Banking and buying a house

[Jeff of Sitges]

Hi I am new to the forum and would like two peices of advice PLEASE

1... I am currently with Caixa Penedes who charge me for a visa card, atm card, 12€s a year to service my account and 2.50€s to pay abill. Plus they pay me no interest on the 12000€s plus I have sitting in their vaults LOL. In addtion although I pay HSBC £25 remmittance to send my euros across from London they charge me 1% to receive them. Is there a better more cost effectice option such as BBVA, bank of Santander etc etc.

2...When I find a flat or house to buy here in Barcelona what is the legal process before the property becomes mine, can anyone recommend a good TRUSTWORTHY (UK) lawyer to deal with the legal stuff and an surveyor of note to give me a full sructural survey of the property. Also how do you get say 500000€s across here safely to pay the owners or builders at completion and what taxes eg.stamp duty etc etc do you have to pay here in Barcelona

Thank you in anticipation

Jeff:)

[fawlty]

Hi,

Ah! the joy of Spanish Banks. Try shopping around, you should be able to find a bank that charges less for account maintenance, and €2.50 to pay a bill is ott. I am with Cajamar and find them quite reasonable as banks go these days. Also, query any charges and negociate, in today's climate the banks are keen to retain customers. You will be struggling to find a bank that pays any interest worth collecting on a normal current account. My bank does not make any charge to receive euros by electronic transfer from a UK bank, but if the money is sent as Sterling and they have to convert to Euros, they will charge. That said, I recently paid in a Euro cheque for €500, drawn on an offshore bank and they tried to charge me €9 commision. The cheque takes 30days to clear. I queried the commision and they said they would refund it. I am still waiting.

With regard to the property purchase, I can recommend Living and Working in Spain by David Hampshire (ISBN 0-9519804-2-4) for good solid advice.(there is an Appendix for legal services, including specialist lawyers in the UK) If you are arranging that sort of money to be transferred over, you definately need to shop around banks, you don't want to be paying a bank €5000 commision on a transfer!

Good Luck

[Legazpi]

I have used "Currency Solutions" in the past to transfer money, but shop around. Somebody once suggested Ebay for money transfers, though I never tried them myself. BTW I take it you are aware that the pound is very low against the euro at the moment - it's not the best time to be converting pounds into euros.

Re. lawyers - I'd rather use an honest Spanish one that spoke English than a UK one. They're more likely to know how to do the searches. Do not use one recommended by a builder/agent.

More info here: http://www.euroresidentes.com/Property/property_spain.htm

BTW tax is 7% in Spain - which is why you may want to pay for a large part of the purchase in cash ;)

[greytop]

The long arm of coincidence. My wife and I spent more than an hour talking about this (to LaCaixa in our case) this morning. Their solution is to allow you to set up a deposit account in Sterling (paying interest a bit under 2% at present) and a Euro current account for everyday banking. You pay in Stg from your UK bank, then can transfer it to the Euro account as you need it at the going rate for that day. They have a very good internet service so you can see the rate you'll get and maybe wait to see if it goes up :rolleyes:
They do charge for running current accounts, cards and international transfers to the euro acct though, as do most Spanish banks. They said that if we tell the UK bank that does the Stg. transfer to charge the receiving bank, we won't have to pay. We'll see!
Wish I'd known this 7 years ago :mad:

Update : cost to transfer from UK to Spain £30 & 3/4 days : cost to pay UK cheque into sterling ES acct €12 & 12 days. Update: we went in today (23 Mar) to put the UK cheque in and guess what, the rules had changed and it would cost £110.

No contest if you're not in a hurry.

[fawlty]

Re. lawyers - I'd rather use an honest Spanish one that spoke English than a UK one. They're more likely to know how to do the searches. Do not use one recommended by a builder/agent.

More info here: http://www.euroresidentes.com/Property/property_spain.htm

BTW tax is 7% in Spain - which is why you may want to pay for a large part of the purchase in cash ;)


Without wishing to sound completly negative, but in view of the recent corruption cases here, be careful with Spanish lawyers, of course they are not all bent, but there have been cases of complicity. The problem is knowing who to trust, and I include, banks, solicitors and notaries in that comment.

