Buying a new-build flat in Spain is different from buying a new-build in Belgium. Therefore, in this article you will already find 5 important points of interest.
Here are 5 tips for a buy on plan in Spain.
1. Protect your payments: check the bank guarantee
The main difference between buying new construction in Spain and Belgium is the date of execution of the deed. In Belgium, you become the owner of the land first, so you become the owner of all constructions on top of the land through the right of accession. Moreover, you pay the promoter as the works progress. This way, your risk is limited.
In Spain, you only go to the notary when the new building has been completed and registered. This ensures that you have no title during the construction of the project. Also, interim payments are in principle scheduled on predetermined dates. And those dates do not necessarily coincide with the progress of the completed works.
To protect your interim payments, a Spanish bank guarantee is crucial. Although legally required, we note that enforcing a bank guarantee is not evident in practice. For instance, there are still projects where the promoter has not taken out a bank guarantee. Especially in corona times, this is not a desirable situation.
Therefore, the first tip when buying a new-build flat in Spain: get checked that each individual payment to the promoter is covered by a bank guarantee. In case a payment is not protected, you can stop further payments until either completion or the bank guarantee is presented.
Read more about the bank guarantee in Spain.
2. Have the purchase agreement reviewed
When buying on plan, the Spanish promoter will often stipulate clauses that allow him to change the project after purchase. These clauses are often necessary. For example, if a force majeure situation arises, the promoter should be able to change the plans. Of course, this change clause should not be too far-reaching. There should be no detriment to the quality and functionality of the design you agreed to.
Find more information on amendment clauses in a buy-to-let plan here.
3. Check delivery documents
Once the constructions are ready, a few more steps need to be done before you can sign the notarial deed of sale. First, the municipality must confirm that the property was built in accordance with the permit and town planning regulations. The promoter must also take out a 10-year liability insurance policy. It is important that the promoter divides the project into individual plots. If your plot was not registered correctly, you are going to face problems at a later sale. You may not be registered as the legal owner. A later regularisation will then be necessary.
If any of the above points are not in order, the appointment at the notary's office cannot take place. To apply pressure then, your only option is to withhold the final payment until the promoter has fulfilled all his obligations. Only after we confirm this, you can execute the notarial deed and make a Spanish bank cheque unsubscribe.
4. Commissioning
After the deed of sale is executed, you cannot move into the property immediately. After all, connecting the utilities takes around 14 to 30 days. In addition, the promoter still has time to fix the remaining items.
5. VAT on additional work and extras
If you plan to order extras or additional works when buying your new build in Spain, it is advisable to include these works in the purchase deed. That way, you will enjoy the rate of 10% VAT instead of 21%. You can find more information here VAT on new construction in Spain.
Read more about each step in the buying process of a new build in Spain.
