Buying a completed or near-finished home straight from a developer is not the same as buying a resale, and it is not the same as buying off-plan. Different taxes apply, specific licences must exist, and the law gives you warranties that only protect you if the right checks are made before you sign. Here is how a developer purchase works — and where it goes wrong.
In Spanish property law a "new build" — obra nueva — means a property being transferred for the first time after construction, sold by the developer who built it. The legal test is the first transmission: the moment the finished or near-finished home passes from the developer to its first owner. That first sale is treated very differently from every sale that follows, both for tax and for the warranties you receive. Once a property has been owned and is sold on, it becomes a resale, and a different set of rules applies.
This page is about that first purchase from a developer of a home that is completed or close to completion — the umbrella guide to a developer purchase. It is deliberately distinct from buying off-plan, which means committing to a property before or during construction, with staged payments and bank guarantees protecting your money while the building goes up. The two overlap — an off-plan purchase eventually completes as a new build — but the risks, the paperwork and the timing are different enough that they need separate treatment. If you are buying before the building is finished, read the off-plan guide alongside this one.
The single biggest difference between a new build and a resale is how the purchase is taxed. Get this wrong in your budget and the shortfall is in the thousands.
The first sale of a new home by a developer is subject to VAT — Impuesto sobre el Valor Añadido — at 10% of the price for residential property (4% in the Canary Islands under IGIC). VAT is charged on the actual price paid, not on a reference value, and is paid to the developer alongside the purchase price.
On top of VAT you pay Actos Jurídicos Documentados — Stamp Duty on the documented legal act of the purchase deed. The rate is set by each autonomous community and typically falls between roughly 0.5% and 1.5% of the price. Together with IVA, this replaces the Transfer Tax (ITP) you would pay on a resale.
Because VAT and Stamp Duty apply, you do not pay Transfer Tax (ITP) on a new build, and the valor de referencia regime that sets a minimum tax base for resales does not apply to your purchase tax. The full comparison sits in our ITP vs IVA + AJD guide.
The practical consequence is simple but easy to miss: a resale and a new build of the same headline price carry different tax bills, and the difference is not trivial. Budgeting a developer purchase as though ITP applies — or, worse, assuming the lower cadastral-style figures of a resale — leaves buyers short at completion. Confirming the correct regime, and the exact AJD rate in the relevant region, is one of the first things we pin down so the real cost is on the table before you commit.
A new build only becomes a home you can lawfully live in and resell once a chain of municipal licences is in place. Missing or defective licences are the most serious problem a developer purchase can carry, because they can turn a finished property into one you cannot occupy, register cleanly or sell on without difficulty. Before you complete, three things in particular have to be confirmed.
The first is the building licence (licencia de obras) — the permission the town hall granted for the construction itself, which must match what was actually built. The second, and the one buyers most often overlook, is the first-occupation licence (licencia de primera ocupación, or LPO), the municipal certificate confirming the completed building complies with the approved project and is fit for habitation. Without an LPO you may be unable to connect mains utilities in your name, and many lenders will not mortgage the property. The third is the cédula de habitabilidad where the region requires it — a habitability certificate that, in several autonomous communities, performs a similar role to the LPO and is needed to take out utility contracts.
A new build is only as safe as the company behind it. Two checks matter before you part with money. The first is the developer's solvency and standing: whether the company is properly constituted, who controls it, whether it is subject to insolvency proceedings or embargoes, and whether it has the financial capacity to honour the warranties it is required to provide. A developer that folds leaves you reliant on the mandatory insurance behind the structural warranty — which is exactly why confirming that insurance exists matters so much.
The second is that the property is properly registered as a new build at the Land Registry. The construction has to be formalised through a declaration of new work (declaración de obra nueva) and registered, so that the home you are buying actually exists as a registered legal entity with a clear title that can be transferred to you free of charges. We check the Land Registry entry (the nota simple), confirm the obra nueva is registered, verify there are no undisclosed mortgages or charges sitting against the property or the wider development, and make sure what is on paper matches what has been built. This sits within the wider property due diligence we carry out on any purchase, and it is reviewed alongside the developer's contract, where the small print frequently needs negotiating.
However good a development looks, no new build is handed over perfect. Snagging — the process of inspecting the finished property and listing the defects that need putting right — is a normal and expected part of taking delivery, and the one-year LOE finish warranty exists precisely because finishing faults are common. The mistake buyers make is treating handover as a formality, signing off and taking the keys, and only then discovering doors that do not close, tiling defects, plumbing that leaks or installations that do not work as they should.
The right approach is to inspect thoroughly — ideally with a professional snagging survey — before or at handover, document every defect with photographs and a written list, and have the developer commit in writing to remedying them within a defined period. Defects that fall within the one-year finishing warranty, the three-year habitability warranty or the ten-year structural warranty are the developer's responsibility, but enforcing that is far easier when the faults are recorded at the point of handover rather than argued about months later. Our dedicated guide to new-build snagging and defects walks through how to inspect, what to record, and how to pursue a developer who will not put faults right.
A great many "new build" purchases actually start as off-plan deals — you commit to a property before or during construction, pay a reservation deposit and then stage payments as the building progresses, and complete only once it is finished. The legal protections at that stage are different and, frankly, more important, because you are paying for something that does not yet physically exist. Spanish law requires that money you hand over during construction is protected by a bank guarantee or insurance policy, so that if the developer fails to deliver, your stage payments are refundable. That guarantee, and the way deposits and stage payments are structured in the contract, are the heart of an off-plan purchase.
If your purchase is off-plan, the deposit, stage-payment and bank-guarantee analysis in our off-plan property purchase guide is essential reading, because the risks you carry while the building goes up are entirely different from the risks of buying a property that is already standing. The point at which an off-plan purchase becomes a new-build completion — keys, notary, first-occupation licence, snagging — is where this guide picks up. Read both: off-plan for the construction phase, this page for the developer purchase that completes it.