With regard to cash payments, again be careful here. If you pay part in cash and only declare the rest on the deeds, you could be in for a large Capital Gains Tax bill, if and when you come to sell.

For example if you payed €350000 on the deeds and €150000 cash and you came to sell the property in a few years and it was still worth €500000, and you managed to get that amount for it, the deeds would show that you had only paid €350000 and thus you would be liable for CGT on €150000 (at current rates 18% ie €27000) True, you would save 7% on €150000 (€10500), but payback time would come when you sold, unless you could persuade your buyer to under declare.

Although this used to be a common (but illegal) practice here, to which solicitors, notaries and banks have turned a blind eye, there has been a clampdown recently, which I believe is having a marked effect.

Another point to bear in mind is that the Hacienda (Spanish Revenue) will know that you have transferred such a large amount of money into your Spanish bank account.

In Spain, as in many countries, tax avoidance is legal, but tax evasion is not. Penalties can be extremely heavy.

Hope this hasn't put you off, but the bottom line is do the research and if an official (solicitor, notary or bank) tells you something which you know is contrary to the law, walk away. If you don't, and the wheel comes off, don't expect any back up from them. There have been cases here of people buying properties through what they thought was the correct legal process, even to the point of having the deeds, only to find out that they have been duped, their properties declared illegal and in some cases demolished.

[Legazpi]

With regard to cash payments, again be careful here. If you pay part in cash and only declare the rest on the deeds, you could be in for a large Capital Gains Tax bill, if and when you come to sell.

For example if you payed €350000 on the deeds and €150000 cash and you came to sell the property in a few years and it was still worth €500000, and you managed to get that amount for it, the deeds would show that you had only paid €350000 and thus you would be liable for CGT on €150000 (at current rates 18% ie €27000) True, you would save 7% on €150000 (€10500), but payback time would come when you sold, unless you could persuade your buyer to under declare.


I thought CGT on houses in Spain was 10%? Or are you talking about the 18% UK CGT? Either way, you still make a good point - paying part in cash only works if you can sell it part in cash.

The other risk with paying too much in cash is that the local council might decide that you're taking the p**s and fine you. In fact I know someone who got a very good deal on a run-down property and didn't even bother paying anything in black money. However the local council refused to believe that he got the place so cheap and fined him anyway!

[fawlty]

I thought CGT on houses in Spain was 10%? Or are you talking about the 18% UK CGT? Either way, you still make a good point - paying part in cash only works if you can sell it part in cash.

The other risk with paying too much in cash is that the local council might decide that you're taking the p**s and fine you. In fact I know someone who got a very good deal on a run-down property and didn't even bother paying anything in black money. However the local council refused to believe that he got the place so cheap and fined him anyway!

CGT now for residents and non residents alike is 18% (previously it was 35% for non residents and 15% for residents until the European Parliament declared different rates illegal and Spain eventually agreed to make it 18% for all).

Never heard of local councils fining in that way, but it doesn't surprise me, I forgot to put local town halls on my list. They are a 'law' unto themselves. Untold number of Mayor's are currently in custody or on bail for alleged corruption. Unfortunately, this sort of thing is a culture in some areas, which I am told goes back to Franco's days. In my view, the system of having all powerful Mayors in post for many years (in one town near me the Mayor held his post for 18 years before he was arrested) can breed corruption.

However, we are living in their country and we have to deal with the system as it is. On the bright side things are changing 'poco a poco'

[greytop]

Councils are looking everywhere to replace money lost by the decline in building income. The fiscal authority can also decide to charge you gains based on their version of the selling price - not what is declared as the value. You may be able to fight this in a court but Spanish courts for these matters can stretch into a long wait for an appearance, meanwhile you run up lawyers fees!)
I think that as buyers we were not really given the option of all up front or pay some cash (even to there being a room set aside for this purpose in the notary's premises). Having sold that property and bought another I managed to reduce the cash payment a bit the second time around but they did not like it.
It's all designed to stop us getting bored ;D