Property lawyer in Alicante — legal protection for international buyers on the Costa Blanca

Property lawyer in Alicante: protecting the international buyer in the Costa Blanca market

The Costa Blanca property market is one of Spain’s most active for international buyers, with tens of thousands of transactions each year involving purchasers from the UK, Germany, the Netherlands, Belgium and Scandinavia. For the majority of these buyers, the Spanish property purchase process is unfamiliar territory: the legal structure, the role of the notary, the tax obligations, and the due diligence requirements are all different from what they have experienced in their home countries.

BMC’s property legal practice in Alicante is built around the specific needs of the international buyer. Our team works in English, German and Dutch, understands the expectations of buyers from each of the major international markets, and has the local knowledge of the Alicante property market — its urbanisations, planning histories, notaries, and Land Registries — to deliver efficient and thorough service on every instruction.

The rental income angle: buying as an investment on the Costa Blanca

Many international buyers in Alicante and the Costa Blanca purchase their property with a view to generating rental income when they are not using it themselves. This intention has specific legal implications that should be addressed at the point of purchase, not as an afterthought: the property must not be in a community that prohibits tourist rental, it must be capable of obtaining the Valencian Community tourist registration number, and the buyer should understand the tax implications of rental income as a non-resident (IRNR, typically 19% for EU residents) or as a resident (IRPF). BMC advises on the rental income legal and tax framework as part of the overall purchase process.

Community of owners: rights and obligations for Costa Blanca property purchasers

Every apartment and many houses in Spain’s urbanisations form part of a community of owners (comunidad de propietarios) governed by the Ley de Propiedad Horizontal. Understanding your obligations as an owner in the community — and inheriting any debts that the previous owner left outstanding — is an important part of the due diligence process. BMC verifies the community fee status and any outstanding community debt as part of every purchase due diligence, and advises ongoing property owners on their rights and obligations within the community framework.

The Spanish property purchase process: step by step

For international buyers unfamiliar with the Spanish system, understanding the sequence of the purchase process eliminates the anxiety that comes from not knowing what to expect.

NIE application. Every foreign buyer must have a Spanish Foreigner Identification Number (NIE) to purchase property in Spain. BMC applies for the NIE on behalf of clients — or advises on the process through the Spanish consulate in the buyer’s home country — so that the NIE is in hand before the reservation deposit is paid.

Reservation contract (contrato de arras). The first formal step is a reservation contract, under which the buyer pays a deposit (typically 10% of the purchase price). Under the most common structure (arras penitenciales, Art. 1454 Civil Code), if the buyer withdraws, the deposit is forfeited; if the seller withdraws, the seller returns double the deposit. BMC reviews the reservation contract and advises on its terms before signature.

Due diligence period. Between the reservation contract and the public deed, BMC conducts full due diligence: checking the Land Registry (Registro de la Propiedad) for encumbrances, charges, and ownership accuracy; verifying the cadastral record matches the physical property; checking planning status and any unresolved urbanisation obligations; verifying the community fee position; and checking for outstanding IBI debts attached to the property.

Notarial deed (escritura pública). The purchase is completed before a Spanish notary, who reads the deed in full and certifies that both parties understand and accept its terms. Payment of the purchase price typically occurs at the notary via bank transfer or certified cheque. BMC attends the notary appointment with the client or, where the client cannot attend, acts as attorney under a power of attorney.

Transfer Tax (ITP) and registration. After the deed is signed, the buyer must pay Transfer Tax (ITP) — in the Valencian Community, 10% for properties up to €1 million — and register the purchase at the Land Registry. BMC manages both the ITP filing and the registry submission, ensuring the buyer’s ownership is registered within the statutory deadline.

Mortgage financing for international buyers in Alicante

International buyers financing their Alicante property purchase through a Spanish mortgage face a regulated process governed by Law 5/2019 on Real Estate Credit. Key features of the Spanish mortgage market relevant to international buyers:

Binding offer. Lenders must provide a binding offer (FEIN) at least 10 business days before the mortgage deed is signed. The buyer has a mandatory 10-day reflection period during which the lender cannot modify or withdraw the offer. BMC advises on reviewing the mortgage offer terms and coordinating the timing with the property purchase deed.

Foreign currency mortgages. Mortgages denominated in a currency other than euros carry exchange rate risk and additional regulatory requirements under the law. Spanish lenders rarely offer non-euro mortgages — buyers who wish to maintain mortgage exposure in their home currency must explore alternative financing structures. BMC advises on the tax implications of foreign currency mortgage repayments for both non-resident and resident buyers.

