Posted by Matthew Andrews on October 5th, 2016.
The shock result over the EU referendum has found the Pound plummeting in recent months as market uncertainty over ‘Brexit’ has caused traders to sour on Sterling. But as the Pound nears a four year low against the Euro, those thinking of selling property abroad could see a healthy return on their investment should they choose to return to the UK.
A return to the UK is being seriously considered by many expats across Spain and the rest of the EU following the uncertainty of ‘Brexit’ as UK nationals worry about their rights to live abroad and claim access to healthcare. For those looking to escape before the fallout out of Article 50, we’ve put together a Step-by-Step guide to selling your property in Spain.
The first step you need to take when thinking of selling property in Spain is to decide if you are going to sell through an agency or if you wish to sell privately. Selling privately can be more lucrative as you avoid agency fees (which tend to range from 3-8% of your listed price) but it can be a lot of work. An agency will do a lot of the leg work for you as they will have a better idea of the local market and can help set a realistic valuation and price for your property and advertise it appropriately, but if you have plenty of time on your hands you may wish to go down the private sale route.
Next you will need legal and tax advice, which requires hiring an Abogado (solicitor), you can ask your agency to recommend one, but is generally best to find an independent one so you be sure that they are acting in your interest. The solicitor can be granted power of attorney if you don’t currently reside in Spain, granting them the power to makes decisions in your absence. If you can’t get to Spain with ease this can save a lot of time and money!
You will also require a notary for preparing the contract of sale and issuing the public deeds. They can provide you with free and impartial legal advice on any aspect of your contract should you need it. You can search for English speaking notaries using this site.
A key part of selling your house is making sure potential buyers know about it! This is especially true if you have decided to forgo selling through an agency as the onus will be on you to drum up attention. If you are selling independently it may also be worth investing in a personalised ‘For Sale’ sign for you house, you can find them on Amazon or eBay for around £25.
If you are selling privately it can be worth paying for a professional to take your photos when marketing your property. You would be surprised by how much a photo taken with the right lighting will improve interest. For some tips on taking a great property photo check out this blog.
The internet is a powerful tool for increasing awareness, so make use of it. Advertise your property online both locally and back in the UK as despite uncertainty over ‘Brexit’, Spain is still a very desirable place for a holiday/retirement home for many Brits.
The most important thing to do is verify if the buyer is legitimate, as you don’t want to get halfway through selling your house only for the buyers to pull out last minute, or even worse get caught up in a scam. Always be wary of those looking to pay upfront!
If you are certain that a buyer is legitimate then you will need to work out who will be paying for certain fees, such as the Plusvalia tax (which we will talk about later). Also make sure you have all the necessary paper work such as the energy efficiency certificates. These may not have been included when you brought your house, but since 2013 they are required when selling or renting property in Spain.
Make sure you are 100% certain that you are happy with the deal as upon signing the Contrato Privado de Compraventa (pre-agreement contract) a 10% deposit will be paid by the buyer, and should you pull out of the sale then you are liable to pay double the deposit as compensation.
You will need to make an appointment with your notary to sign and register the Escritura Publica (title deed) at the local Registro de la Propiedad (property registration). Completion then takes place in the offices of the Notaria Publica (public notary), and requires all parties present (including any bank personnel if the buyer is taking out a mortgage). It is not unusual for there to be delays at this stage as individuals may cancel forcing you to reschedule. At this point it’s good to remember that you can avoid these meeting by granting power of attorney to your solicitor.
The notary will then check all the paperwork and, providing there are no issues, will finalise the sale of your house by giving a copy of the deed to the buyer and sending the originals to the land registry. Congratulations you just sold you house!
It is important to keep in mind all the little fees and tax that are involved when selling your property in Spain, as if you forget to factor them in when selling, you may find them taking a big chunk out of any gains you planned to make when transferring it to the UK.
Non-residents of Spain are required to pay a 3% tax on the Escritura sales price, this will be retained by the buyer and payed to the Hacienda (Spanish tax authority) on your behalf towards your capital gains tax, should this be lower than the 3% tax then you may apply for a refund of the difference.
Plusvalia is a tax based on the estimated increase in the land value of your property since purchasing it, (note this is only based on the increase in land value and not the value of your house). As mentioned earlier sometimes it is agreed that the buyer will pay this tax, especially if they have negotiated on price.
Impuesto sobre bienes inmuebles (property tax) needs to be paid for the entire year of the sale, while utility bills need to be paid up to the date of the sale and will require you to provide the original proof of payment at the signing.
In the event that you are cancelling a mortgage your bank is likely to charge you anywhere between 0.5% and 1% of your outstanding mortgage as a cancelation fee. In addition to this charge you will need to cancel your mortgage at the Notary and Registry, which can cost between €600 and €1000.
It may also be more cost effective to sell your furniture and appliances or even include them in the sale. Paying to ship them back to the UK can be costly, not to mention time consuming – especially if you need to keep them in storage for any period of time.
Keeping these fees in mind is key to making sure you get the most out of your sale and maximise your profit when exchanging your money, and remember it is always advisable to have your legal representation look through everything just to make sure it’s in order.
Once you’ve sold your Spanish property, it’s likely you’ll need to transfer the proceeds back to the UK. It’s possible to make significant savings in this area simply by looking into the different international money transfer providers available.
The two most popular means of moving money to and from abroad are using a bank or using a currency broker. While using your bank may seem like the easier option, using a currency broker can be both simpler and more cost-effective.
While most banks tend to charge transfer fees, some currency brokers don’t. Brokers can also offer more competitive exchange rates and a range of specialist services, like the ability to fix a favourable exchange rate up to two years ahead of a transfer – perfect if you’re selling a foreign property and want to budget effectively.
By making your currency transfer at a more competitive exchange rate and avoiding transfer fees, you could get thousands more Pounds for your Spanish Property purchase.
If you’re considering putting your property on the market in the near future, find out more about your currency transfer options.
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