Buying new-build property in Madrid: what you need to know

Buying a new-build property in Madrid is a fundamentally different process from buying a resale flat. The timelines are longer, the payment structure is more complex, and the risk profile is different — but so are the potential benefits: a property that meets modern construction standards, a choice of finishes, and in many cases a better energy efficiency rating.

This guide explains what to expect if you are considering new-build in Madrid.

The two types of new-build

There are two distinct scenarios under the new-build umbrella. The first is off-plan (sobre plano): you buy before construction begins or during early stages, based on plans, show flats and developer projections. The second is a completed new-build: the property is finished, you can visit it, and the transaction follows a timeline closer to a standard resale purchase.

Off-plan purchases tend to offer better pricing and more customisation options, but they require the buyer to accept delivery risk — the property does not yet exist, and construction timelines in Spain can extend.

Payment structure for off-plan purchases

This is the aspect of new-build buying that most surprises international buyers. Unlike resale transactions, where you pay the full price at the notarial deed, off-plan purchases involve staged payments:

• Reservation fee: typically €3,000–€6,000, paid to secure the property while contract terms are negotiated.
• Private purchase contract: at this stage, buyers typically pay 10–20% of the total price. This is contractually committed.
• Stage payments during construction: some developments require additional payments as construction milestones are reached, though this varies by project.
• Final payment at deed: the remaining balance (often 70–80%) is paid at the notary when the property is formally delivered.

The implication is that a significant portion of the price is paid before the property is completed — and before you have been able to inspect the final result.

Developer guarantees: what the law requires

Spanish law requires developers to provide buyers with a guarantee (aval bancario) covering all payments made before delivery. This guarantee means that if the developer fails to complete the property or goes into insolvency, the buyer can recover the money paid.

Verifying the existence and scope of this guarantee before paying anything is non-negotiable. It is the primary legal protection available to off-plan buyers. Make sure your lawyer reviews it.

Due diligence on the developer and the project

Beyond the payment guarantee, due diligence on a new-build purchase should cover:

• The developer's track record and financial standing
• The building licence (licencia de obras) — the project should have a valid, granted licence before you commit
• The planned delivery date and contractual penalties for delays
• The specifications document (memoria de calidades) — this defines what is included in the purchase: flooring, kitchen fittings, energy systems, storage, parking

The memory of qualities document matters more than it may initially seem. It is the legally binding specification of what you are buying. Buyers who sign without reading it carefully sometimes receive a property that meets the contract letter but not their expectations.

Taxes on new-build

For new-build properties, the applicable tax is VAT (IVA) at 10% of the purchase price, plus Stamp Duty (AJD) at 0.75% in the Community of Madrid. This replaces the ITP transfer tax that applies to resale properties.

This tax difference should be factored into your budget when comparing new-build and resale options at similar price points.

The delivery and final inspection (snagging)

At delivery, you have the right to carry out a detailed inspection of the property before signing the final deed. This inspection — known informally as the snagging list or punchlist — should identify any defects, unfinished items or deviations from the agreed specification.

In Spain, new buildings carry a mandatory warranty: a ten-year structural guarantee, a three-year guarantee on habitability-related defects, and a one-year guarantee on finishing works. These warranties must be documented and handed over at delivery.

At Aedara we work with buyers on new-build acquisitions across Madrid and the wider metropolitan area. If you are comparing new-build options or need help evaluating a specific development, tell us about your search.