Avoid common mistakes when buying property in Spain

Spain's blend of Mediterranean lifestyle, affordable property prices, and year-round sunshine makes it one of Europe's most popular destinations for overseas property buyers. Ensure your purchase in this special country is a success by understanding the common mistakes people make when buying there – from NIE number delays and complex contracts to overlooking currency fluctuations – so you can avoid them.

Contract confusion

In Spain, the property buying process typically involves two key stages:

Contrato de Arras (Reservation Contract)

This initial agreement secures the property and takes it off the market. The buyer pays a deposit (typically 10% of the purchase price), and both parties commit to the sale. To avoid any confusion and financial loss, you must understand the type of arras you’re signing:

·       Arras confirmatorias (most common) – if the buyer backs out, they lose their deposit; if the seller backs out, they must return double the deposit.

·       Arras penitenciales – this permits either party to withdraw from the deal, with the buyer forfeiting the deposit or the seller returning double.

Escritura de Compraventa (Title Deed)

The escritura de compraventa (title deed) is the final sale contract that’s signed before a notary (notario), transferring legal ownership to the buyer. This is the legally binding document that gets registered at the Land Registry (Registro de la Propiedad).

The legal obligations and financial consequences of these contracts differ significantly. Therefore, independent legal advice is essential before signing anything.

Illegal building

Spain has a history of illegal construction, especially in coastal areas. Thousands of properties were built without appropriate planning permission, or don't match their registered plans. Some homes sit on rustic land (suelo rústico) where residential building is prohibited, while others have unauthorised extensions or extra floors.

Buying an illegal property can expose you to demolition orders, heavy fines, or the inability to connect to utilities or sell the property in the future. To avoid these challenges, your lawyer should:

·       Verify that the property has a licencia de primera ocupación (first occupation licence)

·       Check that the built area matches the Land Registry records

·       Confirm the property meets current planning regulations – particularly crucial for older rural properties built before strict planning laws existed

NIE number delays

You can’t buy property in Spain without a NIE (Número de Identificación de Extranjero) – your Spanish tax identification number. Many buyers underestimate how long this can take to obtain, especially when applying from abroad. Processing times can stretch from a few weeks to several months, depending on the Spanish consulate and time of year.

Apply for your NIE as early as possible in the buying process, as you'll need it to open a Spanish bank account, sign contracts, and complete the purchase. Delays in obtaining your NIE can jeopardise your purchase timeline and potentially result in losing your deposit if contractual deadlines pass.

Community fee surprises

If you're buying an apartment or a property within a development, you'll be liable for community fees (gastos de comunidad). These cover maintenance of shared areas, gardens, pools, security, and building insurance. What catches many buyers out is the extent of these fees – sometimes several hundred euros per month for premium developments with extensive facilities.

Before buying, request details of the community fees and check the community's financial health. Properties with unpaid community fees pass to the new owner, and communities can place liens on properties for non-payment. Review the community statutes and minutes from recent meetings to understand any planned work or special assessments that could increase your costs.

Not understanding currency risk

Fluctuating exchange rates have the potential to create one of the biggest hidden costs when buying property in Spain. While the agreed price of your property in euros remains the same, the cost in pounds constantly changes as the exchange rate moves. Even small currency fluctuations between your offer being accepted and completing the sale can drive up the price significantly – particularly in the weeks or months between signing the Contrato de Arras and the final Escritura.

To mitigate currency risk, consider working with a currency specialist rather than using your high-street bank, which typically offers less competitive rates and higher fees. In addition to offering attractive rates, fee-free payments, and transfer guidance, they can help you secure a forward contract to lock in your exchange rate and the price of your property with it.

Protect yourself from currency risk by speaking to a currency specialist.