There are various advantages for people from the UK and elsewhere to purchase property in Tenerife. Not only does the climate offer a summer-like temperature all year round, but Tenerife also offers a low cost of living, beautiful mountainous background and a low-key lifestyle for foreigners and locals. It is no wonder that they name the area the Fortunate Islands.
The majority of people are currently exchanging dowdy UK lifestyles for a beautiful sub-tropical climate. Feeling a renewed sense of confidence and wealth, the aspirations of many European forty-somethings, fifty-somethings and sixty-somethings is growing with demand for property in Tenerife, particularly around the south of the island. However, there are specific subtle differences in the property transaction procedures of Spain and its islands; therefore, it is essential that you do research in advance and have a team of experienced professionals to guide you through the purchase.
How is property sold in Tenerife?
The majority of the property is sold via estate agents, just as is the case in the UK and elsewhere.
We recommend you find an established Tenerife estate agent due to their vast knowledge and experience in the property sector of the island.
When you see an advertisement or locate a property you would like to view on a property website; you can contact the agent and make an appointment to view the property. If you are interested in buying the property, you will need to make an offer to the relevant estate agent.
Property owners in Tenerife are aware of the property market value, but negotiation of the purchase price is typically done via the estate agent. It is common for properties to be sold with furniture and it is unlikely that any formal surveying of the property will take place. This is why you must be careful and use common sense when considering the condition of the property.
What Is The Property Purchasing Procedure In Tenerife?
If the offer made is accepted by the seller, you will be required to pay a deposit of 10% on average. It is recommended that you appoint an independent solicitor at this point to care for your interests. The cost of a solicitor will vary regarding the value of the property being purchased and the amount of work involved in the transaction; however, a standard apartment purchase would generally include solicitor fees of €1,500 to €2,500.
After you have paid the 10% deposit, the solicitor appointed and the estate agent will meet to apply for a “nota simple” from the local Land Registry. A nota simple is a type of document that informs the lawyer of any charges, embargos or mortgages currently existing on the property. Assuming all is well, either the estate agent or solicitor will draft a private contract of purchase and sale that must be signed by the seller and you as soon as possible.
While it is common for the contracts to be drafted in Spanish, it is possible to obtain a side-by-side translation in your preferred language. If you have concerns about what you are signing, do not sign! After signing the agreement, you will be legally bound to complete the transaction in the set timeframe and may lose all of your deposit if you do not adhere to the regulations.
Once the contract has been signed, the transfer of the property will be completed in approximately four to six weeks. The transaction will be finalised at a local notary’s office where the notary will check and confirm the terms and conditions of the contract. It is required by law that the seller and buyer or their assigned representatives are present. If you cannot attend the meeting, you must grant a power of attorney to another individual who will act as a representative on your behalf.
During this meeting at the notary’s office, you will be required to present some banker’s drafts or guaranteed cheques totalling the agreed upon purchase price. If the seller has a property mortgage, you should provide a draft that will be made payable to the seller’s bank as a repayment of the mortgage loan.
If the seller of the property is a non-resident, 3% of the purchase price will be paid directly to the tax authorities as sellers not living in the area must pay the amount to satisfy the Spanish tax authorities before having it refunded. All other payments are sent to the vendor from the banker’s draft. You need to be careful when transferring money in Spain as the banks tend to charge large amounts when receiving transfers. It is common for these charges to amount to thousands of euro.
What Additional Costs Need To Be Paid?
A solicitor will also require sufficient funds from you to cover any costs or taxes arising from the property transaction. Below are some of the additional costs that may occur.
Transmission tax can be approximately 6.5% of the overall transaction value, particularly for resale properties.
The notary and registration fees are approximately €2,000.
A property solicitor’s fees are approximately €2,000 including the changing of utilities.
On a property with the value of €200,000, there would be a typical representation cost of 8%; however, solicitors often ask for 10% so you should ask for a list of the expenses with the transaction several months afterwards.
It is important to note that new properties purchased, where you are the first owner, will present a 1% property tax and you will not need to pay more than 7% vat. This means that there will be a total of 8%; thereby, an increase in property costs of 1.5%.
After all this, you should now be the owner of a dream home in a sunny climate where the council tax amount should be approximately €100 per annum. If you reside in a community, however, you will be required to pay a community maintenance fee to maintain the gardens, the pool, the lifts and any other communal resources.
Any Other Information?
The final piece of information offered when purchasing a property in Tenerife is to draft a will. As you will be making several visits to solicitors and at least one visit to a notary, it is recommended that you draft a will while in Spain. It does not cost a great deal and can spare loved one’s problems if any problems occur.
It is also recommended that you apply for an NIE number. This number assists with registration and needs to be done before a property purchase is conducted.