One feature unique to new developments is the community of owners (comunidad de propietarios) coming into existence for the first time. In an established building the community has years of accounts, agreed rules and a track record you can inspect. In a brand-new development none of that exists yet — the community is being constituted as the first owners take possession, often with the developer still holding unsold units and therefore still wielding influence over early decisions.
For a buyer this means a few things worth understanding before you commit. The statutes governing the community, the allocation of the cuota de participación (each owner's share of common costs), and the initial budget for communal charges are being set as you buy in, and they shape what you will pay and how the development is run for years. Communal facilities — pools, gardens, lifts, parking — carry running costs that the early budget may underestimate. We review the community documentation that exists at the point of purchase, check how charges are allocated to your unit, and flag where a developer-dominated early community could leave first buyers carrying costs or decisions that should be shared more widely once the development sells out.
A developer purchase is, in principle, a clean transaction: a new home, a single seller, none of the history that complicates a resale. In practice the safety of it rests entirely on a set of checks that are invisible to the buyer admiring the show home — the licences, the title, the developer's standing, the warranties and their insurance, the contract terms and the snagging position. Each of those is straightforward to verify and serious if it is wrong, and a foreign buyer relying on the developer's own sales team and lawyer has no one independent confirming any of it.
Our role is to be that independent check. We act for you alone — never for the developer — and we confirm the building and first-occupation licences exist and match the property, verify the obra nueva is registered with clean title at the Land Registry, check the developer's solvency, secure the LOE warranty and structural-insurance documentation, review and negotiate the developer's contract, model the real IVA-and-AJD tax cost into your budget, and make sure the snagging position is properly handled at handover. Where the purchase is off-plan we also check the bank guarantee protecting your stage payments. We work in plain English with English-speaking clients across Spain, drawing on a team of bar-registered solicitors and legal specialists, and where work falls outside an agreed scope we tell you what it involves and quote for it rather than leave you guessing. We quote for each matter, and extras may apply depending on the development and the complexity of the purchase. The wider service sits within our Spanish property legal services.
A new build, or obra nueva, is a property being transferred for the first time after construction, sold directly by the developer who built it. The legal test is the first transmission of the finished property. Once it has been owned and is sold on, it becomes a resale and a different set of tax rules and protections applies.
A new build is subject to VAT (IVA) — generally 10% on residential property — plus Stamp Duty (AJD) at a regional rate, both charged on the actual price. A resale is instead subject to Transfer Tax (ITP). You do not pay ITP on a new build, and the valor de referencia minimum tax base does not apply to your purchase tax.
The first-occupation licence (licencia de primera ocupación, or LPO) is a municipal certificate confirming the finished building complies with the approved project and is fit for habitation. Without it you may be unable to connect utilities in your name and many lenders will not mortgage the property, so it must be confirmed before you complete.
Three matter most: the building licence (licencia de obras) granted for the construction, the first-occupation licence (LPO) confirming the property is fit to live in, and, where the region requires it, the cédula de habitabilidad habitability certificate. All should be confirmed and matched to the property before completion.
Under Spain's Building Act (Law 38/1999, the LOE), the parties responsible are liable for one year for finishing defects, three years for defects affecting habitability such as installations and waterproofing, and ten years for structural defects. The warranty periods run from completion of the works and pass with the property.
Yes. The LOE requires the ten-year structural liability to be backed by compulsory insurance, so the warranty does not depend solely on the developer remaining in business. Confirming that the insurance and warranty documentation exist is part of a proper new-build purchase, and a reluctance to evidence cover is a warning sign.
Off-plan means committing before or during construction, with reservation deposits and stage payments protected by a bank guarantee or insurance until the property exists. A new-build completion is buying a property that is already finished or near-finished. Off-plan is about protecting your money during construction; a new build is about confirming the finished property is legal, licensed and warranted.
A developer that becomes insolvent can leave you relying on the mandatory insurance behind the structural warranty and struggling to have defects put right. Checking the company is properly constituted, free of insolvency proceedings or embargoes, and able to honour its warranties protects you before you part with money.
The construction must be formalised through a declaration of new work (declaración de obra nueva) and recorded at the Land Registry, so the home exists as a registered legal entity with clear title that can be transferred to you free of charges. We check the Land Registry entry to confirm the obra nueva is registered and that there are no undisclosed mortgages or charges.
Yes. No new build is handed over perfect, and snagging — inspecting and listing the defects to be put right — is a normal part of taking delivery. Inspect thoroughly, ideally with a professional survey, document every defect with photographs, and get the developer's written commitment to remedy them. The one-year finishing warranty exists precisely for these faults.
On a brand-new development the community of owners is being constituted as the first buyers take possession, often while the developer still holds unsold units. The statutes, each owner's share of common costs (cuota de participación) and the initial communal budget are being set as you buy in, so reviewing them before completing matters.
We quote for each matter rather than charging a single set figure, because the work depends on the development and the complexity of the purchase. We confirm the scope and quote before starting, and extras may apply where the matter is more involved. We act for English-speaking clients across Spain and explain everything in plain English.
The licences, the title, the warranties, the developer's standing and the contract all have to check out before you sign. We confirm them for you — independently, in plain English, across Spain — so a new home stays a new home, not a problem.
The information on this page is general guidance only and does not constitute legal or tax advice. The tax rates for IVA and AJD, the licensing requirements, and the warranty regime under the Building Act (Law 38/1999, the LOE) are set out in legislation that changes over time and varies between Spain's autonomous communities and foral territories. Always obtain advice on your specific property and circumstances before acting. Platinum Legal Spain is an independent English-speaking legal practice serving clients across Spain.