Buying Property in Tenerife
There are huge benefits that come with owning a property in Tenerife. The all year round sunny weather is the obvious attraction but Tenerife offers so much more, whether it's the appeal of the relatively low cost of living, admiring the island's stunning natural landscapes and biodiversity, the cosmopolitan yet culturally rich towns and cities, the glorious beach lifestyle, the famous vibrant nightlife or endless array of outdoor activities. Of course, if you are already lucky enough to live in or own a property in Tenerife, we don't need to tell you how amazing this island is.
Compared to other countries, there are many subtle differences in the way property is transacted in Spain and its islands, so if you are not familiar with the process it is important to do your homework in advance and ensure that you have experienced professionals helping to guide your purchase. Clear Blue Skies Group SL also work with reputable lenders who can provide competitive mortgages and equity release products to our clients. Click here for more information.
How is Property sold? Most property is sold through estate agents. When you find a property you would like to view you will make an arrangement to visit with a representative from the estate agency and, should you wish to make an offer, the agent will negotiate this on your behalf. It is very common here for properties to be sold furnished. One other thing to note is that, although it can be arranged upon request, it is not common practice to have properties surveyed prior to purchase so you need to use your own judgement on the condition of the property.
What is the procedure for purchasing? If your offer is accepted, you will be asked to pay a deposit, which is normally 10% of the agreed purchase price. It is wise at this stage to appoint an independent lawyer who will look after your interests. The cost of a lawyer locally will depend on the value of the property you are buying and the work involved but for a standard apartment purchase would normally be in the region of 1500 - 2500€.
And after I pay the 10%? Your lawyer and / or estate agent should immediately apply for a “Nota Simple” from the local Land Registry. This is a document which tells the lawyer if there are any charges, mortgages or embargoes on the property. Assuming all is well, the estate agent or the lawyer will create the private contract of purchase and sale and this needs to be signed by the buyers and the sellers as soon as possible. It would be normal for the contract to be written in Spanish, but most good estate agents or lawyers will provide a translation in your language. If you have any doubt about what you are signing, don’t! After signing, be clear that if you fail to complete the transaction in the agreed time, you may lose all of your deposit. If you don't already have one, you will have to apply for an NIE number, this is simply to register you in Spain and must be done before your property purchase is completed; your lawyer or estate agent will help with this but it is usually a very simple process.
The Completion? Typically around four to six weeks later, the transaction will be completed at the offices of a local notary. The notary checks and confirms the terms, conditions and legality of the transaction. It is required by law that the buyer(s) and the seller(s), or nominated representatives, are present. If you cannot attend, you need to grant a power of attorney to the person representing you, this could be your lawyer, a friend, family member etc. This can be granted easily in Tenerife, but can also usually be arranged in your home country if necessary. You will be asked for a number of banker’s drafts (guaranteed cheques) to pay the balance of the agreed purchase price. If the seller has a mortgage, you will probably provide a draft made payable to the sellers bank to pay off the mortgage. If the seller is a non-resident, 3% of the purchase price will also be paid directly to the tax authorities. This is because non-resident sellers must pay this when they sell a property, then the hacienda (tax authorities) will check that they do not owe any tax, before having it refunded. Everything else is paid directly to the vendor by banker’s draft. Care must be taken when transferring money as banks in Spain can charge large amounts for receiving money or raising bankers drafts. Charges amounting to thousands of euros are not uncommon so please discuss this with us.
What additional costs do I have to pay? Your lawyer will also need to have sufficient funds from you to cover taxes and costs arising from the transaction as follows.
- Transmission tax = 6.5% of the value of the transaction (for resale properties).
- Notary and registration fees of around 2000€.
- Solicitor = about 2,000€ including the change over of utilities.
On a property of 200,000€ this would normally represent around 8% but your lawyer will probably ask you for a retainer of 10% so don’t forget to ask for a statement showing everything you've paid for when you receive your refund. This will typically be several months after completion.
Note: For new properties where you are the first owner, the tax would be 1% and you will also have to pay 7% IGIC (vat), so a total of 8% thereby increasing your costs by another 1.5%.
After all this, you should now be the proud owner of your dream home in the sun, where council tax is usually only a few hundred euros a year, and your rubbish is collected daily for a hundred or so euros a year. If you live in a community (all apartments form part of a community) you will have to pay community fees to maintain the pool, take care of the gardens, lifts and other communal facilities.
Anything else? Get a will. As you will be making several visits to lawyers and a least one to the Notary office, why not just do it while you are there? It costs relatively little and can spare your family a lot of problems if anything untoward happens.
Finally, enjoy living or holidaying in your new property in Tenerife!