Buying in Spain just got cheaper

Written by Mat Marsden

Mathew works in the news team and has been living in Spain since 2005

November 30, 2018

Thanks to some new rulings by the Spanish Supreme court and the Spanish government, the purchase costs of buying a property in Spain have been reduced.

The cost of purchasing a property in Spain has been prohibitively high for many years, and is part of the reason the market can stagnate during slow-down periods. However, that’s all set to change after a recent ruling by the Spanish Supreme Court and new mortgage law.

Up until recently, when buying a property in Spain you would have to spend as much as 15% of the purchase price on taxes, documents and fees. The recent ruling is set to reduce that, and it’s expected to boost what is already a buoyant market in many areas of Spain.

Ruling and New Law

In November 2018, a civil case was brought before the Spanish Supreme Court regarding the tax associated with the set-up of a mortgage (1.5%). The Supreme Court originally ruled that this should, in fact, be paid by the bank, not the customer. However, this decision was over-turned to protect the liquidity of the banks.

Immediately following this Supreme Court ruling, the Spanish Government created a new law: Royal Decree – 17/2018. This law states that the bank must pay this fee, not the customer.

The Spanish Government has also said that a new mortgage law will be introduced in the coming months which will further reduce the costs of purchase for the buyer, instead forcing the banks to pay.

This affects fees including:

  • Notary
  • Gestoria
  • Property Registration

How much can you save?

The tax ruling has already come into effect, so if you are buying in Spain then you can already save as
much as 1.5% (Andalucia, each province rate is different) on the value of the mortgage. So, if you
were buying a property for 400,000 Euros with a 70% mortgage, you would be saving 4,200 Euros.

On top of this, you’ll be able to make further savings under the new mortgage law affecting notary,
gestoria and other fees, which would likely mean an additional saving of around 3,500 Euros.

In total, the cost of purchasing property in Spain will be reduced by around 2%. Money that can be
put to much better use as a new kitchen, or in the home improvement fund!

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