IN many of the in-demand locations on the Costa del Sol where we work, particularly in Marbella and Estepona, there has been no new building at all for the past six or seven years and a number of half-finished developments have remained that way since ‘la crisis’ hit back in 2008.
At the end of 2014, however, and more noticeably this year, builders, banks, and, most important of all, buyers seem to have recovered their confidence in the marketplace and, due to a dearth of existing, quality, modern properties for sale, new-build urbanisations are on the rise again.
But, if you’re thinking about putting down a deposit or putting your signature on the bottom of a contract on an off-plan property any time in the not-too-distant, you should be aware that a number of potential legal and planning pitfalls await those who don’t do a little research first.
The first thing you need to confirm is that the property in question has a valid building license, issued by the local Town Council, and that it complies with urban planning regulations.
Spanish law protects prospective buyers from onerous clauses that favour developers and, even if you have already signed an unfair contract, you may have redress in the courts. As an integral part of any contract for the sale of a new-build property, developers also have to provide buyers with a full schedule of specifications that define the characteristics of the home in question.
Also, check the developer or promoter has insurance in place to protect you, and your money, if things go awry. This should be both a bank guarantee (provided by an institution duly authorised by the Bank of Spain) to refund advance payments if work does not begin or end on agreed dates and a 10-year liability warranty against structural defects. Ask to see the policies, read the small print, and, then, if you’re sure, sign. You should also demand a certificate from the insurer and the developer every time you make a payment.
Doesn’t the show home look great? Well, you’ll want your apartment to be identical, so ensure you get hold of a detailed list of building materials and specifications from the developer, and check these against the architect’s plans that have been submitted to and approved by the Town Council and any promotional materials provided as part of the sale, to avoid problems when the keys are handed over. And get your lawyer to make sure the property you’re buying is correctly identified on any contract you sign, so you don’t get a basement instead of a penthouse.
If you’re buying a unit in a new development, there will not be an existing community, so the developer will draw up their own rules which will affect all those who will live in the development. Always ask to see the statutes beforehand, to make sure there’s nothing you can’t live with.
Delays can, and frequently do, occur in any build, but if the wait for your new home becomes too long to bear you may be able to cancel the contract, sue for damages, and get back any money paid in advance, via bank-guarantee insurance. A lawyer can help you explore your options.
Once your new property is finished and ready for delivery it cannot be legally resided in until the local Town Council issues a license of initial occupation. Ask the developer for a copy or, if it cannot be produced, refuse to complete until it is provided. Without one, you will not be able to connect to utilities and may even be liable for fines, so don’t take the developer’s word for it.
Finally, before we shuffle off this mortal coil come taxes, and, if you buy a new property in Spain, you need to pay 10% VAT on top of the purchase price to Hacienda, as well as 1.5% of the price in Stamp Duty, meaning if the place you want to buy is going for 300,000€, you need to set aside another 34,500€ to keep the taxman happy.