Bars Restaurants and Businesses for sale on the Costa del Sol, Spain

Buying a Business

Find a business

Will I see Accounts for the Business I am interested in?

You will find that the owners of businesses in Spain will normally be able to provide you with some financial information about any business that you enquire about. We are often sent emails from our clients asking for copies of accounts and banking information on a particular business. Due to confidentiality for the seller of any business, all private information such as accounting and trading information is usually available upon a viewing of a business and we will work for you to obtain as much information as possible.

One point you should always consider is that no matter how much or little a business is taking, you should look from the angle of “How much could I make with my ideas?” Many businesses can be dramatically changed to be improved with a few simple changes. Spanish Bars always offers honest and impartial advise on the performance of any business that we are showing you.

What is the difference between Leasehold and Freehold?

Freehold
When you purchase a freehold business, you are buying the business, fixtures and fittings and the building. It is just as if you are buying a property in the UK – you own the whole building, bricks and mortar.

You can obtain a mortgage to purchase a commercial freehold and banks will normally loan 50% of the valuation that the bank give the building. Spanish Bars can assist with mortgages and valuations.

You will not pay any rent as you will own the physical property; you would just pay a mortgage, if applicable. If you purchased a freehold, you would also be able to sell a lease on the property where you would get a lump sum for the lease and then a monthly rental income.

Leasehold
By far the cheapest, easiest and most popular way to buy a business in Spain is to buy a leasehold business.

When you purchase a leasehold business (known as a Trespaso in Spanish) you buy the lease for the premises and ownership of all of the contents, fixtures and fittings throughout the duration of your lease term. So if you see a leasehold bar for sale, the advertised price will be for the lease on the premises, the goodwill of the business and all of the fixtures and fittings, which will be documented on an inventory when you sign for the business upon completion.

Here are some leasehold facts:

Lease Length

When you buy a leasehold business, Spanish Bars always ensures that all of our clients are given a brand new lease contract direct from the landlord. The length of the lease will be detailed on the business advertisement for each business and the agreed length will be specified on your lease contract upon completion. The most common lease length is 5 or 10 years, but sometimes a landlord will offer 15 or 20 years or on rare occasions, a lifetime (endless) lease can be obtained.

Deposit

When you purchase the lease, you will usually be required to pay a security deposit of two months rent. This deposit is returnable to you in the event that you sell the lease. You will also be required to pay the first months rent in advance.

Rent

The stated rent in our business advertisements are the current rent that the existing owner is paying. Always remember that the rent can and often will increase for the new tenant. By law, a landlord can increase the rent up to a maximum of 20%, however, this hardly ever happens as the landlord wants to receive a regular income and to inflate the price too high will only result in a failed business and an empty premises! As a rule of thumb, Spanish Bars suggests that you allow for an average of 10% increase to calculate what your new rent would be. Many landlords only increase the rent by a couple of percent. To be safe, Spanish Bars suggests that you also allow money for stock and some back up money for some rent payments just encase it takes a couple of months to get off the ground.

The rent that will be on your lease contract will need to be paid each month between the 1st and the 5th day. This will usually be by direct debit or cash paid into the bank.

Throughout the duration of the contract the rent will remain fixed and the only increase will be once per year by the rate of inflation, which is a couple of percent.

Rent Retention

You will also be required to pay retention every three months. This is not additional money, but you withhold the tax that the landlord pays the tax office in Spain and pay this on his behalf every three months. This tax is 18% of the Rent amount.

An example of this would be:
Rent 800€. The VAT on the rent is 16% (128€ - which you claim back against your stock and supplier purchases, which your Gestor will do for you) so, the rent and the Vat will total 928€. You then deduct 18%, which is 167.04€ and pay the landlord 784€. Then every three months, on behalf of the landlord to the tax office, you pay 167.04€ x 3, which totals 501.12€. The three months VAT of 128€ per month, you claim back against your purchases. So, you do actually end up only paying 800€ rent. This is quite a complicated system to explain, but Spanish Bars believes that our clients should know exactly how this system works. Our team will be happy to explain this with you in more detail, please feel free to ask about this if you have any questions.

Lease Renewal

The contract will usually state that the lease is renewable and a new term can be taken at the end of the first one. You will not be required to pay any extra deposit, nor will you be required to pay another lump sum for the lease. You should be aware that the rent can be increased by the landlord by 10% to 20%, but most landlords are happy with a good paying tenant and it is very common that the rent is left as it is or with a very small increase.

Selling the Lease

As the leaseholder you have the right to sell the lease at any time that you wish. Under the terms of the lease, you will be required to pay the landlord 10% to 20% of the selling price. This is standard practise in Spanish leases and is applicable to all lease contracts. You can often negotiate a lower amount to pay the landlord and this is something that Spanish Bars would be happy to help you with. Of course, you will also be required to pay a commission to the agent who sells the business for you.

Lease Security Requirements

You will normally only be required to pay the landlord a two month returnable security deposit. On rare occasions where there is a high value of equipment being provided in the premises, some landlords will require a larger deposit. It can also rarely be the case where a bank guarantee can be required, where you will need to deposit some money in the bank to cover any non-payment of the rent. This very rarely happens and in such a requirement, Spanish Bars would notify you of this.

Insurance

Under the terms of the lease contract, you will be required to insure the premises for fire and theft. The building will be insured for the benefit of the landlord and the contents will be insured for your benefit. Insurance in Spain is very much lower in cost that in the UK and Spanish Commercials can put you in touch with a reliable, local company to obtain your insurance.

Legal Disputes

The lease for your business will be prepared and signed in Spanish and as such is bound by Spanish law. In the event that you have any disagreement with the landlord over any matter relating to the lease contract, this would be dealt with by the Spanish Courts. The landlord has rights as he owns the property and you would have rights as the leaseholder.