Are you going to buy a new-build flat in Spain? This process is fundamentally different from the procedure in Belgium or the Netherlands. The main risk with a 'buy on plan' in Spain is that you only become legal owner upon completion, not during construction. A strict check of the bank guarantee, completion documents and contractual clauses is therefore necessary to protect your investment.
In this article, you will read 5 indispensable tips from our legal experts to avoid pitfalls in Spanish new builds.
Read more about each step in the buying process of a new build in Spain.
1. Protect your investment: the Spanish bank guarantee is not optional
What is the risk? Unlike in Belgium, where the right of accession allows you to directly own the land and structures as construction progresses, in Spain you have no title during the construction phase. You pay advances but are not yet owners. Does the promoter go bankrupt without a safety net? Then you will lose your money.
The solution: the Aval Bancario A Spanish bank guarantee (Aval Bancario) is your only security. This is an insurance that guarantees your deposits will be refunded if the property is not delivered (on time).
Expert Insight: "Although the law (Ley 57/1968 and the later LOE) requires promoters to guarantee advance payments, in practice we still see cases where the promoter 'forgets' or delays this."
Buyer's advice:
- Check individual coverage: A general policy from the promoter is not sufficient. You need an individual certificate in your name for any disc payment.
- Cessation of payments: Do you not receive proof of the bank guarantee? Immediately suspend further payments until this document is presented.
Read more about the bank guarantee in Spain.
2. Get the purchase agreement and amendment clauses screened
May plans change after purchase? Yes, promoters in Spain include standard clauses allowing them to change the project unilaterally. This is partly necessary for technical force majeure, but this power should not be unlimited.
What should you pay attention to? Unilateral changes are allowed not impair quality, functionality or value of the draft you agreed with.
- Materials: "Equivalent quality" is a vague concept. Make sure the specifications (Memoria de Calidades) are specific.
- Surface area: A deviation of more than 5% to 10% in the habitable area should contractually lead to a price review or rescission option.
Find more information on amendment clauses in a buy-to-let plan here.
3. Check completion documents before the notary appointment
When is a new building legally deliverable? You can notarise the deed (Escritura de Compraventa) sign only when the property is officially completed and registered. The mere physical completion of the building is not enough.
Three crucial documents are required for a secure transfer:
- Licencia de Primera Ocupación (LPO): The municipal compliance certificate that the property was built according to the building permit. Without this document, you often cannot connect water or electricity and cannot rent out.
- Seguro Decenal: Mandatory 10-year liability insurance for structural defects.
- División Horizontal: The registration of the project subdividing the building into individual plots (your flat) in the Property Register.
Warning: Never sign the deed or pay the final instalment (often 40-50%) by bank cheque if these documents are not present. Subsequent regularisation is costly, time-consuming and sometimes impossible.
4. Take into account utility connection time
Can I move into the property immediately? After the deed is executed at the notary, you are the owner and receive the keys. However, the property is often not yet "livable" in the sense of running water and electricity.
Reality: Activating contracts for water and electricity takes on average in Spain 14 to 30 days after the transfer of ownership. This is an administrative process between the owner and the utility companies (such as Iberdrola or Endesa).
- Tip: Do not plan your first stay or furniture delivery on the day of the deed, but provide a buffer of several weeks.
- Remaining points: Use this period to complete the delivery list (snag list) with minor defects to be passed on to the promoter.
Also listen to our podcast on buying new property in Spain at Youtube, Apple Podcasts or Spotify.
5. Optimise VAT (IVA) on additional works and extras
How much tax do I pay on extra options? When buying new construction in Spain, you pay 10% IVA (VAT) on the property. For individual renovations or purchases afterwards (for example, a kitchen installation after completion or installation of air conditioning after the deed), you often pay the standard rate of 21% IVA. Read more about the VAT on new construction in Spain.
Tax benefit: If you include additional works (such as upgrading the floors, kitchen or home automation) in the initial purchase agreement (Compraventa) and have it invoiced by the promoter as part of the property, these fall under the reduced rate.
- Savings: You save directly 11% on the cost of these extras by having them billed correctly.
Frequently asked questions about buying a new building in Spain (FAQ)
Is a bank guarantee mandatory for new builds in Spain? Yes, Spanish law (LOE) requires a property developer to insure all advances received via a bank guarantee or insurance policy. Always ask for proof of this; without a guarantee, you are at risk in case of the promoter's bankruptcy.
When do I become an owner of a newly built property in Spain? Unlike Belgium, in Spain you only become owner once the property is fully completed, the 'Licencia de Primera Ocupación' is delivered and the notarial deed is signed. During the construction phase, you only have a right of claim, not ownership.
What are the buyer's fees (taxes) for Spanish new-build properties? On top of the purchase price, you will pay standard 10% IVA (VAT) on the entire sum. In addition, you will pay the AJD tax (Actos Jurídicos Documentados), which varies between 1% and 1.5% depending on the region. Count on a total cost of around 13-14% on top of the purchase price (including notary and lawyer).
About the author: Glenn Janssens is a lawyer specialising in Spanish real estate transactions and tax regulations. Since 2017, he has been helping Belgian and Dutch individuals and entrepreneurs to safely purchase and structure real estate in Spain. He guides files from A to Z: from due diligence, ownership and tax control to estate planning and optimisation for residents and non-residents. Thanks to his years of experience, hundreds of handled files and focus on transparent communication, Glenn makes complex Spanish legislation understandable and practically applicable for every property buyer.
