Dreaming of a luxury Villa in Tenerife? Leave it to Volcano Estates

Volcano Estates is the No.1 estate agent in Tenerife - probably one of the last European paradise isles. Tenerife has so much to offer, from deserts, volcanoes, exotic fauna and flora, mountains, lush forests and sometimes snow, to incredibly beautiful coastlines and spectacular beaches.

Prestige property in Tenerife

For prestige property on this beautiful island at a price to suit your budget, we are an established and highly experienced Tenerife estate agent you can trust to advise and guide through each step of the purchasing process.

Property specialists in the Canary Isles

Luxury villas and apartments in Tenerife are so popular because they can serve as a stunning holiday home for you and your family, as a Buy-to-Let, Short-term Rental, or even as a permanent residence.

Let us help you to find yours!

Buying Guide

This buying guide will serve as a basic overview of how you can purchase your new home in Tenerife; arming you with all the knowledge you will need along the way. However, this document is not intended as legal advice and we do suggest you still seek guidance from a professional lawyer when considering entering the Tenerife property market.

About Tenerife

Tenerife is a sub-tropical island of huge variety, with landscapes ranging from the snowy peak of mount Teide to the golden beaches of the south, warmed by the sun twelve months of the year. It is no surprise that so many people choose to invest in this piece of paradise.

Tenerife is the largest of the Canary Islands, with the biggest biodiversity of history, culture, flora and fauna. The island boasts the highest point in Spain, the often snow capped majestic Mount Teide which towers over the whole island and is one of the few places left on Earth where you can find ancient laurel and pine forests left over from the Tertiary period.

Why Tenerife?

Whether you are looking to relocate to the sunshine for a holiday or retirement home or fancy trying your hand at being a landlord and buying a Tenerife property to rent out to the millions of holiday makers and workers that descend on the island every year, you can be sure of a good investment as the property market on the island is probably one of the most secure. It has been going from strength to strength for over 20 years and many people have made large profits from their Tenerife investment property.

There are several reasons why Tenerife is such a popular holiday destination for much of Europe, not least of which is the fantastic all year round warm and sunny climate. These islands are considered to be the equivalent of Europe’s Caribbean and with flights to Tenerife taking as little as 4 ½ hours from most UK airports, thus eliminating the chances of jet lag, it is easy to see why many people choose this Spanish owned archipelago.

It is not just this beautiful and diverse scenery that attracts people to this island again and again, nor is it because the island has one of the world’s best climates, although these are strong factors.

The growth of tourism on Tenerife over the last 20 years has led to the development of every facility you could wish for including sport, leisure and health care services. As a duty free island many goods are much cheaper than mainland Spain or other European countries.

Tenerife’s superb all-year-round sub tropical climate has created a full twelve-month holiday industry.

All this combined with Spain's secure economy and the stability gained when they joined the EEC, you have all the ingredients necessary for a property boom. In fact, Tenerife has experienced many property ‘booms’ even without the property falls that have been associated with other countries in times of economic depression.

USAGE

Off Plan - many people looking for a property in Tenerife find buying off plan a great investment. Buying off plan means investing in a property on a new development before that property is built and often before any construction work has started. In certain cases, a property can be sold even before the developer has been granted a Licencia de obra (licence to build).

Buying a property in Tenerife during the pre-construction period ensures a fantastic return for your money. Properties are priced very competitively at this time because the developer is eager to minimise his risk factor and to negotiate decreased interest rates from investors by selling as many units as possible.

Potential investors are being asked to buy an architect’s drawing and an empty plot of land, so it’s not surprising to find that the earlier you make your purchase, the less expensive it will be.

Usually, investors are asked to pay approximately 30 per cent of the total purchase price as a deposit. The remaining 70 per cent is paid after completion and can be financed by a mortgage.

