Staged payments, bank guarantees, the licence of first occupation and snagging: what is different when you buy a brand-new home before it is finished, and where the money is at risk.
A large share of Costa Blanca sales are new builds, sold off-plan or key-ready. The process differs from a resale in ways that matter, because you are paying for something that does not exist yet. Knowing the differences is what protects your money.
Staged payments
Off-plan is paid in instalments tied to construction milestones: a reservation, then a deposit on signing the private contract, then further stages during the build, with the balance at completion. Between the contract and completion you will typically have paid 20 to 40% of the price, sometimes more, on a property you cannot yet live in.
Bank guarantees are the whole ball game
Spanish law requires the developer to secure each amount you pay in advance with a bank guarantee or an insurance policy, held in a special account, so that you are refunded with interest if the property is not delivered. This is not a courtesy: it is the legal protection that exists precisely because developments fail.
Never pay a stage without receiving the corresponding individual guarantee document, in your name, for that amount. Your lawyer must confirm it exists and is valid before the transfer, not after. A developer who says the guarantees will be issued later is asking you to take the risk the law says they must take.
Taxes: IVA and AJD, not ITP
New builds are taxed as 10% VAT (IVA) plus 1.4% stamp duty (AJD) in the Valencian Community, rather than the 9% transfer tax on resales. Budget around 13 to 14% of extras all in, including notary, registry and legal fees.
The licence of first occupation
A new home cannot legally be handed over and connected to services until the town hall has granted the licencia de primera ocupación, confirming the build matches the licence. Delays here are common and they are the town hall's timetable, not the developer's. Your contract should state what happens if the licence is late, and your lawyer should check the developer actually holds the building licence before you sign anything.
Snagging, and doing it properly
Before completion you inspect the finished property and list defects for the developer to fix. Do it with someone technical rather than emotionally: an independent surveyor for a few hundred euros will find things a delighted buyer will not. Sign nothing that says you accept the property as seen until the list is agreed in writing.
After delivery, Spanish law gives you warranties on the building itself: one year for finishes, three years for habitability defects, ten years for structural damage. Keep the paperwork; those clocks start at delivery.
New build or resale?
Neither is better, they are different bets:
- New build: modern insulation and efficiency, ten-year structural warranty, a blank slate, and staged payments that spread the cost. Against that: waiting, construction risk, and the reality that the finished view may not be the one on the brochure.
- Resale: you see exactly what you buy, you can move in immediately, neighbours and community fees are known quantities, and there is usually room to negotiate. Against that: older installations, and renovation costs that are easy to underestimate.
Choosing an agency for a new build
Many agencies on this coast are effectively sales channels for particular developers, which is legitimate as long as you know it. Ask directly which developments they are paid to sell and which they are not. On any town page you can filter for agencies that list new builds among their specialities, and put several side by side before you commit to one.
Questions people ask
Is buying off-plan in Spain safe?
It is as safe as the guarantees behind it. Spanish law requires every advance payment to be covered by a bank guarantee or insurance policy in your name. With those documents in hand and an independent lawyer checking them, the financial risk is largely covered; without them, it is not.
How much do I pay up front on an off-plan purchase?
A reservation of a few thousand euros, then commonly 20 to 40% of the price across the contract and construction stages, with the balance at completion. The exact split is set by the developer and should be written into the contract.
What is the licencia de primera ocupación?
The town hall's licence confirming a new building may be occupied and connected to utilities. Without it, completion should not happen: your lawyer will insist on it.
What warranty do I get on a new build in Spain?
Broadly, one year on finishes, three years on defects affecting habitability, and ten years on structural elements, running from delivery. Keep the delivery documentation, since the periods run from that date.
Can the developer change the specification?
Only within what the contract allows. Read the clause on substitutions of materials and equivalent quality carefully, and get the plans, the memoria de calidades and any promised extras attached to the contract rather than agreed by email.