Following the Las Palmas property money trail
The scariest part of buying a Las Palmas property is when you start to transfer money.
Where exactly is it going? And is it safe?
In fact, it’s not as daunting as it seems, especially if you know exactly what to do and when.
Las Palmas property: The money trail
Here’s my complete guide to where your money goes when you buy a property in Las Palmas.
NOTE: With the Las Palmas property market now recovering fast it is no longer possible to reserve a property for a few days while you think about it.
This is why it is vital for all buyers to have their mortgage pre-approved if they are looking to buy in high-demand areas of Las Palmas city such as the Puerto and Las Canteras.
See my guide to getting a Las Palmas mortgage for more details.
The arras
Once your offer is accepted, you pay a deposit of 10% of the total purchase price. This sum is paid into your estate agency’s account and is held in escrow.
This is why it’s important to work with a reputable local estate agency. You want your deposit money safe while you complete the purchase.
The arras takes the property off the market for a period of between one and three months, depending on what you agree with the seller. Many owners now want a short arras period.
The arras agreement is legally binding. As soon as you sign the arras contract and make the deposit you are committed to buying the property. If you decide not to buy, you forfeit the deposit. If the seller pulls out after signing arras, they have to pay you twice the deposit amount in compensation.
Paying the balance
You pay the outstanding money owed to the seller on the day of signing (the purchase price minus the señal and arras deposit).
This is normally done by handing over bank cheques cut in advance by your Spanish bank.
Costs and fees
Buying a Las Palmas property costs around 10% of the purchase price in taxes and fees.
If you buy with a mortgage, you hand this money over to your bank and they pay all the taxes and fees (notary fees, registry costs, taxes, etc) on your behalf.
If you buy in cash, you need a local gestoria (admin company) to handle these procedures. You pay them the 10% and they return any surplus cash once everything has been paid for. This can take a couple of months as the registry is thorough but a bit slow.
Practicalities
You have to pay the arras deposit from your home or Spanish bank account to your agency’s deposit account. Cash transactions of over 1000 euros are illegal in Spain and money laundering rules are strict so it is best to have your arras money in your local bank account.
You have to pay the outstanding amount from a Spanish bank account rather than from home.
It is always best to transfer the funds you need from your home account to your Spanish bank account well in advance of signing day.
See this article on opening a local bank account in Las Palmas.