What has changed for Russians, Belarusians and Ukrainians when buying real estate in Spain?

The real estate sector in Spain is actively attracting the attention of foreign developers, as evidenced by the significant increase in the number of deals concluded. With this sunny country, known not only for its magnificent beaches, but also for its rich cultural heritage, more and more people from different parts of the world dream of becoming owners of real estate, be it apartments or luxury villas on the coast.

Over the past 15 years, there has been a steady increase in interest in the Spanish real estate market from foreign investors, with the exception of one quarter when the pandemic had its negative impact. In the third quarter of 2022, for example, there was an increase in sales among foreign buyers, amounting to an impressive 68% compared to the same period last year. UK and German nationals stand out among the top active buyers, while Russians traditionally hold a strong position in this segment.

However, the situation started to change with the outbreak of the conflict in Ukraine and the adoption of international sanctions against Russia, which made Spain less accessible for both tourists (due to the closure of direct flights) and wealthy investors.

Difficulties for citizens of Russia and Belarus

Changes concerning the representatives of Russia and Belarus have created significant difficulties in the implementation of transactions for the purchase of real estate in Spain. First of all, many financial institutions currently refuse to open an account for citizens of these countries.

• Despite this, some banks, such as BBVA, continue to interact with clients from Russia and Belarus, but they now require proof of the legitimacy of the origin of the income.
• It should be understood that opening a bank account in Spain is an important step on the way to the acquisition of real estate, as all financial interaction with sellers, including payment of taxes and utility bills, is carried out through this account.
• In exceptional cases, it is possible to transfer money to the developer from a foreign banking institution, but this is quite rare.

Restrictions on bank accounts

In addition, a number of financial institutions have imposed restrictions on the replenishment of accounts previously opened by Russians and Belarusians, which has created additional difficulties in servicing mortgage loans and meeting obligations to pay utility bills.

Despite this, experts point to the persistence of this situation, especially among clients who do not provide accredited institutions with the required financial documents, including annual tax returns. Financial institutions require their clients to submit timely income tax returns, which are due in February or March for the previous year.

If a citizen fulfills this requirement, his transactions with funds do not cause any trouble.

Preparation for purchasing real estate

Thus, the process of purchasing real estate in Spain for citizens of Russia and Belarus is transformed into a more labor-intensive task in today's conditions. Preliminary preparation for the financial requirements of banks and careful planning of all aspects related to the financing of the transaction are key steps to avoid surprises later.

A thorough understanding of all the conditions necessary for a successful transaction, together with accurate compliance with all legal standards - this is what can significantly increase the chances of a successful purchase of real estate in this beautiful sunny state.

Therefore, it is highly recommended to thoroughly research all aspects of the process and be prepared for potential changes in market conditions before making a decisive move to purchase.

Restrictions for citizens of Russia and Belarus

Russian and Belarusian citizens face a number of difficulties when it comes to managing the money in their European bank accounts. According to recent changes in legislation, the limit of money that can be kept in their accounts is limited to 100,000 euros. This rule creates difficulties, especially when it comes to buying real estate, the value of which almost always exceeds this amount. In such cases, buyers need to make staggered transfers of funds.

These transfers usually take a few days to a few weeks and can be made from both spouses' accounts if the transaction is a two-person transaction.

Scheme of translations

When using a staggered scheme, it is important to allocate funds correctly so that each of the transfers does not exceed the established limit. For example, Russians may transfer their funds from a sanctions-free bank to foreign accounts or to the accounts of others, with the total amount transferred not exceeding one million dollars or a similar amount in another currency.

It is important to note that due to the current international situation, Spain is considered an “unfriendly country”. This means that Russian banks can block receipts to the accounts of individuals and legal entities in Spain, even if the transaction has been approved. To avoid such situations, Russian buyers often prefer to transfer funds to their accounts beforehand and then make a settlement with the seller.

Difficulties with mortgages

Don't forget about mortgages and down payments, which can cause additional difficulties, especially if the main source of income is rubles.Some financial institutions may not approve the loanIf income is declared in a currency other than the euro or dollar.

Situation with Ukrainian citizens

As for Ukrainian citizens, they are currently prohibited from transferring money to current accounts used for real estate purchases in Spain. However, Ukrainians can make transfers from accounts opened in other countries. It will also be difficult to obtain mortgage financing if the main part of income is in hryvnias.

The process of buying real estate in Spain

Now let's take a detailed look at how the process of buying real estate in Spain. Suppose you have decided to buy a cozy apartment in a new residential complex on the coast, for example, in Benidorm. Or you are interested in a villa located in Altea or a nicehouse with a garden in Torrevieja.

First of all, you need to discuss your goals and preferences with a realtor. He or she will help you analyze various options, both online and offline.

