How does a purchase/contracting agreement work?
This newly built villa in Ibiza is being offered for €2,750,000 (ex I.V.A.), on a buy-to-let basis. This offers financial and creative advantages over a turnkey delivery. Namely, it means that you immediately become the owner of the land and the permit. Construction of the villa then starts, so you still have all the freedom to have it finished to your taste. We are happy to explain the differences.
Would you rather buy turn-key? Then the villa will be finished, and you can make any adjustments afterwards.
If you opt for a purchase/construction agreement, you will be involved from the start. That offers options for finishing touches, such as (terrace) tiles, finishing colours, painting, switchgear, lighting and much more. Moreover, you own the land and building permit from the start.
Benefits new construction
Economical form of purchase
The newly built villa is yet to be built. This offers an important advantage. Namely, you can opt for a buy-to-contract construction, instead of turnkey delivery. We list the differences for you:
| Form of purchase/contracting | Turnkey delivery | |
| Down payment | 10% deposit with arras contract (provisional sales contract) | 30% deposit with arras contract (provisional sales contract) |
| Construction and land interest | No construction and land interest during construction period | However, construction and land interest during construction period (expected to be 1.5 years) |
| Increase in value | Benefit from value increase during construction period (around 7.5 to 10% per year in recent years) | Pay inflation adjustment (increase in value) against purchase/contract price |
| Property | Direct land ownership and licence | Construction contract in developer’s name |
| Interim sales | Possible without developer’s permission | Not possible |
| Guidance | Full guidance from the developer | Full guidance from the developer |
The sale of turnkey projects often does not take place until construction is 75% complete. With our purchase/construction agreement, you are involved from the start. This offers freedom in choosing, for example, the tiling, finishing colours, sanitary fittings and the kitchen. We deliberately build the Dutch way, because it offers much more freedom for the buyer, both financially and creatively.
Do you have any questions about the two forms of purchase? Contact us and we will tell you more.
Advantages of a purchase/construction agreement
In the Netherlands, 90% of new construction projects are realised under a buy-to-let agreement. That is why we are happy to introduce that form in Ibiza, for your new-build villa. We call that ‘Dutch well regulated’.
Thanks to the purchase-to-contract construction, you benefit from a number of advantages:
- 10% deposit when signing the arras agreement (provisional sales contract). With turnkey delivery, this would be 30%. The notary retains the down payment, and settles it at handover.
- No construction and land interest during the construction of the new-build home. In 2023, this interest was 5% per annum; for 2024, we expect an increase of 1-2%.
- You benefit from the increase in value during the construction period. In recent years, this was around 7.5-10% per year. At turn-key delivery, you will pay this percentage extra, as an ‘inflation correction’.
- After signing at the notary, you are the immediate owner of the land and permit. This limits the risks, because you are no longer dependent on us as the developer.
- You may resell the land and permit in the interim, if necessary, without intervention or permission from us as developer.
- All contracts are in your name after transfer at the notary. This limits the risk in case of guarantees from the contractor, for example if we as developer were to go bankrupt.
- Money flows directly from you as the owner to the contractor and other suppliers, without the intervention of us or other parties.
Of course, we do continue to provide you with full guidance throughout the process. Moreover, this is included in the price. Nothing changes in the process, but the purchase based on a purchase and building agreement is literally ‘Dutch well regulated’.
Do you have any questions about this? Get in touch, and we will be happy to tell you more.
Aankoopkosten op Ibiza
Ibiza, like the Netherlands, has ‘buyer’s costs’. We list the main costs:
- 21% sales tax (IVA) on the land and permit fees
- 10% sales tax (IVA) on the contract price
Note: with turnkey delivery, you pay 10% IVA on the total purchase price.
You buy a newly built villa. For this, you do not pay 11.5% transfer tax (ITP) because it is not an existing property.
- Notary and registration fees (around 1 to 2%)
- Lawyer fees (around 1%)
- Mortgage costs (around 2 to 3%)
Mortgage applications
With a Spanish mortgage, you can finance up to 60% of the value of the property. You will pay the other 40% from your own funds. Bear in mind that on top of that, you will pay the buyer’s fees from your own funds.
Spanish mortgage banks assess your income to determine your eligibility for the mortgage. Suitable forms of income are wages, income from entrepreneurship and (rental) income from assets.
In addition, Spanish banks look critically at your personal situation, such as family composition, whether you have a rented or owner-occupied home, what work you do and what type of income you earn with it.
