Renting and buying a property both have expenses you should be aware of as well as the procedures to follow in each situation, even if sometimes the real estate agent or bank are the ones dealing with it on your behalf.
When renting a property in Spain you should count on initial expenses equivalent to 6 months worth of rent. The first expense you will have is probably a down payment to remove the property from the market, and this is usually then deducted from the first monthly rent. If a contract is not signed in the end that amount might eventually be returned to you, if the owner/agency agreed to do so.
At the time the contract is signed, apart from the first monthly rent that will be paid in advance, you will be asked to pay a deposit, 1 or maximum 2 months worth of rent. This amount must be passed on to the corresponding autonomous entity, who will be responsible for returning it when the contract is terminated, if the tenant has nothing outstanding to pay and if there were no contract breaches or property damages – which are the reasons the deposit is held for in the first place.
are the reasons the deposit is held for in the first place.
It is advisable to confirm the name of the property owner on the Housing Property Registry and to file the rental contract with that entity, which protects you in case the property is sold.
Real estate agencies charge a commission for their services,, which is sometimes shared between landlord and tenant, but it is not so uncommon that the cost is 100% on the tenant.
Some other procedures not to forget, and that can add more expenses too, are: changing the account holder of electricity, water and gas meters; get Home Contents Insurance (the actual property structure should be insured by the owner) and buying or moving your own furniture in case the property in not furnished.
If you are considering buying a property, you should know the costs associated with it round 10-15% of the property value. You will start by paying a deposit to remove the property from the market (usually 5-15% of the property asking price and that will be deducted from the total sale price) and signing a pre-sale contract that outlines the property details and payment procedure agreed with the seller. For this, you should request all legal information associated with the property from the Housing Property Registry and the local Town Council.
In case you need a mortgage to buy the property, you will need to choose the most convenient one for you, considering the guidance from the Bank of Spain that the monthly amount of the mortgage should not exceed 30% of your income. You will also need an independent valuation of the property from an official appraiser, that usually costs between 250-350€. This valuation is done according to the current market and it is an essential requirement for the bank to calculate your mortgage.
When the mortgage is approved, a certified legal document is issued that adds 1% of the property value (according to the appraisal) to the mortgage costs.
If you are buying a new property, on top of its value there will be 10% VAT (or 4% for social housing). If it is second hand, Spanish tax on property transfers will be due and it is usually between 5-10% of the property value.
The purchase-sale of the property will have to be registered on a Notary, whose fees are regulated by law and are proportional to the value of the property.
Once you are the owner of the property, you will need to file the notarised property deed (and also the mortgage deed, if there is a mortgage) with the Housing Property Registry – this cost varies according to the region and the property value. It is also advisable (but not mandatory) to change the property owner’s name at the Town Council registry.
If you have hired advisory services throughout the purchase process you will also have those agency fees to pay.
There will be some annual fees due to the town council, like the Real Estate Tax (IBI), which is around 0,4-1,1 % of the property value and Refuse Collection Tax.
Additionally, if your new property is part of a an apartment complex, you will also need to take into account community expenses, like building utility bills and insurance and in any case do not forget to change the account holder of electricity, water and gas meters and get insurance for both the property and its contents.