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The
Property Buyers' Guide
The following information is intended for your guidance and not a
substitute for proper legal advice.
We hope by providing you with this guide we may encourage you to
take the plunge and join the many happy homeowners in Tenerife.
Purchasing property in Tenerife is easier to achieve than most
people realise. You may be considering a holiday home as an escape
from the winter chills or seeking a supplement to your income by
renting your property to holidaymakers, or even joining the resident
community in Tenerife following the purchase of a business.
Whatever your reasons, this is a serious purchase and we promise to
provide you with the highest standard of service in a professional
and friendly manner.
CHOOSING YOUR
ESTATE AGENT
In order to ensure that you receive professional advice, look for an
agent who is registered by having the initials A.E.P.I. and a
registration number, which shows they are members of Spain’s college
of Estate Agents (Asociation de Profesionales y Empresarios Gestores
de la Propiedad Inmobiliaria). We at Tenerife Land & Property S.L.
are fully registered and our A.P.I. registration number is 913. In
addition, for your extra security, we are associated with the
National Association of Estate Agents in the UK. The Directors and
staff have lived in Tenerife for many years and they have acquired a
wealth of knowledge and experience which is available to you. Couple
this with our 40 years’ experience in property and you are assured
of expert guidance and a professional service.
WHY CHOOSE
TENERIFE?
The Canary Islands enjoys one of the finest climates in the world.
Of all the islands, Tenerife is the most popular for visitors due to
its diversity of contrasting environment, from areas of outstanding
natural beauty to lively resort areas. Frequent flights of
approximately four hours are also available from the majority of
European airports. The local time is the same as the United Kingdom.
The sub tropical climate provides twelve months of sunshine and warm
temperatures – truly the ‘sunshine state of Europe’, providing an
idyllic lifestyle for residents and visitors alike. For investors,
the resort areas of the island have no closed season, and cater for
visitors throughout the year. This means maximum yields can be
achieved from rental income.
With sustained rises in property values (15% per annum in recent
years) and the added bonus of rental income for investment buyers,
Tenerife continues to be the first choice to own a holiday home in
the sun or invest in a business.
Therefore, to summarise, Tenerife offers the following advantages:
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Property Investment - secure return on capital.
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Property Letting - excellent opportunities and profits.
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Year round warm & sunny climate.
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Continuous and stable property demand.
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Favourable taxation / costs for property owners.
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Accessibility – flights from most airports.
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Contrasts in scenery from the lively southern resorts to areas
of natural beauty.
FINDING YOUR
PROPERTY
Following your initial meeting with us we will take a brief from you
of your requirements in order to ensure that we present you with
information that fits with your needs. However, let’s analyse a
typical requirement: -
A one-bedroom apartment, on the flat, near to the beach, shops and
facilities, with a sea view.
This is one of the commonest briefs that we receive from a
prospective purchaser. However, it can be the most difficult
requirement to satisfy. Bear in mind, for any coastline, how many
properties can be built that meet this criterion. In reality, this
is very few, and they command unprecedented prices. This is true for
virtually any coastline in the world. Also, bear in mind that
properties close to the front line may also have higher noise
levels, higher running costs, (i.e. community fees) and are often
smaller and less desirable to stay in than other ‘non front’
properties. Ground level may be a ‘must’ if a family member is
disabled. However, it rarely offers a real sea view, and may be
noisy if there are many floors above. Therefore, it is an idea to be
flexible and open to some compromise (unless, of course, your budget
is unlimited). To help you in deciding on options, here are some
facts: -
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Quietest, most peaceful areas are about 500 - 1000m back from
coastline.
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Maximum sun is between Los Cristianos and Callao Salvaje.
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Temperature drops with altitude. Stay below 1000m for warmest
winters.
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Superb coastal views normally come from the top of hills, not on
the front.
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North of Island – wetter, greener, cooler, tranquil. South of
Island – drier sunnier, warmer, lively.
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Garages and parking spaces close to properties are fairly
scarce.
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Some residential apartment block buildings are often noisier
than holiday complexes.
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If you are looking for tranquillity, check the adjacent resort
is not an 18-30 holiday complex.
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There are as many people wanting to rent property in quieter
areas as there are wanting the front line properties.
BUYING THE
PROPERTY
It
is important to ensure that the person selling the property is
entitled to do so. As part of our service we carry out a search to
show that this is the case.
In order to negotiate the best terms with the seller, you will need
to have your financial arrangements already in place. For example,
you may see the ‘ideal’ property and wish to make the seller an
offer. Few sellers will seriously respond to an offer without asking
exactly how the buyer intends to follow up on the offer, should the
seller accept.
Buyers who indicate that they will immediately, following
acceptance of the offer, provide a 10% deposit lodged with the
seller’s agents and sign a private purchase contract, are far more
likely to secure the property and negotiate a price reduction. You
will need to sign a purchase contract and pay a deposit (usually 10%
of the purchase price of the property). The contract of purchase
will state the terms and conditions of the sale and purchase, and a
specific time for the completion of the transaction, when you must
produce the balance of the price. If for any reason you decide, up
to this completion time, that you do not wish to proceed with the
purchase, you will forfeit the deposit paid. In the event that the
seller changes his mind, he/she must return any deposit you have
paid in full, plus a compensation payment for damages (usually
equivalent to the amount of the deposit you have paid).
We will provide you with a list of suitable lawyers. You will need
to select and instruct a lawyer to act on your behalf. The list of
lawyers we provide you with are experts in Spanish property law and
speak fluent English.
