Tips for high-net-worth individuals buying property in Spain: Part 1

High-Net- Worth-Individuals (HNWI) looking to invest or buy property in Spain in the luxury market (on or above 1,000,000 €) will have an advantage over those buyers who are on a lower budget. The first advantage is, of course, the possibility to buy the property with cash and therefore mark quicker timings but also to reduce the price slightly as a cash buyer is always an attractive incentive for a seller eager to sell.

Another advantage for the HNWI who resides in the UK is that they could apply for a Golden Visa that would allow them to overcome the current visa restrictions to British citizens and non-Europeans spending time in Spain. A Golden Visa is a very attractive option for the non-European buyer as it would allow the said buyer to spend long periods of time in Spain without being classed as a Spanish Tax resident.

Not all property purchases qualify for a Golden Visa, being the main requirements that the property is worth more than 500,000 Euro and no mortgage is charged on the property (or if there is a mortgage then a cash investment of more than 500,000 € should be demonstrated). This is a very enticing option to get a Visa that would allow the non-EU buyer to spend as much time as they want in Spain and to have free movement within the Schengen area that should be used while it lasts. There are serious rumors in Spain that lead us to believe that Golden Visas will no longer be available relatively soon. If someone is interested in considering applying for a Golden Visa, we would strongly recommend that this is done sooner rather than later.

But what about the process of buying property in Spain? What tips should the HNWI bear in mind when buying property in Spain? See below a non-exhaustive list of some of our recommendations:

• Do not buy property in Spain without independent legal advice.

In the same way that you would use a solicitor to buy property in the UK, you should also instruct a lawyer or abogado to advise on the purchase of your property in Spain. Do not pay attention to some estate agents who may say that you do not need a Spanish lawyer and that the Notary Public will represent your interests. This is not true. The Notary will prepare the deeds with the information provided by the seller, but their advice cannot replace the advice and protection that you would get from having your own lawyer.

• Do not pay a large reservation after only visiting the property once

Some estate agents may ask you to pay a large reservation to secure the property and remove it from the market. Don´t do that. If by any circumstances you fall in love with a property and you are concerned that someone may take it, you can consider paying a reservation of 3,000 to 6,000 Euro but not more than that. Ideally, no payment should be made without having received independent advice from a lawyer but we are conscious that, sometimes, clients can be put under pressure to secure a property with a payment. In those cases, the less you pay to secure the property, the better.

• When buying a resale property, make sure that you instruct a surveyor.

In the same way that you would do in the UK, in Spain it is also advisable to instruct a surveyor to inspect the property. In this case, it would be an architect. The said professional would inspect the property and check if the property is in good condition and does not show any structural defects. Although Spanish law provides a period of 6 months to claim against any hidden defects in a property that has been purchased, it is better to check the property before you purchase it because the last thing that you want after buying your property in the sun, is to spend thousands of Euros in a Court case against your seller.

• Get your tax and ownership advice before you complete the purchase.

Being a HNWI, it is paramount that you get advice on the best tax structure to acquire the property in Spain and this should be obtained before completion. Any change of ownership after completion will involve hefty legal and notary fees as well as taxes and land registration fees. Also, since Spain does not have a full tax exemption between spouses in terms of inheritance tax, some consideration should be given to the potential inheritance tax that the beneficiaries would pay on your death.

• Open a Spanish bank account while in Spain.

You will need a Spanish bank account for completion and for the payment of the purchase price as well as for the direct debits of the property. As opening a Spanish bank account can prove very difficult, if not impossible, from abroad, our advice is to go to one of the main Spanish banks (Caixa Bank, Sabadell bank, Santander, BBVA between others) and open a bank account while you are in Spain.

These are some of the initial tips that we would give to a HNWI considering buying property in Spain. It is not an exhaustive list and there is much more to advise. This is why we will cover more tips in our next article.

Antonio Guillen is a Spanish lawyer & English solicitor at gunnercooke. Contact him here.