The extra costs that come with buying a property are relatively low in the UK by international standards, lulling us into a false sense of security when buying overseas.
If you neglect to allow for these fees and find your dream home at the top end of your budget, that home might actually be out of reach.
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Certain types of property come with tax incentives, and you may find you can reduce the extra fees. However, it’s essential to know what these costs are and how to calculate them. Plus, if you plan ahead, you can avoid the costs fluctuating due to exchange rates.
We list some of the fees you’re likely to encounter…
Estate agent fees
In the UK just the seller pays estate agent fees but, in some countries, these fall on the buyer. Properties are usually advertised with these fees included. In France, for example, these will be anywhere between 4-10%.
Notary costs
A notary is an impartial witness to the signing or authentication of a legal document. Their fees encompass not only their own fees but can also include stamp duty, land registry fees and taxes, which are paid by the buyer.
It’s important to note that a notary is not the same as a lawyer, so you will still pay for a lawyer separately. Your estate agent should know which notaries are efficient and knowledgeable.
In Spain, for example, allow for these costs to be from 0.5 to 1% of the purchase price.
VAT on new builds
If you’re buying a new-build house or apartment abroad, it’s quite common to pay VAT on this. For example, in Spain, VAT (IVA in Spanish) is levied at 10% of the purchase price.
Land Registry fees
Depending on where you buy, there can be land registry fees to record the ownership of the property in your name once the purchase has been completed. Allow for 1% of the purchase price.
Independent lawyer fees
As mentioned above, it’s likely you’ll need the services of a lawyer to purchase your property. These costs vary but allow for €1,500 to €3,000. If the purchase is complicated, they can be higher.
Fees in France
Notary Fee
The use of a Notary in France is mandatory for property purchases. As the buyer, you should expect to pay between 3-10% of the property value. This includes several costs that are collectively called notary fees or “frais de notaire” because they are all paid via the notary.
Registration Fee
Registration fees in France range between 0.6-5%. When property transactions do not fall under VAT they are subject to a registration fee.
Estate Agent’s Fee
Estate agent’s fees can be split by the buyer and the seller in France and are around 3-10% of the property price, plus VAT. However, you shouldn’t have to budget for this separately, as they should be included in the price of the property.
Land Registry Fee
Land registry fees vary but are usually around 0.10% of the property price.
Fees in Spain
Property Transfer Tax
Buyers of re-sale property (as opposed to brand new) are required to pay the property transfer tax, which varies from 6% to 10% depending on the autonomous region.
Value Added Tax (VAT)
However, as mentioned above, if you’re buying a new build, a VAT of 10% will be required for this.
Notary Fee
Notary fees in Spain are around 0.03% to 0.45% of the property value. For properties over €601,012.10, this depends on the agreement between the notary and the client.
Registration Fee
Registration fees are around 0.02% to 0.175% of the property value. These include land registry fees and a fee for public deeds.
Estate Agent’s Fee
Estate agents in Spain usually charge around 2.5% to 3%. However, these are usually included in the asking price, so you shouldn’t need to budget for them separately.
Fees in Portugal
As a general rule, once you’ve taken account of agency fees, legal costs, registrations and taxes, you will be looking at paying about 8-10% of the property purchase price in Portugal.
As a buyer, you won’t need to pay estate agent fees in Portugal, as the agent works on behalf of the seller on a commission basis.
Property Transfer Tax
Property transfer tax in Portugal comes at varying rates, depending on the property classification. The tax base is the selling price of the property or the current market value of the property, whichever is higher.
Registration Fee
Registration fees include the notary fees and are around 0.20% to 1.20% of the property value.
Stamp Duty
Stamp duty is at a flat rate of 0.80%. Again, the tax base is the selling price of the property or current market value of the property, whichever is higher.
Fees in Cyprus
Typically, estate agent’s fees in Cyprus are paid by the seller.
Value Added Tax (VAT)
Like in Spain, buying a new build in Cyprus is subject to VAT. The standard VAT rate is 19%.
Legal Fees
Although a solicitor is not essential for your property purchase, it will make things a lot easy. Legal fees in Cyprus are generally negotiable, between €850 and €1,730.
Fees in Italy
Estate Agent´s Fee
The standard agency fee, regardless of the type of property (commercial, residential, or land sales), is between 3% and 8% and is usually shared between buyer and seller. The agency fee is payable at the signing of the preliminary contract.
Registration tax
For old properties, registration tax is 3% for those buying their main home. The registration tax for non-residents and those buying second homes is higher, however, at 7%.
Land Registry Tax
Land registry tax is payable on all property transactions. Resident buyers of their first home pay a fixed fee of €168. Buyers of second homes and non-residents pay 1% of the property.
Cadastral Tax
1% or a fixed fee of €168 for new properties. A fixed fee of €168 also applies if the property is their main or only residence.
Value Added Tax (VAT)
Buyers of new properties do not pay registration tax and instead are liable to pay Value Added Tax (VAT), which ranges from 4% to 22%.
Legal Fees
Legal fees are usually around 1% to 2% of the declared price of the property and are also subject to 22% VAT.