PAYING FOR THE
PROPERTY
The costs for which you must budget in buying a property are, of
course, more than just the price of the property or land. There is
Transmission Tax (stamp duty), the Plus Valia (local rates), the
Notary’s bill, the fees from the Registro (property registry), the
bill from your lawyer, and other associated professional fees and
duties for drawing up of new title deeds (the Escritura), etc.
Therefore, for budgeting purposes, allow around 10% of the purchase
price of the property to cover these costs.
What will be the
total cost by the time the purchase is complete?
As previously mentioned, you need to allow 10% of the purchase
price for the fees and costs of acquiring the property. Note that
this 10% is over and above the purchase price, and will be needed to
pay the 6.5% land taxes etc. If the purchase price agreed, for
example, is 100,000 euros (approx Ł64,500 sterling), then the final
cost will become (purchase price + 10%) a total of 110,000 euros.
This 10% covers the conveyance costs, which includes 6.5% of the
purchase price to the Land Registry, and other associated
professional fees and duties for drawing up of new title deeds (the
‘Escitura), appointments at the Notary’s office, a translator (if
you do not understand Spanish), searches and various other
conveyancing fees. Any monies remaining will be returned to you,
along with all of the various receipts and invoices for the work
involved.
When and how is my
money paid out?
Noting
that the solicitor will normally require the 10% acquisition fees
before any work proceeds, and the purchase option agreement will
place a limit on how long you have to complete the transaction, you
will want things to move fairly quickly. Thus, in our example,
following signing of the purchase agreement you would: -
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· Pay in the 10% deposit of 10,000 euros to the selling
agent
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· Pay the 10% conveyance fee of 10,000 euros in our
example to the solicitor
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· Confer with the solicitor and your bankers to arrange
the appropriate certified cheques
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· The balance of 90,000 euros will be handed over on the
day of signing at the Notary’s office.
If you are NOT a resident in Spain and are buying property or land
from a resident, it is advisable to bring your money from abroad to
complete the transaction. It is simple to open a non-resident
account with a local bank. You can then transfer your funds from
your own bank in the U.K. to this new account. Upon signing of the
new Title Deed your cheques for payment will be shown to the Notary
and included as part of the documentation of the deed. They must be
en-scribed with details of the property or land to be purchased or
have an investment certificate from the issuing bank attached. The
Notary will also require you to sign a Spanish Ministry form,
declaring that the investment has been made.
It is also possible, when purchasing from a non-Spanish resident,
to pay the completion funds abroad in any currency. In this case,
the deed will state an equivalent amount in euros as this gives the
value in which the transmission tax (in the U.K. we know this as
stamp duty) is calculated.
You
may have to produce more than one cheque, as in many cases
non-resident vendors may be liable for capital gains tax. In this
situation, a sum of 3% calculated against the value declared in the
title deed will need to be retained and paid to the Spanish tax
authorities. This will be noted in the deed and the payment to the
tax office will then be made by the lawyer acting for you. The
cheque for this 3% retention, which is made out to the Tesoro
Publico, should also be en-scribed with the property details shown
to the Notary, as it forms part of your overall investment in Spain.
Non-resident vendors who have owned a property for a period in
excess of ten years before December 1986 will not be liable for
capital gains tax, and the 3% retention will not be required at the
point of sale.
The Estate Agent’s fees are normally paid by the vendor. In the
event that there are any other costs, we will always endeavour to
advise you of these. Our service to you, from airport collection to
our after-sales service, is provided at no cost to you.
In the event that you require any additional related services or
assistance (e.g. flights, accommodation, etc.), we will always try
to achieve value for money for you and advise you of the costs prior
to the making of any arrangements.
MORTGAGES &
FINANCE
We
have excellent working relationships with the local banks who will
be pleased to provide you with mortgage or any financial advice.
Please ask for a mortgage quotation with no obligation. In addition,
we have financial advisors in the U.K. who can provide you with
independent financial advice.
REGISTERING THE
PURCHASE
Signing the Escritura in the Notary’s office does not yet mean that
you officially own the property. For the transaction to be complete,
you must register the deeds in the Registro de la Propiedad
(Property Registry); your lawyer will normally do this for you. When
the deeds are taken to the Registro de la Propiedad, the purchase
tax of 6.5% of the value of the property must be paid.
You will now be responsible for the payment of a tax to the Local
Authority known as ‘Plus Valia’ (like local rates in the U.K.). This
tax varies from area to area (just like in the U.K.) A form should
be completed and forwarded to the appropriate Local Authority
advising them of the change of ownership. If this is not presented
they will continue to send the bills for the annual local authority
taxes to the previous owner.
UTILITIES BILLS
When
you purchase a property, the seller and you must sign forms to
transfer the bills into your name. Both the electricity board (UNELCO)
and the water company (INALSA) have these forms.
Local rates are payable at the appropriate town hall each October.
You or your representative needs to visit the Oficina de Recaudacion
(office of records) at the town hall to give them the form changing
the rates into your name. As bills are NOT sent out for the rates
property owners often forget to pay them.
In the event that you are purchasing a property in an
‘Urbanisation’ you will find that there is a Community Association
of which you must become a member. Each property owner in the
complex owns a percentage of the communal areas (e.g. swimming pool,
garden areas), and is responsible for making a payment to the
Association for their upkeep.
Please check with us before you decide to purchase a property of
the cost of the monthly community payment.
RENTAL INCOME
If
your main motivation to purchase is for investment (or both as a
holiday home and for income from holiday rental), once you have
decided on a suitable property style and complex we will be happy to
provide you with an analysis of the potential rental income the
property can generate |