Mortgage tax (AJD) and early repayment. Since Law 5/2019, the Documented Legal Acts Tax (AJD) on mortgage deeds is paid by the lender, not the borrower. Early repayment fees are capped — 0.25% of the outstanding capital in the first three years, 0.15% in years four and five — making flexible mortgage management more accessible for international buyers with variable income profiles.

Selling a Costa Blanca property: the legal and tax process

When an international owner decides to sell their Costa Blanca property, the legal process mirrors the purchase in reverse but with its own specific obligations. Key steps include:

Energy Performance Certificate (EPC). A valid EPC (certificado de eficiencia energética) issued by a certified engineer is mandatory before marketing the property. Without it, the sale cannot proceed at the notary. BMC coordinates the EPC issuance as part of the sale preparation.

Plusvalía municipal. The local authority (Ayuntamiento) levies the plusvalía municipal — a tax on the increase in the cadastral land value — on the seller at the point of sale. Following the Constitutional Court ruling STC 182/2021, sellers can now choose between the objective calculation method (fixed coefficients applied to the cadastral land value) and the actual gain method (real increase in land value since acquisition). BMC calculates both methods for each sale and files under the more favourable route.

Capital gains tax (IRNR for non-residents). Non-resident sellers pay 19% (EU/EEA) or 24% (non-EU) on the capital gain. The buyer must retain 3% of the purchase price from the payment and remit it to the AEAT within 30 days — this is a payment on account of the seller’s IRNR liability. If the final tax is less than the 3%, the seller recovers the difference by filing a Modelo 210 return within four months of the deed.

Cancellation of mortgage. If the property is subject to a mortgage at the time of sale, the mortgage must be formally cancelled at the Land Registry — either settled and removed before completion, or settled from the sale proceeds at the notary and immediately discharged at the registry. BMC manages the mortgage cancellation process in coordination with the lender.

Off-plan property purchase on the Costa Blanca: specific legal protections

Off-plan property purchases (sobre plano) are common in the Alicante and Costa Blanca market, particularly in Orihuela Costa and on the northern Costa Blanca near Jávea and Dénia. They carry specific legal protections and risks that require specialist attention.

Under Law 57/1968 (now superseded by the building regulations framework) and the current consumer protection rules, developers must guarantee the return of all stage payments — typically 20-30% of the purchase price paid during construction — through either a bank guarantee or insurance policy. BMC verifies the existence and validity of the bank guarantee or insurance before any stage payment is made. When developers have become insolvent during construction and buyers have lost stage payments — a scenario that played out significantly in 2008-2015 — the guarantee is the buyer’s primary mechanism for recovery.

Off-plan contracts should specify: the exact delivery date (with contractual penalties for delay), the technical specifications of the property (with reference to approved plans), the planning permissions applicable at the date of the contract, and the buyer’s right of inspection before acceptance. BMC reviews and negotiates off-plan contracts before signature.

Inheritance of Spanish property: the rules for international families

International property owners on the Costa Blanca frequently own Spanish property jointly with a spouse or leave Spanish property to children or other beneficiaries. The succession of Spanish property involves both Spanish inheritance tax (Impuesto sobre Sucesiones y Donaciones — ISD) and succession law considerations.

EU Succession Regulation. EU Regulation 650/2012 allows EU citizens to elect the law of their nationality to govern succession to all their assets (including Spanish property), rather than having Spanish succession law apply by default to their Spanish property. This can be significant for British nationals post-Brexit: the Regulation’s election is not available to British nationals in the same way as EU citizens, but Spanish private international law may still allow election in some circumstances. BMC advises on the succession law applicable to Alicante property for each nationality.

Valencian Community ISD. The Valencian Community applies generous ISD reductions for direct-line heirs (children, parents, spouse) — the 99% reduction on the taxable base for Group I and II beneficiaries effectively eliminates the inheritance tax burden on most Costa Blanca property inheritances within the immediate family. Non-EU nationals can access the most favourable treatment between the national framework and Valencian rules following the ECJ’s free movement of capital jurisprudence.

Spanish will (testamento español). International property owners on the Costa Blanca are strongly advised to execute a Spanish will governing their Spanish assets separately from their home-country will. A Spanish will avoids the delays and additional costs of having a foreign will translated, apostilled, and admitted to the Spanish probate process — which can delay administration of the Spanish estate by many months. BMC drafts Spanish wills for international property owners as part of the property purchase process.