New Build properties you´ll find in different gradations; from own development or off-plan until almost completed turn-key promotion. You can find a turn-key house that´s practically finished and only needs to be inscribed (through a New Build Declaration at the notary) for the key exchange. Or the opposite: an off-plan project of a promoter that is still on the drawing table. Most liberty ánd responsibility you have in your own development (auto-promotion) to your own desires. The benefits of buying off-plan or New Build properties of course are that the owner still (partly) can realize his own wishes in terms of layout, materials, equipment, etc. Quality specifications of course need to be put in the private purchase contract as detailed as possible.
Maybe needless to say that the lawyer doesn´t have a technical background and isn´t responsible for the communication or follow-up over the technical finish by the promoter.
Just to be clear: in the countryside of Andalusia you per definition can´t build, so it only concerns urban developments here.
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New Build bank guarantee (aval)
The developer or constructor nowadays always needs to dispose of an official bank guarantee (aval) for New Build projects. With this Spain guarantees that the buyer will get his money back if the company would go bankrupt during the building process. Or if the construction would suffer from delay by the builder or Promoter, which of course isn´t unthinkable. Have the bank guarantee checked by a lawyer, although the second, individual guarantee normally only is given after the private purchase contract. This contract with New Builds is mostly drafted by the Promoter and in practice, they are little flexible with making changes in it.
By the way, with New Build properties it´s often possible to take over the mortgage of the Promoter.
IVA (VAT) and AJD tax
In New Build projects you don´t pay ITP transfer tax. Instead it´s 10% IVA (VAT) plus1,2% AJD, Actos Juridicos Documentados tax or stamp duty (permanently lowered). For separately bought terrain you pay 21% VAT, just like for a loose garage/parking. Also, the costs of the lawyer are higher, because there´s more paperwork and the project takes much more time, especially in off-plan properties.
Own development: auto-promotor
Now the financial crisis is over, you see more and more constructions in own development again. The prices for these still to build houses normally are lower, because the buyer carries all responsibility. On the other hand, there are many reasons for which the costs can and building time can rise significantly. In many cases the Town Hall is the limiting factor in this so rather not start an own development under time pressure. Get some solid advice from your lawyer about the financial, fiscal and legal consequences of your own development without developer.
New service contracts & Comunidad (Community of Owners)
New contracts for water and electricity will be more expensive. The reason for this is that often a certified electrician or plumber needs to make a special ´boletin´ (technical report). The whole process of activating new service contracts can also take several weeks. So, don´t plan your holiday direct or removal directly after completion. Any way you could suffer delay because of the issuing Licence of First Occupation (LPO, Licencia de Primera Ocupacion) by the Council.
With New Build properties there´s no Comunidad (Community) yet and you can´t know what the future yearly costs and services will be. Read more about the subject in the paragraph: New Community of Owners for New Builds.
Referrals & references real estate agent & lawyer:
Need a referral for a good estate agent in Andalusia? Or like to receive an example offer for the legal investigation of a specialized and independent lawyer? Find out more through the link above.
©2023, Ariane van Wijk