NEWLY BUILT PROPERTY
====================

Many people have a dream of one day commissioning a brand new house
that will be built especially for them and to their particular
specification. This is easily arranged in this part of the Costa Blanca,
but there are certain points to bear in mind that could help to avoid
your dream turning into a nightmare.

For quite a few years now there has been something of a building frenzy
going on in this part of Spain, and everywhere you look, new houses and
urbanisations seem to spring up almost overnight. House building here
is quite different from the UK: for a start, higher temperatures and
extreme weather conditions such as gota fria (seasonal heavy storms and
rains) can affect properties if they are not built with these factors
in mind. If you watch a Spanish house being built, it can took as if it
is being thrown up at great speed and with little care, but appearances
can be deceptive, and the end product is usually quite solid and sound.
They are built to keep the heat and damp out, with roofs and terraces
that allow for drainage of heavy rain. Spanish builders therefore
construct to a design that suits the climate and living conditions here,
and what is a good idea in England may not translate well to this part
of the world, so do think carefully before modifying any intrinsic
feature of your new property that has been recommended by your builder.


TIME SCALES
===========

One of the biggest complaints from people who have properties built in
this region is that they are rarely finished by the agreed completion
date. It is usually the constructor who bears the blame for this
situation, but it is often out of their control to meet an exact
deadline. Constructors have a huge number of "threads" to bring
together when building properties; they often sub-contract part of the
building works to other companies, and are vulnerable to adverse
weather conditions, obtaining building supplies etc. So a prime rule
when you are having a house built is never plan everything around the
proposed completion date - even if you are assured the property will be
finished on time, always bear in mind that it could be delayed. It is
always a good idea to have a penalty clause built into your contract so
you receive compensation should there be a delay in completion, but
this is not usually a large amount and furthermore will not ensure
there is no delay.


PAYMENT
=======

Once you have signed the Purchase Contract and paid a deposit for your
new property, time scales are normally worked into the Contract for
percentage payments to be made depending upon the stage reached in
building the premises, e.g. once the foundations are in, when the roof
is on, when the interior works have been completed, etc. It is
sometimes acceptable to hold back a small percentage of the final
payment until any outstanding minor works are carried out. To this end,
it is a good idea to prepare a "snagging list" with the constructor so
you are both in agreement on any such works. By the same token, make
sure you get a detailed and itemised list of expenditure before the
works commence so everyone is happy who is paying for what and when.
The constructor will be applying for the relevant Certificates and
Licences prior to commencing building work and as the property is
constructed, and again the cost of these will be detailed and included
in your Contract.


INSURANCE
=========

It has recently become law that all constructors must take out an
insurance against serious defects or their company going bankrupt
before the building has been completed (much like the NHBC Certificate
in the UK). Because these insurances are so new, they often take months
to arrange, which could delay completion of the property, it is worth
checking your constructor has this aspect in hand so it is not left
until the last minute. Constructors usually pass the cost of this
insurance on to the purchaser, and it is quite a significant amount, so
also ensure this has been accounted for in your expenditure list, or is
included in the contract price.


THE DEEDS
=========

In order to sign the Escritura de Obra Nueva & Compraventa (Deed for a
New Property) at the Notary's Office, the following documents are
required; the Building Licence, a "Fin de Obra" (End of Works)
Certificate, the Architect's description of the new property, and the
10 year Insurance Certificate. As there can be delays in obtaining all
these documents, owners sometimes arrange with the builder that they
move into the property prior to signing the Escritura.

FINANCIAL IMPLICATIONS
======================


It is possible to sign an Escritura of Compraventa (Deed of
Sale/Purchase) at the same time as the Obra Nueva, and these documents
are often merged into one. However, do bear in mind that notary and
property registry fees will still be applicable for each transaction,
albeit in one voice. Some builders pay the cost of the Obra Nueva
Escritura themselves, so this is another point to check with your
constructor.


TAXES
===== 

You can sign an Escritura for just the land your property is going to
be built on, and a subsequent Escritura for the Obra Nueva once the
property is built, but the usual method is to wait and sign when your
house is complete, to avoid the higher rates of VAT charged when
purchasing a plot of land alone. For example, if you buy a plot of land
and sign an Escritura on just this plot, you will pay 16% IVA. If you
subsequently build a property on the land and sign a separate Escritura
for the Obra Nueva, there will be a further 7% VAT to pay on the
property construction. If however you wait and sign everything once the
house is complete, you will only pay 7% on the total price. Furthermore,
if you have a garage or swimming pool built after the property has been
constructed and registered, the IVA will be separate and set at 16%. In
addition, and separate from the IVA tax, once you have signed the
Escritura, you will have to pay a Government Registration Tax which is
1% of the declared value of the new dwelling.

Once the premises have been built, and the escritura signed, the
constructor will arrange for his electrician and plumber to prepare a
Boletín (report) in order that the electric and water contracts may be
drawn up. The Boletin accompanies the Cedula de Habitabilidad
(Habitacion Certificate) application which must be lodged at the Town
Hall. The Town Hall will inspect the new property to satisfy themselves
that a) it has been built in accordance with the plans submitted by the
builder and b) the property is of a requisite standard for habitation.
They will then issue the Cedula.


UTILITIES
=========

It is at that point that the electric and water contracts can be drawn
up in the new owner's name. Once again, these new meters and
connections must be paid for, so make sure they are shown in the
expenditure list you receive from the builder. This is another area
that can take months to arrange, and until that time you will be on a
temporary building supply, so check with the builder as to how bills
will be paid (i.e. are these included in his services, or will he be
passing the costs on to you).

I recommend you seek the assistance of a gestor or qualified individual
if you are buying a new property, as apart from the complexity of this
particular type of transaction, it is good to have an impartial third
party who can liaise between yourself and the constructor if necessary.
If you are considering buying a plot of land with a view to building at
a later date, or land that has an existing old property on it (usually
known as a finca) it is vital that you seek advice, as checks must be
made that the land is urbanisable (i.e. can be built on), there are no
minimum size requirements by the Town Hall to inhibit building, and
general services such as water, electric and sewage can be provided.