Tips for the first time buyer - It is of utmost importance that purchasers know their rights and limitations when taking what possibly could be one of the most important decisions in their life; the purchase of a property.
First time buyers are probably not familiar with current property prices and values. Affordability is the key. We therefore recommend a budget be stipulated from the offset. If bank financing is required this should be done prior to property hunting. Only once a budget is set, that one can really decide the kind of property and its location. Prices may completely differ from one location to location, even from one street to another. It is therefore very important to first establish needs and requirements according to affordability. At this stage a quick property search on our site should give some idea of what is available on the market at the present moment, and for what price, on the following criteria:
1. Location: Where would you prefer to live?
2. Type: What type of property would you like?
3. Number of bedrooms: What size will best accommodate your needs for the foreseeable future?
4. Finished or shell: Would you prefer a more modern home or one with traditional character? Would you buy a finished or lived-in property or would you rather do it up yourself, to your own taste, at your own pace?
5. Amenities: What services and amenities do you require (schools, transport, etc)?
The Procedure
Once we have found the property you were looking for, we will do our utmost to negotiate the best price possible for you, and once price and conditions are agreed to, a date and time is set for the signing of the 'promise of sale' (or convenium) with your notary. However, before proceeding to the notary it is imperative that the following is clearly agreed to by both parties:
1. The agreed price
2. Whether freehold, if property has a ground rent the amount, and also whether temporary or perpetual
3. List of fixtures, fittings and pieces of furniture included in the price
4. Payment terms, if any
5. List of pending works to be completed by the vendor
6. Other terms of the promise of sale, for example 'Subject to loan' clause
7. The deposit amount: Although not stipulated by law, it is practice that the deposit on account is the equivalent of 10% of the agreed purchase price, paid as a sign of goodwill by the purchaser and of their intention to appear on the final deed of purchase.
8. Term of the agreement (convenium): Unless otherwise agreed, it is valid for three months. It is important to know that the deposit will be forfeited in favour of the vendor should the purchaser not appear on the final deed without a valid reason at law.
During the period between the signing of the convenium and the final deed (the contract), the following will take place:
1. The notary (employed by the purchaser) will, within 3 weeks of signing the promise of sale agreement, register the said agreement with the commissioner of Inland Revenue and pay 1% of the sale price on account of duty due by the purchaser on the final deed of sale.
2. The notary will also carry out researches on the property and verifies clear legal title, assuring that there are no outstanding debts, hypothecs or loans on the property.
3. The purchaser must honour all the conditions mentioned in the promise of sale agreement e.g. bank application for loan in good time, ascertaining that a valid building permit covers the property etc.
4. The vendor in turn must honour all the conditions that are mentioned in the promise of sale, which apply to him or her e.g. completion of pending works agreed upon etc.
Our property consultants will actively follow up these procedures to ensure a smooth, final transaction of the property. Once the above have been completed, the notary advises the parties on the date of the final deed.
1. The final deed is signed at the bank in the case of bank financing.
2. The contract of purchase is read out and if all is in order all the parties concerned sign it.
3. The balance due, i.e. the purchase price less the deposit already paid when the convenium was signed, is paid to the vendor.
4. The parties concerned pay all outstanding payments concerning the purchase. For instance, the vendor may settle any outstanding amount due to a bank as the final part of a loan settlement, as well as capital gains tax that may be due on the property, and the estate agent's fee if applicable. The purchaser will pay stamp duty, notary's fees and searches etc.
5. Keys to the property are passed on to the purchaser.
6. The notary public registers the contract at the public registry (and the land registry if applicable).
Expenses
Stamp duty on the purchase price must be paid as to 1% on signing of the preliminary agreement and the balance on signing of the final contract, together with the notary's fees and cost of searches. When the property being purchased is to be used as purchaser's ordinary place of residence, stamp duty is charged at 3.5% on the first EUR 116,469 and 5% on any amount over EUR 116,469. For any other property purchase, stamp duty is charged at 5% on the total value of the property.
No stamp duty is charged on the value of the movable property (furniture and fittings) being transferred with the immovable property.