The first thing to bear in mind when looking for a property in the Canaries is that it’s going to be hot and tiring work. This is why it is absolutely essential to engage a good and registered estate agent to work for you. A good estate agent will be registered and have a good reputation – and lots of properties to show you, one of which will be your ideal home.
Think about what you want from your new property. If, for example, you are buying with the sole intention of renting out your apartment, it doesn’t actually matter whether you like it or not! What matters is whether the property itself has good rental potential. If, on the other hand, you like the sound of an independent villa with its own pool, think about how you would ensure that it is maintained and cleaned on a regular basis, and how much it might cost? If you are relocating, how will it feel in three years to be living full time on a complex with part-time residents always coming and going, and splashing in the pool every day? Think with your head, not your heart, and don’t get carried away. Keep a firm grip on what the price means in British Pounds, what your budget really is, and keep an eye on the exchange rate: a difference of even one percentage point can make a difference of thousands of pounds.
When you get to the stage of buying the property you’ve found, you will need to deal with bureaucracy. A good estate agent will help you transfer money from the UK, open bank accounts, arrange mortgages, and apply for your NIE – as well as give advice on transporting animals and furniture, equipping your new home, schools, etc. Do not feel you have to do this on your own: a good agent should offer this advice and help up front. And beware the kindness of strangers: people who have already bought abroad often do not mean to mislead, but their experiences are not of the present time, and rules can change, and frequently do, as well as differ from region to region!
How much deposit needs to be put down to secure the purchase depends on the type of property you’re looking to own. If it’s a resale then generally 10% is requested up front, increasing to up to 25% if you’re buying a new property direct from the builder. Contracts then need to be drawn up clarifying the who, what, when and how’s of the agreement between both parties, such as the completion date and method of payment.
Before the deeds can be handed over however, all the receipts and necessary paperwork have to be checked to see that there are no debts outstanding on the property. This will include;
• obtaining a Nota Simple (clearing data from
the registration office)
• checking that all I.B.I (local council rates)
have been fully paid up to date
• collecting the most recent electricity & water
receipts signed and approved by the President
of the community where you’re buying
• Obtaining a copy of the deeds (Escritura).
You’ll need all the originals of these documents on the day of completion at the Notary’s office. The Notary will refuse to sign the deeds unless it has been clearly stated that you were already aware that some receipts were missing.
The whole process of buying a property in the Canaries usually takes between two and six weeks. For the main transaction, you will need to be present for a notary appointment. Unlike the UK where both the and the buyer vendor each have a solicitor, and the solicitors alone carry out the process, here both sides attend a notary, and the vendor hands over the keys and the buyer hands over the money. The deeds are officially processed at the notary also, and are sent to the land registry for emendation of title – you get a “simple copy†of the deeds on the day, or the day after, and in due course you get the full deeds back with your name on it. A Horizon representative will attend notary with you – and you’ll get an English translation of everything – so there’s nothing to worry about.
There are several other costs that should be taken into consideration when buying property, those at the purchase stage and ongoing costs:
• purchase stage- there are a series of taxes and charges to be paid in any property transaction, and we always advise our clients mentally to allow an extra 10.5% of the property sale price for “gastos” (charges) when deciding what they can afford (we will be able to provide a very close guide to the exact costs within a few days of starting the conveyancing) . These gastos include:
1. Notary’s fee
2. Land registry fee
3. Taxes (for new properties, the tax is 5% plus 0.5% stamp duty, on resale properties, the tax is 8.5% and stamp duty is not payable)
4. Capital gains tax (“plus valiaâ€)- payable on the increase in value of the land upon which the property is built, calculated from the date the current owner took possession.
Ongoing costs,
These really only comprise utilities (e.g. electricity, water, and basura (rubbish)), which are generally cheap here, and local rates, which are also pretty cheap. Rates are calculated at 0.45% of official rateable value (Valor Catastral), which must never be more than market value. There is also a “wealth taxâ€, which is a tax on property owned in Spain: the rate is 0.2% for properties valued at up to €167,129.45, slightly higher if above. Your main annual expense, though, will be community fees if you buy a property on a complex. These are paid by the community of owners into a communal fund, administered by a professional administrator, to cover maintenance, security, lighting, pool cleaning, etc. Community charges vary a bit: you will be lucky to find a community which charges much less than €60 per month, and very unlucky to find one charging much more than €130! It depends, really, on things like the number of pools and lifts the community has to maintain - these are the types of things that push the rate up towards the upper limit. All in all, you should not go far wrong if you mentally allowed around €1,500-2,000 (roughly 1,000 – 1,500 Sterling) to cover all of the above.
April 30th, 2007 by 
Horizon News
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