Buying a business in Spain

Buying a business in Spain can be a complicated and expensive procedure; however, with the right agent and the right advice, it can be made very simple. Fiesta Property Services are the experts on the Costa del Sol when it comes to buying a business. We offer a professional, honest and reliable service. We have produced this simple guide to answer many of your questions and worries. We are however, always at your disposal should you need more help or answers.

Who can buy a business in Spain?

Quite simply, anyone though it is always easier for EU citizens as they have the same rights as a Spanish national. You must have available funds as Spanish banks very rarely loan money for business purchases and you must have an N.I.E number.

What types of businesses are available ?

You can always purchase empty premises and set up any kind of business but generally there are all manner of established businesses available for sale such as bars, cafes, restaurants, retail outlets, water sports companies, offices and many more. If you purchase an empty unit (called locales), you will have to comply with all the local and EU regulations. This can be difficult and expensive.

Freehold or leasehold ?
Freehold
If you purchase a business freehold, it is exactly the same as buying a home in the UK. You are buying the building, bricks and mortar. You then own the property and can sell it at any time. You can also sell a lease of your own to someone else or rent it out. In some cases it is possible to raise finance to purchase a freehold. We have mortgage companies who will lend up to 70% providing you have a home in the UK. Freeholds in Spain are rising in value each year by up to 40%.

Leasehold
Buying a leasehold bar in Spain is a good way of acquiring a business without the massive outlay of a freehold and this is the preferred method for most buyers.

Purchase price

The price quoted is for a new lease at the terms stated in that lease. You will normally pay this in one lump sum on signing over of the new lease. It is normal practice to secure a sale in the first instance with a 10% deposit. This deposit is non-returnable unless the sale falls through because of the seller. If you simply change your mind, you will lose your deposit.

Length of lease

This will be clearly stated in all publicity advertising the business and will be written into the lease agreement. The norm is 5, 10, 15 or 20 years. Sometimes an endless lease is offered.
You have an automatic right to renewal of the lease providing you pay the rent on time and keep within the terms of the lease. On renewing the lease you do not have to pay another lump sum.

During the lease
· You will pay the agreed rent on a monthly basis.
· You can run the business in accordance with the terms of the lease (ie as a bar).
· You can alter the theme of the bar, the décor, the furniture etc but you cannot, without the landlord’s permission, alter the structure of the premises.
· You will be responsible for the electricity, water, community charges etc
· Your landlord is responsible for external repairs and major structural work
· The rent will increase by the rate of inflation each year
· On renewal of the lease the rent will be increased (usually 20%)

Selling the lease

At any point you can sell the lease, at whatever price you want. You will normally have to pay your landlord a commission on the sale of 10-20%. A new buyer will be responsible for any legal costs involved in the sale.

Security issues

· You may be required to insure the property
· You will need to give your landlord a security deposit of 2 months rent. This is returned to you when you leave, providing the premises are in good condition
· You will also need to pay your rent one month in advance

Disputes with your landlord

How much does it cost to set up a business in Spain ?
When you purchase a business through Fiesta Property Services, we always use a lawyer. This is for your protection. The lawyer will check the licenses on the business as well as checking for any outstanding debts. He will oversee and translate the lease for you. He will also oversee the completion, making sure everyone gets paid the right amounts. Your total legal fees will be around 2,700 euros.

You will also need to allow 3 months rent on your lease. 2 months is a security deposit, returned when you leave, one month is your rent in advance.

The purchase procedure

At Fiesta Property Services, we have a tried and tested system of purchase. Once you have found the right business;
1. We negotiate the purchase price on your behalf
2. Once your offer has been accepted, you pay a 10% deposit
3. We then collect all the paperwork from the seller and introduce you to a lawyer
4. Contracts are signed and you have 30 days in which to pay the balance (this can be varied by negotiation with the seller)
5. We help you open a bank account and register with accountants and tax offices etc
6. The lawyer meanwhile begins to check the paperwork and obtain a new lease for you
7. During this 30 days, the seller withdraws the business from sale and cannot sell to anyone else, nor increase the agreed price and terms
8. On the set day of completion, you will meet with us, the seller, the landlord and the lawyer. Contracts will be exchanged, money changes hands and you get the keys to your new business

Once you have settled into your new business, we are still on hand to give you as much help and advice as necessary.

Nightmare stories?

As with everything in life, there are stories of things going wrong and you will probably have heard many about bars in Spain. We too have heard of people losing all their money, buying an illegal bar, being closed down and many more. Not all the stories you hear are true, however, all these problems can be avoided. It is a proven fact that most of these problems arise through the agent not doing his job correctly, not having a legal advisor or coming across a dishonest agent.

Fiesta Property services are proud of our reputation for honesty and the thorough way in which we do business. This ensures that our clients do not become the subject of such horror stories. There is no reason why you should not be successful in your new business.

We will be happy to supply you with references if you are still unsure. This is something that no other agent will give you. What about all the other things you have to think about ?
Part of the service we offer is total settlement in Spain. We are always available to help with bank accounts, schools, tax, accountants, social security, residential rentals, connecting to services, suppliers and anything else that you need. Here are a few points to consider;

Written by Steve and Sandra Timewell
from www.idealspain.com