Buying Guide Details

Buying Property in Madrid

Where to buy property in Madrid

Property buyers will find Madrid is one of the cheaper major European capitals but by Spanish standards it is one of the most expensive areas. As with every capital, there are distinct districts within the city offering quite diverse lifestyles – it’s imperative to check out the character of an area before you buy.

With more and more overseas businesses opening up offices in Madrid, there is a rising number of expats seeking long-term rental property in Madrid. Investing in a property in Madrid that is convenient for the commercial centre will provide good returns in rental income and capital growth. Chamberi and Retiro districts are popular for access to the business heart of the city.

For a property buyer looking to move permanently, the excellent public transport system makes it a very easy city to navigate. In addition, with an estimated 100,000 foreigners living there, Madrid has a host of language schools, clubs, foreign-language news-sheets, and English-speaking medical facilities for those still coming to terms with the Spanish language.

The city has much else to offer – museums, such and the world-famous Prado, shopping, parks and terrific nightlife. In its pulsating inner quarters and in its more sedate, residential suburbs, there is a wide range of property to suit all tastes, but not necessarily all budgets.

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The Process of Buying Property in Madrid

Anyone wishing to buy (or sell) a property in Madrid must first obtain from the state – in person – a fiscal number for foreigners known as NIE (numero de identificacion de extranjeros)
Once the buyer has received the NIE number, the buyer’s lawyers can make an offer on their behalf. When a price has been agreed, it is recommended that both parties sign a preliminary agreement which outlines details such as the completion date
A deposit of 10% is the normal amount placed to secure the deal. After this, if the buyer pulls out they lose the full deposit but, should the seller decide not to go ahead, he/she must return double the amount of the deposit – i.e. 20% – to the buyer
If a property in Madrid is purchased off-plan, it is usual for payments to be broken into stages, the balance being paid when construction finishes
On completion, when all the necessary checks have been carried out, both parties sign the escritura (title deeds) in the presence of a notary. The buyer then pays the balance, plus all other fees and taxes. Copies of the deeds are sent to the Land Registry and the tax office.

Homes Overseas Property Club

Homes Overseas has joined forces with a collection of IFA specialists to form the Homes Overseas Property Club (HOPC), designed for existing and prospective overseas property homeowners.

The Club – which has access to international lawyers in no fewer than 43 different countries - has been set up in order to guide people through some of the various issues relating to buying and maintaining a property overseas. It offers advice on a range of topics, including financial, legal, insurance, taxation, property management and foreign currency matters.

For further information please telephone 0845 838 7142 or email info@homesoverseaspropertyclub.com

Fees & Taxes

Taxes and fees usually amount to around 10% of the total purchase price of the property
Taxes payable depend on whether the property in Madrid being purchased is new-build or resale. Currently, transfer tax of around 7% is applied on resale property in Madrid, which includes stamp duty. For new-build property in Madrid, VAT (IVA) of 7% is payable in addition to 1% stamp duty
On top of this there is also plusvalia (capital gains tax), which is set by the local authorities and depends on the area concerned and the amount of profit being made on the sale. This is usually paid by the seller
If the buyer is purchasing land or commercial property in Madrid rather than residential, VAT is 16% as opposed to 7%. Stamp duty remains the same
Most Spanish lawyers charge around 1% of the final purchase price, and notary fees are around 0.5%
Agents’ fees can vary anywhere between 2% and 15% – so be careful not to be ripped off

Getting there

Madrid Barajas airport is served direct from many regional airports in the UK year-round.

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