Once construction begins and the new development starts to take shape, it’s much easier to get an idea of what the property will look like once it’s finished, which is why the purchase price increases at this stage. Once the development is completed, buyers are willing to pay even more for the final product. Many people invest in off plan properties in Tenerife only to resell them for a hefty profit once they’re finished. As a bonus, the seller is not required to pay Capital Gains Tax if the property is sold before the owner takes possession of the escritura (title deeds).

Buy-to let

Compared to the Costas, Tenerife has been very well booked up. Declining winter occupancy has been the trend on the peninsular. For example, back in 2000, Costa Blanca had an occupancy rate of 80 per cent, and that has gone down every year to a level of just 40 per cent. From Benidorm to Mallorca, the story is the same. Meanwhile, here in Tenerife, we have winter occupancy rates close to 75 percent. Great news for our rental investors.

And while we’re talking statistics, remember that Tenerife has one of the highest repeat visitor rates, so the person who rented your apartment this year is likely to book it again, and again.

Insurance

PROPERTY: In the same way that you would have your house and contents insured at home, you must insure your property here as well. The insurance of all the common parts in your complex or urbanisation is the responsibility of your Owners Association and sometimes that insurance would give some cover to privately owned parts of the building as well. However, the level of cover is generally not very comprehensive and would not cover your contents at all.

In some instances it is better to have your own insurance for your property and its contents. The premiums are not expensive and we can arrange this for you, if you so wish.

The Purchase Contract

The purchase contract for a resale property will contain details of the vendor and purchaser, the purchase price and method of payment. It will also confirm that the Escritura de Compraventa (Title Deed) is in the name of the vendor and that this will be passed to the purchaser on completion of the sale. It will also guarantee that the property itself will be transferred free from all encumbrances and rights of third parties and will state who is liable for taxes and costs involved in the transfer. There will also be stipulations regarding penalties for non-fulfilment of the contract.

The purchase contract for a property still in construction will contain similar details and normally further information regarding ownership of land, building permissions, completion dates and the setting up of a community, etc.

Often contracts are written in English and sometimes they are in Spanish with an official English translation. Your estate agent should go through the contract with you and clearly explain any details that you are not sure of. If you are not sure of any clauses in the contract, or have doubts about the fairness of the stipulations in the contract, then do not sign it. You can still pay a holding deposit to secure the property and let your legal advisor vet the contract before you sign. No reasonable developer will refuse to refund a holding deposit should a solicitor find any legal reason why you should not proceed. Good estate agents will only deal with reasonable and reliable developers.

Taxes & Costs

There are taxes and two fees payable on all transfers of Spanish properties. The Notary is entitled to a fee for preparing the Escritura, and there is a further fee for registering the property in the new owner’s name. There is a document tax of 0.75% plus a local tax (I.G.I.C.) which is at present 5% of the official value if you are purchasing a new property from a developer, or a 6.5% transfer tax if you are purchasing a resale property from a private owner.

There is also a tax on the increased value of the land known as Plus Valia, which is levied at various rates on the annual increase in value since the previous sale. Strictly under Spanish law, the seller is liable to pay the Plus Valia tax but in practice the purchaser is asked to pay all fees and taxes in the transfer of a property. The fees and transfer tax are demanded soon after the Escritura is signed, but the Plus Valia tax is often not payable until some time later when the seller may not be found. Plus Valia is charged against the property, which means that if the vendor fails to pay, the purchaser will eventually be liable for this tax anyway.

There are many factors that enter into the calculations of these fees and taxes but as a general rule of thumb, if you allow 8% to 10% of the purchase price you will not be far out.

Another fee for consideration is that of a solicitor or lawyer and this will generally depend on how much time and work is involved in any particular purchase. These fees can vary greatly between one lawyer to another and not always will the final bill be what was originally estimated – however, the bonded lawyer that we can refer you to will not deviate from the fees quoted.

After the purchase of your property you will have community fees to pay to an owners association which is explained further under the heading of The Community of Owners.

Mortgages

You'll be pleased to hear it's fairly straightforward to apply for and obtain a mortgage and non-residents can get up to 70% of the valuation price. There are costs involved however:

* Approximately 280 Euros for a property valuation.

