Buy or rent? What are the procedures and expenses?

If you plan to buy or rent a home, you will have to anticipate an important series of procedures and expenses . In some cases, the real estate agent or the bank, if you have to sign a mortgage, can take care of certain procedures. However, you need to know them all.

Keep in mind that the costs associated with buying a home are around 10-15% of its total value . You must calculate the purchase costs of your home plus the costs of contracting the mortgage. As for the rent, the associated expenses are between six monthly payments . Similarly, this will depend on the negotiation between you and the owner and/or real estate agency.

That is why today with GLM we tell you everything you need to know about buying or renting a property.

Do not miss it and continue reading!

Procedures to be carried out at the time of buying or renting

To buy

• You must go to the Property Registry to obtain all the legal information about the property. It is important that you know if it has associated charges, such as a mortgage or if it is repossessed. In addition, you can always ask for a simple note or a domain and load certificate , which is legally valid.
• Go to the town hall to find out the legal situation of the building, since it could be affected by a future urban plan.
• Go to the notary to notarize the house . Fees are regulated by law and are proportional to the price of the property .
• Go back to the Property Registry to register the two deeds in your name: the one for the house and the one for the mortgage. The cost varies depending on the municipality and the price of the house.
• Go to the cadastre of the town hall where the place where the change of owner is made is located. This procedure is not mandatory , but it is advisable. This way they can send you the IBI that you will have to pay when you already own the home.

Rent

• The most advisable thing is to go to the Land Registry to check who is the owner of the house and in what state it is.
• It is also advisable to register the rental contract in the Land Registry . In this way, you will have insurance before the sale of the building or home.

Expenses to take into account to buy or rent a property

To buy

• If the property interests you too much, you should start by making a down payment to reserve it for you . The amount should not be too high. Another option is to write a pre -contract of sale , where the method of payment agreed with the seller and the data about the property are determined.
• Sign the deposit contract , which is regulated in the Civil Code and also serves to reserve your home. The amount to pay varies between 5 and 15% of the value of the home . This percentage is then deducted from the total, and commits both parties : buyer and seller. It can be terminated , but you will surely lose the money. Now, if the one who terminates it is the seller , he must pay you double what you have put .
• You must choose the mortgage that best suits you to finance the purchase. The Bank of Spain advises that the monthly cost of the mortgage does not exceed 30% of your income . The signing of the mortgage contract generates a Documented Legal Act Tax (AJD) where you have to pay 1% of the deeded amount.
• You will have to appraise the house to define its price according to the current market by an official appraiser. Without a doubt, it is an essential requirement for the mortgage calculation by the bank. It is usually worth between €250 and €350.
• If it is a second-hand home, you will have to pay the Property Transfer Tax (ITP). This varies according to the Autonomous Community and ranges between 5% and 10% of the deeded value.
• If the house is new, you must pay VAT . This is 10% of the deeded value if the house is of a general nature or 4 % if the house is protected .
• Supplies . It is mandatory to change the owner of the water, electricity and gas meters, whether you decide to buy or rent the property.
• If you have contracted the services of the agency to advise you throughout the buying and selling process, you must pay them.

When you already own

• When you are already the owner of the home, you must pay the Real Estate Tax (IBI) to the town hall. It is between 0.4% and 1.1% of the total value of the house . This tax is annual and can be split. However, in the year of sale of the property, it is the owner who must pay the IBI .
• Garbage tax . This varies according to the municipality and, sometimes, is charged together with the IBI .
• You will have to pay the community receipt for housing expenses.
• The community insurance , which covers structural accidents that the property may suffer.

Rent

• The real estate agency or the owner may ask you for a down payment as a reservation for the home . Then it will be deducted from the first monthly payment or they will promise to return it if the contract is not signed.
• If you rent through a real estate agency, you will have to pay the commission. However, you may have to pay half with the landlord or 100% as a renter.
• Pay the deposit to the real estate agency or the owner, which must be deposited in the corresponding Autonomous Entity . Incasol , in Catalonia . IBAVI, in the Balearic Islands. Social Housing Agency, in Madrid . Bizilagun, in the Basque Country . AVRA in Andalusia , etc. This amount is refunded once the contract ends. As long as no clause of the contract has been breached, nor has any defect, damage or non-payment been caused. The Autonomous Entity is the one who returns the money.
• In some cases, the owners usually request a bank guarantor to face possible defaults.
• The first monthly rent . You should always remember that the rental price should not exceed 30% of your monthly income .
• It is optional but it is recommended to insure the contents of the home. The continent is already insured by the owner.
• Pay the Property Transfer Tax (ITP), which is calculated according to the years of the contract and the rental price. This tax varies according to the Autonomous Community.
• Supplies . It is mandatory to change the owner of the water, electricity and gas meters, whether you decide to buy or rent the property.
• The payment of the move , as long as the apartment is not furnished or if you move from another property.

So buy or rent?

We recommend that you read this post about the profitability of buying or renting a home. However, the final decision will depend on the financial situation of each interested party. Some questions you can ask yourself before solving it are:

• what are your plans for the future?
• Do you plan to move from the city?
• Do you have good economic stability?
• How much money do you have saved?
• What is the monthly fee you can pay?

Finally, it should be mentioned that an intermediate possibility between buying or renting is that of renting with the option to buy. It is a modality similar to that of renting , since there is a lease contract, but including the option to purchase. This will work for a set period and you can decide if you will buy the property or if you will continue renting.

We hope that this post about everything you need to know about buying or renting a property has been useful to you. If you have any comments to make or you think we missed mentioning something, you can write us in the box below the post. We are very interested in your opinion!

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