Madrid - Sothebys International Realty
Real Estate Agency Madrid
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Madrid Property Buyer's Guide

Madrid is one of the most attractive property investment destinations in Europe and the cultural and financial hub of Spain. It is the third largest and wealthiest city in the European Union, and contributes 19% towards the total GDP in the country (as of March 2018).

Spain received more than €36bn of foreign investment in 2017, the highest recorded since 2008, of which 61% was directed to Madrid. In terms of foreign real estate investment, Madrid ranked third in the European Union in the same year, with over €4bn.

Rental yields in residential property vary depending on the district and amount of risk. In the most sought-after prime areas where the risk is low, such as Salamanca, Chamberi, Retiro, Chamartin and Centro, the return stands at around 4% before costs.

Where should I buy?

Unless you know the region well, the first question any potential buyer asks is where should I buy in Madrid.

Madrid does enjoy a great diversity of neighbourhoods, architecture and facilities, so there are many considerations to take into account, such as historic or modern, city or quiet residential area, apartment or villa, gated or golf communities.

Here at Madrid Sotheby’s International Realty we have Real Estate professionals who have lived in Madrid for many years and know the region well, who can advise any potential buyer of the areas to consider that suit their particular requirements and budget.

What sort of property should I buy?

This is where our expertise can help you decide on the right property to suit – are you planning to live there full time or will it be a second home? Perhaps you want to acquire it purely as an investment?

What is your budget?

Just a few of the points you should consider, but our Real Estate professionals will be pleased to guide you in the right direction and show you some suitable properties from which to choose.

What is the buying procedure?

Buying property in Madrid is very straightforward and when you buy with Madrid Sotheby´s International Realty you can rest assured your purchase is handled professionally and correctly. Our experienced team deal with both buyer and seller when handling negotiations and help with any other questions.

There are three basic stages of the purchase:


Reservation Agreement & Deposit

Buyer and Seller sign a simple reservation agreement and the buyer pays a modest reservation deposit as a gesture of good faith. This confirms the agreement of buyer and seller, subject to the property searches and takes the property off the market, keeping it reserved by the seller for the buyer for an agreed period during which the lawyers will have prepared a Private or Option Contract.


Option Contract

When lawyers have confirmed that the legal position of the property is in order, the Option contract is drawn up and signed by both buyer and seller. If any irregularities have been discovered, the buyer can withdraw and the reservation deposit returned.

If all is well it is usual for 10% of the agreed purchase price to be paid by the buyer. This contract is binding on both parties and if the buyer withdraws he forfeits the deposit.



Completion of the purchase takes place at a notary where the deed of conveyance “Escritura Publica” is signed by both parties, the balance of the purchase price is paid and the buyer takes vacant possession of the unencumbered property. Your lawyer will then lodge the deed at the property registry to assure legal title.

What are de buying costs?

The buying costs depend on the agreed purchase price to cover all your buying fees and taxes, plus an additional 2% if you are obtaining a mortgage. The costs are generally:

Transfer Tax

For resale property the tax is 6%, or 4% in the case of large families where the property will be the main family home.

There is no Transfer Tax for new homes which instead are subject to 10% VAT (IVA), plus 0.75% stamp duty on purchases over €180,000.

For plots, commercial premises or garages, the type of tax payable will depend on whether it is being bought from an entity or a private person. In the former, VAT of 21% plus stamp duty as per above will be applicable. In the latter, transfer tax of 7% applies.

Notary and Land Registry fees

Fixed by law on a sliding scale, around 0.3% for properties of around €1,000,000.

Lawyers' fees

Around 1% of the purchase price.

Mortgage fees

An arrangement fee of around 1% of the advance is typical. In addition mortgages are taxed , at around 1.5% of the advance.

On-going support

After the purchase, Madrid Sotheby´s International Realty will always be available for clients to offer any help we can. Usually your lawyer will arrange to change the utilities into your name together with the Town Hall taxes, such as the I.B.I (local community taxes) and the Basura (rubbish collection). Equally, if the property is within a community, there will be community fees to pay that vary according to each community. For advice on insurance, tax, banks, finance or indeed any aspect of living on this wonderful island we can introduce you to the best people who will be able to help and guide you.

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