Whether you’re buying a new development or a resale property in Costa del Sol, understanding the payment structure is crucial. The process can seem overwhelming, but it’s fairly straightforward once you break it down. Let’s walk through the key steps so you know exactly what to expect, how much to pay, and when.
A great place to start looking is by snagging list for new developments, check out our article on how to get ahead of the game.
Payment Process for New Developments
Buying a new development comes with a structured payment plan, which can be an advantage.
As a rule of thumb, a new development complex takes around two years to build, but timelines vary depending on when you reserve and the type of project. If you’re buying pre sale or before the developer has obtained the building license, in areas like Mijas, you can wait an additional year due to an inefficient system and long waiting cues for developers.
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1. Reservation Deposit
When you find the property you love, the first step is to reserve it with a deposit.
• Time. Immediately when you’re ready
• Amount. Usually €5,000–€20,000 or more, depending on the property price
• Purpose. Secures the property and takes it off the market, giving you time to start the next steps. power of attorney, lawyer engagement, mortgage process, due diligence, anti money laundering (AML), and know your customer (KYC) checks
• Refundability. Typically non refundable unless your lawyer includes clauses for conditions like due diligence, mortgage approval, or AML clearance (or if we have a very good reason)
2. Private Purchase Contract (PPC)
This is the formal agreement between you and the developer.
• Timing. Signed 30–60 days after the reservation deposit if the building license and bank guarantees are in place. If not, you will wait until these are finalized
• Payment. You typically pay 20–30 percent of the property price, minus the reservation deposit. Some developers may ask for more
• What It Covers. Detailed terms, building specifications, and timelines
• Bank Guarantee. Developers must provide a bank guarantee or insurance for your payments
Storytime. Bank guarantees are like a safety net, ensuring your money doesn’t vanish if the developer decides to run off to Dubai or goes bankrupt. Developers don’t use your funds to build; they must rely on their own resources or a bank loan. If they disappear, you claim directly from the bank guarantor, not the developer.
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3. Stage Payments During Construction
Sometimes payments are made in stages as construction progresses, but not always.
• Installments. Usually 10–20 percent at key milestones such as foundation completion or structural build
• Flexibility. Some developers offer tailored payment plans, but most are less accommodating
• Transparency. Payment schedules are clearly outlined in the PPC so there are no surprises
4. Final Payment
When the property is complete and the final inspection is done.
• Amount. The remaining balance, typically 50–60 percent of the total price
• When. Paid upon signing the escritura pública (title deed) at the notary
• Keys. You receive the keys and officially become the property owner. Enhorabuena
Don’t forget to check out our guide on the payment stages for new developments.
Payment Process for Resale Properties
The process for resales is simpler but has its own steps.
(This guide is about payments, if you want to know the whole process check out this one HERE)
1. Reservation Deposit
• Amount. €3,000–€20,000 or more, depending on the property price
• Purpose. Reserves the property while your lawyer conducts due diligence
• Refundability. Usually not refundable unless specific clauses are included. If you pull out without a valid reason, you lose the deposit. If the vendor pulls out, they must repay double. Clever, right
2. Private Purchase Contract (PPC)
Not always required but becoming more common.
• Timing. Signed after due diligence, usually within 7–14 days
• Payment. You pay 10 percent of the property price
• Conditions. Protects both parties and outlines penalties, legal details, and property information
3. Final Payment (Title Deed / Completion)
• Amount. The remaining balance
• When. Paid at the notary during the signing of the escritura pública
• Keys. Ownership transfers and you take possession
Additional Costs to Keep in Mind
These apply to both new developments and resales.
1. Taxes
• New Developments. 10 percent VAT (IVA) + 1.5 percent stamp duty (AJD)
• Resales. 7 percent transfer tax (ITP)
2. Legal Fees
Around 1 percent of the property price
3. Notary and Registration Fees
€1,000–€2,000 or a percentage of the property value
4. Mortgage Costs
Arrangement fees, valuation, and bank charges (roughly 2–3 percent of the loan amount)
Tips for a Smooth Payment Process
• Hire a lawyer. A must
• Understand the timeline so you don’t miss payment deadlines
• Check bank guarantees for new developments
• Budget for taxes and extras
• Be realistic about timelines, especially when no building license is in place
Advantages of Payment Plans for New Developments
One major perk of buying pre sale or off plan is the staged payment structure, which spreads out your financial commitment and gives you time to secure financing.
Example
• Property Price. €300,000
• Payment Breakdown.
◦ Reservation Deposit. €6,000
◦ PPC (30 percent). €90,000 within 30–60 days
◦ Stage Payment (10 percent). €30,000 during construction
◦ Final Payment (60 percent). €174,000 at completion
Final Thoughts
Whether you’re buying a sleek new development or a charming resale property, understanding the payment process makes the experience smoother and less stressful.
If you ever want clarity on payment plans or timelines while browsing properties on the coast, I’m always happy to help you make sense of it.