How to buy off-plan or a new build in Spain safely

Buying off-plan

When you buy off-plan, you purchase land with planning permission to develop the properties advertised as stated in the Approved Planning permission and you pay an amount upfront, before completion of the property. It is no longer allowed to use the monthly off-plan payments to build the development, and the money paid into your “off-plan contract” must be kept in a bank's guaranteed account.

The first occupation license will be granted once checked that the property has been built according to the permit.

10 years of construction insurance is in place for new constructions.

Buying a new build

When you buy new, it can be a property from 15 years ago that was repossessed and it has just been granted the “licence to live in”… therefore, “new” only means no previous owner (different tax applied to new or old properties). These repossessed properties are very particular, and you must expect tax debts, communal services debts, lack of habitability licence, many times the horizontal division is not made and the neighbours have to do it…and require special checks, if done properly, can be an excellent investment as they are normally very cheap.

1. Get independent Spanish specialist legal advice.

A developer might offer to package your legal fees into the sale purchase but it’ll be better for you in the long run if you get independent advice. Then you’ll have more certainty that your lawyer is working in your best interests.

2. Make sure the developer and property are bank guaranteed.

Before you pay a deposit, defend your investment from the effects of larger economic storms like recession or bankruptcy by asking your developer for the bank payment guarantee certification.

3. Check the building licence.

Don’t sign a Private Purchase Contract until you’ve checked that your plot has a Licence of First Occupancy (Licencia de Primera Ocupación or Cédula de Habitabilidad). This proves that your property complies with planning and building regulations. The local municipal town hall will carry out an inspection to issue your certificate. Without one, you won’t legally be allowed to live in your new home.

Remember many repossessed properties do not have a license so you will need to request it directly to the Town Hall and it can be very costly.

When you buy off-plan, the “cédula” will not be available until the house is completed and checked, therefore make sure your off-plan purchase contract refers to the lack of “cedula” as a breach of contract on completion.

4. Check the construction warranty is in place.

New builds come with a warranty in the form of insurance on the construction named Seguro Decenal,  it´s a mandatory warranty for new-build properties that protects the new construction against serious issues for 10 years (ei cracks on walls) and makes sure developers are insured to make repairs if necessary.   

5. Find out about communal or service charges.  

Most properties that are part of a resort have shared maintenance, sports facilities, or gardens – and these need upkeep. This usually comes with an annual cost. Find out how much it is and what it covers so that your budget for the property purchase stays up-to-date. Also, bear in mind that there can be extraordinary disbursements.

6. Check if it’s legal to rent out your property. 

If you’re relying on future rental income to pay your mortgage, check if you can legally rent as holiday lets in your area. The first thing is to check with the President of the community of owners if they allow “touristic rentals” and then check the regional regulation and requirements. You do not need anyone’s permission or license to rent on long term. 

7. Visit your location.

New-build property developers should be able to either show you your plot and/or let you visit a show home as an example of what your house will look like. Get an idea of where your new home will be in terms of location too. You want to know your new community suits you. Usually, developers will allow you to check the property yourself a few months before it’s finished once it is safe to visit.

8. Be prepared for delays beyond anyone’s control. 

If you ask your legal representative to record dates for completion into your contract you will be protected against delays.