Off-plan buying guide
Buying Off-Plan Property in Spain
Off-plan property — buying directly from a developer before or during construction — can be one of the most attractive ways to enter the Spanish market with a modern, turnkey home. It can also be one of the most complex. The risks are real and the protections depend entirely on how well the purchase is structured from the reservation stage onwards.
Reservation deposit is binding
Off-plan reservations typically involve a staged payment structure. The deposit is usually non-refundable if you change your mind.
Guarantees must be verified
Developers are legally required to insure stage payments. Always verify the bank guarantee or insurance policy before paying.
Completion date is an estimate
Construction delays are common. The contract should specify a longstop date and what happens if it is missed.
Legal review must happen before signing
Developer contracts favour the developer. Independent legal review before the reservation stage is not optional.
How off-plan purchases work in Spain
The payment structure for off-plan is unlike a resale purchase — funds are committed progressively during construction rather than at one moment.
- 1
Reservation
Initial deposit of 1–3% of the purchase price. Removes the unit from sale. At this stage, legal review is still possible and recommended.
- 2
Private purchase contract
The main off-plan contract. Payment schedule, specification, longstop date and guarantees are all fixed here. Legal review of this document is critical.
- 3
Stage payments
Typically 20–30% of the total price paid in instalments during construction. Each payment must be covered by a bank guarantee or insurance policy.
- 4
First Occupation Licence
The developer applies for this once construction is complete. It is a prerequisite for completion — no licence, no legal handover.
- 5
Completion and escritura
Final payment (usually 70–80% if using cash, or mortgage drawdown) is made when signing before a notary. Ownership transfers officially at this point.
| Stage | Typical payment | When | Protection to verify |
|---|---|---|---|
| Reservation | 1–3% | Unit taken off the market | Refund conditions in reservation note |
| Private contract | 10–20% | Weeks after reservation | Bank guarantee or insurance policy issued |
| Stage payments | 10–20% | During construction | Each instalment covered by the guarantee |
| Completion | 70–80% / mortgage | At the notary, after First Occupation Licence | Licence granted, snagging list agreed |
Legal protections for off-plan buyers in Spain
Spanish law requires developers to insure or bank-guarantee all stage payments made before completion. This means that if the developer goes insolvent or fails to complete, buyers can recover their deposits.
Critical check
This protection only works if the guarantee or insurance has actually been issued and is valid. Verifying this — before any payment — is one of the most important steps in the off-plan process.
What to check before signing an off-plan contract
Developer contracts are written to protect the developer. Independent legal review before signing is the only reliable way to identify and negotiate unfavourable clauses.
- Developer's track record and financial standing — have they delivered comparable projects on time?
- Building licence (licencia de obras) — must be granted before any stage payment is made
- Stage payment guarantee — bank guarantee or insurance policy must be in place and verified
- Delay clauses — what is the longstop date and what compensation or exit rights apply if it is missed?
- Price escalation clauses — some contracts allow the price to increase. Understand the limits.
- Specification of finishes — materials, brands and quality standards should be written into the contract, not just the brochure
Most common mistake
Paying the reservation deposit before the building licence (licencia de obras) has been granted. Without the licence, the legal protections around stage payments are much weaker — always verify it first.
Taxes and costs on off-plan purchases
New-build purchases (including off-plan) are subject to 10% VAT plus 1.4% stamp duty (AJD) rather than transfer tax (ITP).
Budget approximately 12–13% on top of the purchase price to cover taxes, notary, registry and legal fees. If financing is used, add mortgage-related costs on top.
Why mortgage planning matters for off-plan
If you plan to use a mortgage, the lender will not release funds until the property is complete and the First Occupation Licence is issued. This means the stage payments during construction must come from your own funds.
- Stage payments during construction must be funded from personal capital — the mortgage does not cover these
- Time the mortgage application to align with the expected completion date
- Build in a buffer for construction delays — mortgage offers have validity periods
- Confirm the lender will accept the developer and development before committing to stage payments