KS Costa Estates Businesses and Homes on the Costa del Sol

Buyers Guide

All property details shown on this site have been supplied directly from the vendors or agents acting on behalf of vendors.  We therefore do not guarantee the exact accuracy or take responsibility for any discrepencies or inaccuracies that maybe shown.  We advise due diligence is carried out on any property prior to a Freehold or Leasehold purchase or Rental.
Here are just a few points and some general information on buying businesses, commercial property and leases on the Costa del Sol. We at KS Costa Estates take you and your finances very seriously. We are pleased to answer any specific questions you have so please contact us or we can meet you here on the Costa del Sol where we can discuss the buying procedure in person. If it would be of help we can introduce you to an independent legal business and commercial property transfer specialist here on the Costa del Sol, we therefore believe we can be invaluable to you as a buyer.
There are 3 main options available when acquiring commercial premises here:
FREEHOLD – outright purchase of the property.
LEASEHOLD – you are the tenant and pay rent to the property owner. You own rights to sell your leasehold interest.
RENTAL – you rent direct from the property owner usually paying a security bond. With a rental contract you do not generally have automatic rights to sell or pass on the contract to a third party.
Buying a business trading from leasehold or rental property is the most common and affordable way to acquire a trading business here on the Costa del Sol. We at KS Costa Estates will help you every step of the way, once we have helped you find a suitable business or vacant trading premise that’s when we really go to work on your behalf. We pride ourselves on the effort we put in to securing you your business at the best possible price and with the strongest form of tenure both in terms of the contractual agreement with the property owner and the rent you will have to pay. On many occasions over the years by spending a little more time, putting in more effort than many agents are willing to afford their clients, we have negotiated much improved contractual terms and in many cases reduced rents and often rent free periods, which of course will benefit you, our client, when you initially get started in your new venture and in the long term. When a price for the business or property has been agreed you will in most cases be asked to lodge a reservation with your legal representative, this shows the vendor that you are serious about the purchase and also makes sure the business is secured while due diligence checks are carried out. If the searches reveal insurmountable issues that you and your representative are not happy with then you can pull out of the purchase and your reservation will be returned. If all aspects of the purchase meet with your approval a purchase /sale contract showing all the agreed terms and conditions will be prepared and signed by both you and the seller. A full deposit, normally 10% of the purchase price or on average a sum between 2.000 and 5.000 euros will be paid to the seller, this is normal practice when buying businesses and leases on the Costa del Sol. An inventory, where applicable, of the equipment, fixtures and fittings you are buying will be prepared and attached to the purchase / sale agreement. An agreed completion date will be set. On the date of completion you will pay the balance of the purchase price plus any deposits and bonds required by the freeholder. A new lease / rental agreement will be assigned to you by the freeholder on that date and you will be able to start the process of opening up your new venture or continuing with an existing one (see opening license section). Please note, deposits are only deemed returnable in the event the vendor does not uphold or fulfil his contractual obligations or legal issues arise. When buying an existing registered company in Spain the process is a little more complicated and again should be overseen by a Spanish lawyer or transfer specialist.
Lease terms and conditions:  Leases are usually granted for a period of 5 years, but they may be for 10 or more years, renewability after that period has expired is normally available subject to the tenant having upheld and respected the terms and conditions of the lease agreement. No further premium is required in order to renew your lease. However, we always advise close scrutiny and reading of the small print of every lease contract you are offered as lease terms and conditions can vary. On signing a lease agreement you will have to pay a standard rent guarantee to your landlord equivalent to a 2 months rent amount. Some landlords are following current trends by asking for further guarantees and bonds especially in the case that expensive equipment owned by the landlord is left in situ and which is not included in your inventory of purchased goods. Also in certain cases freeholders may ask for advance rental payments. Deposits and bonds are returnable, subject to the terms and conditions of the lease being upheld and respected by the tenant, either when you sell on your lease or when you vacate the premises at a break point in the lease term. Leases are strong forms of tenure, most are simple private agreements between the landlord and tenant unless otherwise stated. Rents can only increase or decrease on a yearly basis by the rate of Spanish inflation. At lease break points or if you sell your lease on the landlord is entitled under Spanish law to increase the rent by up to 20% of the current rent amount. If you do sell your lease the landlord can enjoy participation receiving a percentage of the sale price or an agreed set amount. As a tenant you will be responsible to pay utility bills, terrace taxes (where applicable), rubbish collection and insurance for contents and public liability, insurance in Spain is usually quite inexpensive especially in comparison with other countries, the Spanish high street banks offer very affordable and comprehensive policies. With most Spanish leases the property owner is responsible for paying the annual property tax.
