Buying off-plan property in Spain is a great opportunity to save substantially on your property investment. Discounts often vary between five and twenty percent of the final asking price once the development is complete.
We all remember how off-plan purchases were tainted by developers going bankrupt and corrupt officials whose approvals were ultimately revoked. This was a sad and difficult period for the Spanish economy, the construction industry and, last but not least, the buyers. Thankfully, the Spanish government has worked hard to breathe new, regulated life back in to the construction industry. The laws and regulations have been tightened and anti-corruption measures have been introduced. Most importantly, as a buyer of off plan property in Spain you now benefit from strong legal protection.
Developers are now required to take out insolvency insurance to guarantee the buyers' deposits are safe in the event of the development not being completed. We strongly recommend to you, our buyer, to employ a lawyer, notary or solicitor experienced in dealing with off plan purchases. Before you enter into a purchase contract, your sollicitor will first verify the building license and will ensure that all payments you make will be protected by either a bank guarantee or an insurance policy covering your payments, taxes and interest from the day of payment to the day of completion.
To make purchasing a property off plan even more attractive, many developers are now offering lower initial deposits and an attractive schedule for making the further payments to completion. Land sales in Spain are subject to the standard rate of VAT (IVA), instead of the reduced rate for new residential properties. In order to apply this rate, you often have to wait to sign the notarised deeds of sale until the property has been completed, but the savings are obvious.