We are going to explain that to you, but in short, the main difference as a whole is in favour of Spanish purchase system.
We’ll quickly list the advantages for you:
Speed, and the fact that the property is secured very early on:
Yes, in the United Kingdom you’ll have to wait a longer time to have the possession of the property.
In Spain, once we have located the property for you, it can take just a few weeks or days for the keys to your flat to be in your hands.
In the UK your property is not insured until the time of signing. In fact, even if you have agreed upon the purchase, a third party can come across with a better offer (the dreaded gazumping).
In Spain, from the moment you decide that a property is of interest to you, it can be secured with the deposit contract and a few days later with the arras contract. This last one is a main step, from then on you can sit back, it is difficult to lose the property from that moment on. If you withdraw from the purchase you will lose the 10% deposit and if you are the seller you will have to return the 10% deposit and compensate the buyer with an additional 10%.
On the other hand, in the UK buyers will largely rely on a solicitor for all of the legal. In Spain you should do the same, because conveyancing system can be tricky, and also because the Spanish lawyer sill makes all the enquiries about the situation of the property, concordance between registers, and of course review of contracts to secure the purchase and relationship with the notary.
The figure of the notary is not known among the British, although it exists in many European countries. The Spanish notary must necessarily be present at the signing of the financing, if there is any, and at the signing of the deed, although the rest of the research work falls to the lawyer.
The lawyer must have sufficiently broad powers of attorney, granted by you with his/her advice, to be able to act on your behalf and to avoid unnecessary trips (this is also granted by the notary with the lawyer’s instructions). With us you will have a lawyer for the performance of this function.
However, there is less public information for the consumer
In the UK the land registry provides consumers with information on sales over the last few years, so that when they buy they have an idea of the price of their chosen area. In Spain the only price reference the buyer has are the prices demanded by the sellers, without access to public data. The Spanish state has something similar, called cadastral value, which is used by the state for the tax called plusvalía municipal, but it is far from the market value.
The British come with a benchmark price in mind, but prices here depend on the market of each area, and even within the area they can vary greatly from one almost neighbouring property to another depending on many variables (floor, lighting, year of construction, easements, etc.).
For price guidance it is best to seek the advice of a Spanish real estate professional. Please also note that unlike in the UK, real estate agents do not have the exclusive right to sell the property (in the vast majority of cases), so portfolios are shared, as well as most agents are working for the seller. If you have the help of a personal shopper, the transparency when it comes to adjusting the price is second to none.
The role of the real estate agent in Spain is therefore more consultative, and if it’s a property hunter his/her work is nothing less than absolutely consultative. As personal shoppers we will present you the cream of the crop, according to your requirements and as long as you have been willing to follow our advice.
Quick financing
In relation to financing, you need to bear in mind that if you need to sell a property in the UK to buy here, it is best to complete the sale before locating the property or the process will be futile as you will not be in a position to pursue and secure the property. Or if you need refinancing, as is common among Britons, do this first.
In Spain, where you will get 80% of the total or more in some cases, and the property itself will become the security for the loan. Here you will have to pay a valuation of the property made by the bank (the valuation of a property in Spain is only done when the buyer needs a mortgage, whereas in UK, this is normally done consecutively with all property purchases), plus administrative costs. However, the notary’s fees (for the loan, mind you) will be paid by the bank.
We have a brokerage service for financing or with one of the major financial institutions we work with, should you decide to take out a loan in Spain.
Taxes and charges:
Then we must analyse the tax costs, from one country to the other. In UK, you must pay stamp duty on properties costing more than 250.000 pounds, unless you are a first-time buyer, then you don’t pay stamp duty tax up until 425.000 pounds. in Spain on the other hand, if you are buying a second-hand property in Madrid independently to the cost of the property, you will have to pay 6% transfer tax of the purchase price (4% an the case of large family – 3 kids, or other circumstances), 10% if you buy in Valencia, or 10% of VAT if you are purchasing a newly built property.
In Spain, you can enjoy a property of a hundred square metres with a property tax of €300 in Madrid, depending on the district and area of course. This could be about €800 and €1,200 a year, or more in the most sought-after areas, and still have a considerable advantage.
Co-ownership charges are lower here, much lower. A flat could have co-ownership charges of €300 for a year.
But if you’re buying to sell, like everywhere else, speculation is not encouraged. You will have to pay 19% tax on the increase in value between buying and selling. Apart from that, tax and charges are the most important factors in Spain.
More square metres:
This will of course depend on your budget, but in general you will probably get more square metres in Spain for less money. In Madrid, properties can range from studios, to modest 1-2 bedroom flats, to 3-bedroom flats or more stately properties of more than 200 sqm; and if you’re on a budget, you’ll be able to get more square metres for less money.
In Madrid there are also town houses, and you can buy luxury properties in specific areas of the city centre. A small advantage here is that you may be able to have a private swimming pool in the case of a villa, or a communal pool in the case of a condominium.
Please see also The stages of the purchase in Spain https://www.maproprieteamadrid.com/stages-of-the-purchase-of-a-property-in-madrid/