Rentals: Renting commercial property, usually direct from the landlord, is a low cost way of acquiring business premises. Normally a rental contract can be negotiated for periods of one year and upwards, straight rental contracts are normally associated to vacant premises. As with a lease you will usually have to pay a security deposit equivalent to 2 months rent amount and quite often a further security bond as a guarantee against equipment that is in situ and rented to you under the terms of the rental contract. The main difference with a rental contract as opposed to a full lease is that with a rental contract you do not have automatic rights to sell your business and lease contract to a third party (although it may be a possibility subject to your landlords agreement). Unlike a lease purchase you will not be paying a premium for the contract or for a business that is occupying the trading premise.
Freehold - outright ownership: Once your offer to purchase has been agreed you will need a lawyer or legal representative to formalise the agreement. You may be asked to lodge a reservation with your lawyer while they carry out the necessary due diligence checks on your behalf, this will mean obtaining a ‘Nota Simple’ from the land registry which will clearly show the legal owner and provide details of any outstanding mortgages or embargoes that may be attached to the property. They will also check for any other outstanding taxes that may be due and that all utility bills are paid up to date. A ‘Valor Catastral’ rateable value will be obtained, this will allow them to inform you what the transfer taxes will cost. If everything checks out to your satisfaction and you wish to proceed with the purchase your lawyer will prepare and exchange private contracts with the vendor paying over your 10% deposit which is non refundable at this stage. On the assigned day of completion you and the vendor will attend the office of a notary to sign the ‘Escritura de Compraventa’ (Title deeds). A notary solely certifies and witnesses that the parties have agreed to buy and sell under the terms stated. At this point the balance of purchase funds is paid and possession passes to you free of charges, mortgages and tenants, unless otherwise agreed and stated. On your behalf your lawyer will arrange payment of taxes and fees and register your title deeds at the Property and Land Registry. Taking in to consideration lawyers fees, notary fees, transfer taxes and land registry costs, and in some cases Plus Valia property value tax, you should budget for approximately 12% of the purchase price, slightly more if you are buying with a bank mortgage.
Licensing of commercial premises (Licencia de Apetura)
In most cases you will acquire a business that is currently licensed for the relevant trading activity i.e. shop, bar, café bar, restaurant, car hire etc, although the owners personal name or company name will be shown on that license it is actually the premises and activity that are licensed, in this case the title of the license will be transferred in to a new owners name.
Your legal representative will carry out the necessary applications and submissions on your behalf. The transfer of title can take several weeks to complete however once the correct documents and applications have been submitted to the relevant department of the Town Hall in which the business is located you can normally continue to trade by ‘piggy backing’ the existing license until your new one is issued.
A licensed technical engineer will be employed as part of the process to visit the trading premise to compile a report and make a new plan of the layout, this is for the security certificate to confirm to the Town Hall that no structural changes have been made since the issue of the existing license and that the necessary installations comply with legislation and lawful requirements. In some instances when the existing license was issued within the last 12 months period a new security certificate may not be required. Our advice is that each individual license transfer should be taken on its own merit as different Town Hall licensing departments do have different remits and associated costs of transfer. In most cases as part of due diligence it may be advised to instruct a technical engineer to visit and overview the trading premise before any purchase / sale agreement is formalised in order to assess and report on any obvious issues that may create a problem enabling a normal license transfer to be made without unseen costs.
Please note: There are numerous license categories available and they all obviously have their own limitations and criteria. We advise all of our clients whilst making it clear and transparent that the type of business activity you want to operate is covered by the actual license that you are buying the rights to and transferring into your name. All business premises need to fulfil basic sanitary, hygiene and safety standards. Any changes that need to be made in order to comply with Town Hall requirements will be detailed to all of our clients when using the services of our recommended business transfer specialists prior to the signing of any lease contract.
Costs: Costs for transferring existing licenses can vary according to the Town Hall fees where the business and premises are located and the type of business license being transferred, however to give you an idea of costs in order to help you with your business plan and costing budget on average a license fee is around 400 euros. If a technical engineer is employed then you should budget for around 450 euros including taxes.  
Please note that when licensing new premises and / or applying for change of use the process is very much more involved and the costs will increase significantly. A complete new project will be required together with more certified documentation. We at KS Costa Estates will be able to help and advise you on your individual requirements.
Most buyers will employ the use of a gestor, licensed business transfer specialist or lawyer to carry out the complete procedure. Those new to Spain will also require assistance and guidance in obtaining the required paperwork and documents that will allow you to live and work in Spain, as a European this is a fairly straight forward process, those from outside the EEC should seek advice of an immigration expert as the procedure is more complicated. You will also need to register for social security and taxation and acquire health and hygiene food handling certificates. Costs for all of the above including taxes and technical costs will obviously vary a little from firm to firm, we advise you budget approximately 2.000 to 2.500 euros in most cases.
When using our recommended business transfer consultant a tailor made package to suit your requirements will have a fixed price cost with no hidden extras (please note that unlike many other agencies we do NOT receive introductory commission payments when recommending clients).

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