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Real estate happiness on Ibiza with Engel & Völkers - what buyers should know

Buying a villa or finca on Ibiza is a lifelong dream for many people. The advantages of buying a property on the sought-after Balearic island are as varied as they are convincing: high quality living, an exclusive location and an attractive investment. Engel & Völkers Ibiza is your competent real estate agent who will support you at every stage of the buying process. In this article, you will find out why buying a villa or finca on Ibiza is worthwhile and what you should bear in mind to ensure a smooth purchase process.

Maximum living comfort and a good investment: buying a villa or finca on Ibiza

If you prefer a spacious property with luxurious furnishings and a large plot, you should focus your search on the villas in our portfolio. For those who prefer a traditional architectural style, we recommend buying one of the beautiful Ibizan fincas, which are generally found inland. Both types of property can be used either as a holiday home or as a main residence, depending on your personal preferences.

Buying one of the properties in our high-quality Engel & Völkers portfolio comes with impressive benefits. These include maximum living comfort, the protection of your privacy, and the customisability and design freedom of your new home. Property owners on Ibiza also benefit from the very high quality of life that the Spanish island offers all year round. The sunny climate, the beautiful landscape with numerous beaches and the wide range of leisure activities with many restaurants, cafés and bars are just some highlights convincing property buyers. In further blog articles, you can find out more about the qualities that make Ibiza an attractive place to live and to make it your year-round residence.

Another reason why many of our clients decide to buy a villa or finca on Ibiza is that a high-quality property on the Balearic Islands is a good investment. As these two property categories are highly sought-after and Ibiza is in demand, owners are very likely to be able to sell their property at a profit at a later date. There is also the option of renting out your property for a longer or shorter period, for example in the summer months, and generating an attractive rental income. A valid letting licence is a prerequisite for short-term letting. In a personal meeting, our estate agents will be happy to provide you with further information on the potential for increasing the value of your property investment or on the subject of a rental licence if you are interested in buying a property that can be rented out.

If you are thinking about buying a luxury property, it is essential to work with a professional estate agent, as various villas and properties in the upper price segment are not freely available to everyone on portals for reasons of discretion. In our publicly accessible portfolio, you will already find numerous exceptional properties such as villas and fincas in attractive locations that are just waiting to be discovered by you. However, if you would like to find out more about the luxury properties that Engel & Völkers Ibiza discreetly offers for sale, you should seek a personal consultation and receive non-binding advice. Our real estate agents will be happy to help you concretize your project and find the property of your dreams.

Everything you need to know about buying a property on the Spanish archipelago

Before you realize the purchase of your new home on Ibiza, you must inform yourself about the buying process in Spain and the additional costs that you will incur. Before signing the contract, property buyers in Spain must first compile all the necessary documents. This includes your original identity card or passport as well as the Spanish Foreigner Identity Number (NIE) for tax purposes, which is required for both EU citizens and non-EU nationals. If you are a citizen of a non-EU country and wish to buy a property in a rural area, you will also need a Spanish military licence. This can be applied for at the Spanish Ministry of Defence, where personal data such as nationality, residence status and other information will be checked. The entry requirements for this military licence are not considered to be particularly high, but it can sometimes take several months from the application to the final issue, which is why our estate agents advise you to deal with the issue in good time before completing the purchase. It is also helpful if you open an account with a Spanish bank before the purchase to facilitate payment transactions. To ensure that you have gathered all the documents you need, we recommend a one-to-one consultation with an expert such as Engel & Völkers. We can advise you on the entire process and put you in touch with other experts if required.

Prospective buyers in Spain are also obliged to check all legal aspects of the property before buying. Engel & Völkers Ibiza will be happy to help you with this as part of our all-inclusive service: our estate agents will take care of clarifying the following matters - for example, whether...

... the seller has the title deed,

... the property is registered in the seller's name at the land registry and is free of encumbrances,

... an energy certificate is available, 

... there are no current tenancies.

Engel & Völkers will also apply for a cadastral extract from the Spanish land registry with information on the build surface and location of the property if this is not already available. 

Once the right property has been found, the subsequent purchase process can be divided into 3 phases. These include;

 1. negotiations that our brokers are happy to moderate

Once you have found your dream property in Ibiza, you must first agree on the purchase price and the general terms of the purchase contract with the seller. An experienced estate agent acts as a competent intermediary in this phase and supports both parties in finding a suitable selling price, determining the terms of the purchase contract and confirming them in writing.

2. option contract and payment of the deposit

Before signing the official purchase contract, you have the option of having Engel & Völkers draw up an initial option contract, which offers both parties maximum security. The option contract can be drawn up in cooperation with a real estate agent or legal representative. At this stage, the down payment or deposit of 10% of the sales price is paid to the seller. 

3. signing of the purchase contract

Finally, the purchase contract is signed in front of a notary and in the presence of all parties. When the contract is signed, the sale price must be paid to the previous owner. This transfers all ownership rights and obligations to the buyer.

Once the contract has been finalised, the change of ownership must be entered in the land register. The notary before whom the deed of sale was signed must send a certified copy electronically to the Land Registry so that the buyer is registered as the new owner. The buyer must also report the change of ownership to the land registry within 2 months of signing the contract and to the city or municipal administration by submitting a simple copy of the purchase contract.

Another point that you should consider when planning is the additional costs that have to be paid when buying a villa or finca on Ibiza. In addition to the purchase price, the buyer of an existing property must pay a property transfer tax. This tax is progressive, meaning that the tax rate increases as the purchase price rises. The property transfer tax is calculated as follows, depending on the value of the property:

- Up to 400,000 euros: 8%

- From 400,001 to 600,000 euros: 9%

- From 600,001 to 1,000,000 euros: 10%

- 1,000,000.01 to 2,000,000 euros: 12%

- Over 2,000,000 euros: 13%

In the case of new buildings, buyers do not have to pay land transfer tax, but VAT (10% for residential buildings and 21% for land and commercial properties) and stamp duty (1.5%) to the developer.

In addition to the taxes you will have to pay, there are other costs involved in buying a new home, such as notary and land registry fees, legal fees and bank charges. All in all, buyers of a villa or finca in Ibiza can expect to pay between 8% and 12% of the purchase price, depending on the type and value of the property.

Would you like to buy an exclusive property from our portfolio? Take this opportunity to find your dream villa or finca with Engel & Völkers Ibiza! We will be happy to advise you in a personal meeting about buying a home on Ibiza and answer all your questions on this complex subject. If you are an owner and would like a free valuation of your property, or would like to be put in touch with a local lawyer, the Engel & Völkers Ibiza team will be happy to help! We look forward to hearing from you!

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