* 1% mortgage opening commission.

* Insurance, varying from 120 – 240 Euros per year.

* A fee for the Notary & Registration of the mortgage.

Provided you submit the requested financial information, which is very straightforward, the mortgage can be effective within 10 to 15 working days. The advantages of securing a local mortgage include extremely low interest rates (4% variable); it doesn't reflect your country of origin; it’s tax deductible; and should you rent the property, the same account can be used as a debit credit account.

Legal procedures on buying

All property sales and purchases in Spain must be registered the land registry and the Title Deed (Escritura de Compraventa) must be prepared by a public official called a Notary. This deed is then signed by both the seller and the buyer in the Notary’s presence.

A Notary is a lawyer who has had special training and passed extra examinations to qualify him for his special duties which cover a large range of legal matters. Apart from dealing with all property transactions, he sees that Spanish wills are properly signed, witnessed and registered, authenticates important documents and certifies due service of legal notices. He is a very important official.

The Notary is responsible for seeing that the conveyance deed is drawn up correctly and fully describes the property and that the agreed declared purchase price has been paid to the vendor in the appropriate currency. He witnesses the signing of the deed and collects the fees and taxes.

The deed is then sent to the Land Registry Office where the name of the new legal owner is registered. It can take some time before the title deed comes back from the Land Registry Office, and in the meantime an authorised copy is given to the purchasers.

If you have agreed to buy when on holiday and do not wish to return for the signing of the deed, you can appoint a lawyer as your agent to appear before the Notary and sign on your behalf. This person must be officially appointed by a deed which in England is called a ‘Special Power of Attorney’ or in Spain, an ‘Escritura de Poder de Compraventa’. This deed can be prepared by the Notary as soon as you have agreed to buy and normally would be in the name of your lawyer who is doing the conveyance for you.

What is a sales agreement?

A private document signed between the buyer and seller. It must state the following points: • Details of the buyer and seller. • A legal description of the property • The purchase price • The form of payment and currency to be used in the transaction (banker’s draft, cash, etc.) • The completion dates and penalty clauses if these dates are not met usually, if seller withdraws after signing the contract he is liable to pay double the amount of the deposit and the buyer should he pull out, will forfeit his deposit.

What if there's still a mortgage on the property?

If there is a mortgage on the property it can be cancelled on the same day that you sign at the Notary.

Before the signing date at the notary, we will inform the holding bank to prepare the cancellation costs, and the amount that the seller still owes.

On the day of the signing a banker's draft will be made out for this outstanding figure including the costs and paid to the bank. This figure will then be deducted from the purchase price when paying the seller. The bank will then register the cancellation of the mortgage

Is it easy for a foreigner to obtain a mortgage?

Yes. So long as you can submit basic financial information getting a mortgage in Lanzarote is much easier than in most other European countries. Often builders will offer you a mortgage if you purchase a new property. But don’t worry, we at Volcano Estates will handle the whole process for you.

What does a foreigner need in order to buy property in Tenerife?

The first thing is to apply for an N.I.E. (Number of Identification for Foreigners), which is basically an ID card anybody with a financial interest in Spain or the Canary Islands is required to have.

You'll also need to set up a non-resident bank account, which is a simple process, but again, we will handle all these administrative procedures for you.

Will we have to pay tax when selling a property?

Yes, as a non-resident you'll have to pay 5% of the new declared value as a retention to the Spanish Tax Office, but provided your accounts are in order you should get most of this back within five or six months.

You will also have to pay 35% of the capital gains as Income Tax, i.e. 35% of the difference between the price you paid for the property and the price you’re selling it for.

Hable con nosotros hoy

Si desea recibir más información de cómo comprar su propiedad a través de Volcano Estates, simplemente contacte con nosotros hoy en el (0034) 928-51.87.52 o a través de nuestro e-mail y recibirá una respuesta inmediata