Purposes of acquiring real estate

You need to understand your main purpose of buying a property, as this will determine the agencies' recommendations. For example, the purchase can be considered as:

• primary residence;
• secondary vacation housing;
• a facility to rent out and generate income;
• investment to obtain the so-called “golden visa”, which will give the right to residence and employment in Spain.

For the latter option, the minimum value of the property must be at least €500,000.

Preparation for purchase

Now the question arises - where to start the process when you have already chosen the object of interest. The first step is to prepare all the necessary documents and clarify all the details of the transaction. This is necessary to ensure a safe and smooth purchase process.

Document preparation

Preparing the necessary documentation to prove the sources of finances and the origin of income is an extremely important step even before you leave your home country. It is important to accumulate all the necessary documents that can confirm how the funds intended for real estate investment were obtained. This confirmation should cover the entire amount that you intend to invest in such investments.

• Agreements on sale of assets (real estate, cars)
• Certificates on the amount of salary
• Tax declarations for individual entrepreneurs
• Statements of dividends received
• Bank accounts with transactions in the last year

These financial statements should clearly reflect the receipt of salary or business income. These documents are important when dealing with banks, as they will be required to open an account and to verify the source of funds before any money transfers.

Search for qualified specialists

At the next stage, it is critical to have the support of an experienced lawyer and tax representative, as the notary is only involved in the transaction at the final stage. For this reason, it is advisable to have a qualified lawyer on hand at all preliminary stages, starting with the reservation of the property, who can help you with any legal aspects.

The main task of the lawyer is to carry out a legal check of the objects, to make sure that the documents in the registry and cadastre are correct, and to check the developer's licenses. The lawyer will also have to deal with the tax registration of the property and obtaining a foreigner tax identifier (NIE). In addition, the lawyer should make sure that bank guarantees or insurance policies are in place for all payments related to the contract.

Checking the legal cleanliness of the object

If you are planning to buy a ready-made home, you will need to carry out a standard check of the legal cleanliness of the object. The first step in this direction - order an extract from the register (nota simple), which can be done online or directly in the office. Payment for the services of a lawyer will be from 0.5% to 1% of the value of the transaction. Usually agencies have at their disposal experienced professionals with whom they have long cooperated.

In addition to a lawyer, you will also need a tax representative, who can be either a lawyer or a licensed tax consultant capable of performing the necessary duties. According to Spanish law, information about the representative must be included in the contract for the purchase of the property (the so-called “escritura”). The tax representative's task is to ensure compliance with tax legislation throughout the transaction.

Signing of the reservation agreement

The third stage involves signing a reservation agreement and making a prepayment.

If you have not yet prepared documents to prove the origin of your finances, start with this. The fourth step is to open a bank account in Spain and obtain an individual taxpayer number (NIE).

Several key documents will need to be provided in order to take these actions. These include:

• Certificate of employment
• Income statements
• Employment contract
• Tax returns for the last two years, especially if you are self-employed
• Bank statements showing your receipts, such as wages or other income

If you intend to transfer funds to the seller, it is also important to have a pre-contract of sale, reservation agreement or proof of payment to confirm your payment. You will need to be present in person at the bank to open the account, but you can execute a power of attorney for another person to complete the remaining steps of the transaction.

Individual taxpayer number (NIE)

An Individual Taxpayer Number (NIE) is essential for all foreigners intending to purchase property in Spain.The absence of this numberwill not allow non-residents to carry out any legal actions. NIE can be obtained both at police stations and consulates.

Signing the purchase and sale agreement

The fifth step is the signing of the contract of sale between the seller and the buyer. This document, called contrato privado de compraventa, must contain all the terms of the transaction, including the payment schedule.

When buying new buildings, construction companies usually offer installments, which the parties agree on in advance. The down payment may vary:

• Large real estate developers require about 20%
• Small regional companies - up to 40%

Typically, this phased payment option is given to the buyer, allowing them to pay in installments rather than all at once.

Payment of VAT

When buying a new home, you should also remember to pay the value added tax (VAT), which is 10%. In case of purchase on the secondary market, there are several ways of settlement:

• Transfer of funds from your account to the seller's account
• Checks issued by the bank

Awaiting completion of construction

In the sixth phase, you will have to wait for the home to be completed and make payments as scheduledinstallmentsIf you are buying a new building. It usually takes one to two years to build a new building.

During this period, you will need to make regular payments according to the terms of the contract and wait for the construction work to be completed. Every developer is required by law to insure your payments, which ensures that in the event of bankruptcy, you can be reimbursed for the amount lost.

