if a building license has been issued. Ensure your lawyer verifies the building license and land ownership before signing any contracts.
License of first occupation
Do not complete any purchase without obtaining the Licence of First Occupation (LFO). Also known as the Certificate of Habitation, the LFO confirms that the property complies with all planning and building regulations and is fit for human habitation. Utility companies, banks, and regional tourist authorities require this license for official supplies and legal rentals.
Obtain an NIE number & Bank Account
To purchase property and open a bank account in Spain, an NIE number is required. This can be obtained relatively quickly with the help of our recommended lawyers.
Avoid large snagging lists
Before completing your new property, prepare a comprehensive snagging list to identify any issues. This task is not for the lawyer but rather for someone experienced in construction.
Understand your construction guarantees
When buying a new build in Spain, you have consumer rights and construction guarantees. These include:
- 10-year construction warranty (Seguro Decenal): Covers serious structural issues such as foundations or retaining walls.
- 3-year warranty: Covers less serious issues like leaking roofs or damp.
- 1-year snagging: Covers minor issues such as cracks in plaster or poorly fitted doors. The developer is obliged to fix these problems within the first year.
After completion
After completing the purchase, you’ll need to set up standing orders for utilities, community fees, IBI tax, and rubbish collection tax. Your property lawyer will help guide you through this as well. If you’re not sure how to find a trusted Spanish lawyer, feel free to ask us and we can recommend you our vetted list of lawyers we work with.
What to ask before purchasing off plan property in Spain
To minimise possible complications, here are some essential questions you should ask before buying an off plan property in Spain:
- How is the payment plan structured?
- Is an initial deposit required?
- How many instalments will there be, and when are they due?
- Are the amounts I advance insured or guaranteed?
- When is construction scheduled to begin and end?
- Can you provide specific details about the house’s design and features?
- Do I have the option to personalise certain aspects of the property?
- What warranties does the property cover?
- What happens if the project is delayed?
- Have all the necessary licences and permits for construction been obtained?
- What will the community and common areas look like?
- What are the cancellation conditions like?
- What will the handover process be like?
FAQs about off plan property in Spain
Here are some of the frequently asked questions about purchasing off plan property in Spain.
Is buying off the plan a good idea?
Yes, it can be a good idea as it often offers lower prices, customisation options, and potential value appreciation by completion. However, it requires thorough research and due diligence.
Is it safe to buy off plan in Spain?
Yes, buying off plan property in Spain is safe if you follow legal procedures, ensure bank guarantees, verify the developer’s credentials, and hire a reputable lawyer to oversee the process.
Can you negotiate when buying off plan in Spain?
Generally, it’s quite hard to negotiate the price on off-plan properties in Spain. Sometimes there are opportunities for small price adjustments depending on the developer.
Is buying property in Marbella a good investment?
Yes, Marbella is a highly desirable location with a strong property market. Its popularity as a tourist and expatriate destination ensures good rental yields and potential for capital appreciation.
Can I get permanent residency in Spain if I buy a house?
Yes, buying a property worth at least €500,000 can qualify you for Spain’s Golden Visa program, which provides residency and can lead to permanent residency and citizenship.
Final thoughts on buying off plan property in Spain
Buying off plan property in Spain can be a rewarding investment with the potential for significant returns. By following these steps and seeking professional guidance, you can navigate the process with confidence and look forward to enjoying your new Spanish home.
It may be time to talk to the team at Luxury Property Finder Marbella to explore your options. Our passion is finding the perfect property for our clients, tailored to your specific needs and desires, so we welcome you to share your vision with us. If you have any questions about off plan property in Spain, reach out to us today!
