Managed self-build: buying a plot with a building permit and building your villa in Menorca
With managed self-build you buy the plot with the project and the building permit, and you become the developer of your home: you hire the construction yourself, which pays 10% VAT. At LLUM, construction is estimated at 16–20 months, with technical direction and financial management of the works included in the support.
Being the developer: what the law says
Spain's Building Act defines the developer by what they do, not by their profession:
“Any natural or legal person, public or private, who, individually or collectively, decides, promotes, plans and finances, with their own or third-party resources, building works for themselves or for subsequent sale, delivery or transfer to third parties under any title shall be considered a developer.”Ley 38/1999, art. 9.1
Their obligations include (art. 9.2):
- holding a right over the plot that entitles them to build on it;
- providing the information needed for the project and authorising the site director's later changes;
- applying for and obtaining the permits and authorisations, and signing the certificate of acceptance of the works;
- taking out the insurance required by article 19;
- handing over to the buyer, where applicable, the documentation of the completed works.
At LLUM, the plot comes with the approved project and the building permit already granted, and the support includes technical direction and financial management of the works.
VAT on construction: 10%
If you contract the works directly with the builder, as developer, the construction of the home pays the reduced rate:
“1. Construction works, with or without supply of materials, resulting from contracts entered into directly between the developer and the contractor for the construction or renovation of buildings or parts of buildings intended mainly as dwellings, including the premises, annexes, garages, installations and complementary services located in them.”Ley 37/1992 (VAT Act), art. 91.Uno.3.1.º
The taxes on buying the plot depend on who sells it: see Taxes when buying a new home in Menorca.
Ten-year insurance when you build your own home
The ten-year guarantee for structural damage is mandatory for residential buildings, with an exception for self-builders:
“However, this guarantee shall not be required in the case of an individual self-builder of a single detached home for their own use. Nevertheless, if the home is transferred inter vivos within the period provided for in paragraph a) of article 17.1, the self-builder, unless otherwise agreed, shall be obliged to take out the guarantee referred to in the previous paragraph for the time remaining until the ten years are completed.”Ley 38/1999, second additional provision, section One
In practice: if you sell the villa before those ten years are up, you will have to take out the insurance for the remaining period, unless the buyer expressly releases you under the terms set by that same provision.
Self-build compared with buying off-plan
| Managed self-build | Off-plan purchase | |
|---|---|---|
| What you buy | Plot + approved project + building permit granted | The finished villa |
| Who builds | You hire the construction yourself, with no developer margin | The developer handles everything: builder, technicians and suppliers |
| Price | Plot + construction contract | Fixed from day one; staged payments under the contract |
| Timeline | Estimated construction: 16–20 months | Construction and delivery: 20–26 months |
| Customisation | Greater scope for customisation | — |
| Protection of payments on account | — | Mandatory bank guarantee or insurance (Ley 38/1999, first additional provision) |
Both options share the same architecture and quality standard. Prices for each are available on request.
Sources
- Ley 38/1999, de Ordenación de la Edificación (consolidated text, BOE) — arts. 9 and 19, first and second additional provisions
- Ley 37/1992, del Impuesto sobre el Valor Añadido (BOE) — art. 91.Uno.3.1.º
Informative article, written on the basis of the regulations in force on the review date. It does not replace advice from a lawyer or tax adviser on your specific case. Quotations from Spanish legislation are unofficial translations: only the Spanish text published in the official gazettes is authentic.
