Costa del Sol real estate market is heating up and new developments and off plan properties are in the highest demand. The reasons why our clients choose to go for the off plans are obvious: cutting edge contemporary design, large floor to ceiling windows, open plan kitchen with modern appliances, energy and eco efficient … Those are the main differences between resale properties on the Costa del Sol which have been built with Mediterranean style.
Buyers are keen to buy at a lower price, therefore the demand for the off plan properties in Marbella area that are in the pre-construction phase is huge.
Here in this blog we would like to explain how the procedure of buying off plan property works in Spain, what is the due diligence process for off plan property and what are the purchasing costs associated with the purchase of new property on the Costa del Sol.
1. What is the procedure of buying off plan property on the Costa del Sol
The procedure of purchasing off plan property on the Costa del Sol is straightforward but varies depending on the phase of the building permission and contruction. Typically it is as follows:
– An initial reservation deposit (between €6,000 – €10,000) is paid to remove the selected unit from the market. This may be paid directly to the developer, or held in your lawyers escrow account. This allows for searches to be made to ensure the development is legally sound. If not this is refundable.
– Once searches are completed, you will need to make the first down payment, and sign the private purchase contract. This is normally between 10% and 30% of the final price. Money paid will be covered by a bank guarantee/insurance policy provided by the developer.
– In some cases, stage payments may be due as milestones are reached in the construction.
– On completion, the builder will apply for the first occupation license. Once these have been granted (without them you will be unable to have utilities connected), a final payment will be due (usually 60-70% of the price). You will sign the deeds and show proof of payment before a notary. The property is now yours and all you need to do is to instruct your solicitor to take care about connecting utilities, water, electricity and so on.
2. What is th due diligence process for buying off plan property in Marbella
Due diligence is ensuring all is in order with community fees, local taxes, and utilities. Your legal advisor will carry out a series of property checks called a Due Diligence report. It typically includes the following in case of purchasing new property on the Costa del Sol:
– The legal identity of the owner/the seller of the immovable property you intend to buy;
– That the property under construction is legally registered in the corresponding Land Registry;
– That the property is free from charges (mortgages, liens, encumbrances, etc.) It is customary for the developer to have finance to build which may take the shape of a mortgage. Should the buyer not be interested in taking over the proportional part of said finance in the way of a mortgage on the property, then it will need to be cancelled prior to completion, with all the cancellation costs paid by the developer.
– That the property has been granted the corresponding municipal building permit and habitation licence (where applicable) by the Town Hall in question, and respects local urban planning rules.
– That the construction specification or quality specifications are made available to the buyer and included in annex to the purchase agreement.
– That there is a Bank Guarantee or Insurance Policy in place in order to provide guarantee for all monies paid to the developer during the construction process.
– Confirm and check the content of the mandatory 10 year insurance guarantee (Seguro Decenal) that will provide coverage for any structural defects on the property.
– Revision of the purchase contract drafted by the developer in order to assure that its content respects the buyer’s rights and that it is fully understood by the buyer and to ensure that this document respects the buyer’s rights.
3. The costs associated with purchasing off plan property in Marbella are as follows:
1% Notary fee
1% legal fees
1.5% Stamp duty Tax
Total for new properties: apprx. 13.5%
4. Where can I see all off plans in Marbella and new developments for sale on the Costa del Sol
You can check out on our website the separate category – New developments and off plan properties on the Costa del Sol. Search within the category to find the perfect match for you and get in touch with us to receive more information. SImply click on the image below and you will be forwarded to corresponding page.
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Disclaimer: Alpha Estates Marbella gives notice that the particulars contained within this blog are prepared for the convenience of an intending purchaser and although they are believed to be correct at the time of publishing, their accuracy is not guaranteed and any error, omission or misdescription shall not be grounds on which compensation may be claimed neither do they constitute part of a contract. All the information provided by Alpha Estates Marbella has been sourced with the greatest posible care. Alpha Estates Marbella cannot be held responsible for any inaccuracy that was not made known to Alpha Estates Marbella.