Applying for a mortgage

In step seven, if appropriate, you can apply for a mortgage.In SpainA home loan can only be obtained if the new building has already been commissioned. A mortgage can only be issued after this step.

Usually, buyers approach banks for a mortgage 2-3 months before construction is completed and the final deal is notarized.

The loan provides an opportunity to close the remaining amount on the mortgage contract using the borrowed funds. However, it is worth bearing in mind that mortgage financing is only available to people whose income comes in currencies such as euros, dollars, British pounds and dirhams. If you earn in Russian rubles, Belarusian rubles, Ukrainian hryvnias or Kazakhstani tenge, your chances of getting a loan are significantly reduced and banks will most likely have to turn you down. If you are going to purchase housing directly from the owner, you can apply for a mortgage immediately after opening an account with the bank.

Signing the bill of sale

The next step is the signing of the main document of the transaction, known as the bill of sale or escritura publica de compraventa, before a notary, which takes place in the eighth step. Both parties to the transaction sign this document in the presence of the notary, who then certifies it with his or her resume. All costs associated with the services of the notary are borne by the buyer.

Registration of the bill of sale

At the ninth stage, the bill of sale is registered in a special register. The notarial papers are sent to the registration chamber, where they are entered into the property register. This is important, as it is after this that the buyer officially becomes the owner of the apartment. At the notary office you are given a certified copy of the bill of sale, while the original will be sent from the registry within 2-3 months.

In just a day or two you will be able to receive a certificate, similar to an extract from the USRN in Russia, attesting to the new owner of the property.

Real estate acceptance

At the tenth stage of the real estate transition after the transaction is completed, the developer hands over the keys to the apartment to the new owner. The buyer, with the help of a professional if necessary, inspects the condition of the apartment and immediately reports any deficiencies identified. In practice, sometimes the process of transferring the apartment can take place before the transaction is notarized, which is certainly a more convenient option for the buyer.

Taxes and additional expenses

Regarding taxes and additional costs associated with buying an apartment in a new building, the following taxes are worth considering:

• 10%- Value Added Tax (IVA);
• 1.5%- Stamp Duty (AJD) if the accommodation is not the main place of residence (stay of less than 6 months);
• 0.1%- Stamp Duty if the dwelling is the main place of residence.

In addition, you should consider the costs approx.1,5-2%for registration and notary services, and approximately0,5-1%for the services of a lawyer. Thus, tentatively, the amount of additional expenses may amount to approx.12-14%of the value of the property stated in the bill of sale. Value Added Tax is paid at each scheduled payment, while stamp duty, notary and registration fees are paid immediately upon completion of the transaction.

Buying a ready-made home

If you buy a completed home, such as an owner-occupied apartment, you will need to pay a fee6-10%real estate transfer tax (ITP). The amount of this tax is set by the local government. Thus, the execution of all necessary documents and authorization of the transaction is an important stage of the acquisition, in which it is extremely important to take into account tax liabilities and the costs of notary and lawyer services to avoid unexpected costs.

A successful purchase requires careful attention to every stage, starting with the selection of the property and ending with obtaining all the necessary supporting documents and certificates.

Conclusion

In conclusion, analyzing the current developments in the Spanish real estate market, it can be noted that the situation is not easy, both for foreign investors and local buyers. Russian and Belarusian citizens face new barriers and restrictions, which can complicate the process of buying real estate. Limited access to banking services and the need for strict compliance with financial requirements make the purchase of apartments and houses in Spain not as easy as before.

However, despite all the difficulties, interest in Spanish real estate from foreigners remains high, including citizens of Ukraine, who are also looking for opportunities to invest in stable and profitable assets.

Key points

It is worth emphasizing that understanding all the nuances of the real estate purchase process is an important step to avoid possible problems in the future. Investors should be prepared for changes in conditions, closely follow the requirements of the legislation and, if necessary, contact professional lawyers and realtors with experience in working with foreign clients.

• Changes in banking:Russian and Belarusian citizens face restrictions when opening accounts.
• Financial requirements:The need to confirm sources of income and submit declarations.
• Purchase Objectives:Depending on your goals, your approach to real estate selection may differ.

Selecting targets for purchase

It is important to keep in mind that choosing your goals for buying real estate is essential. Whether it is:

• Permanent residence
• Summer residence
• Possibility of obtaining a “golden visa”

Each of these options requires detailed analysis and a balanced approach.

In summary

Thus, buying real estate in Spain in modern conditions requires from buyers more responsibility and awareness. Nevertheless, as practice has shown, for those who are ready to adapt to the new realities, the market still offers many opportunities, and everyone can find their ideal corner on the Mediterranean coast.

Spain remains an attractive and most enchanting investment destination despite the time hurdles, and these changes are opening up new horizons for future property owners.