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PURCHASING GUIDE Here at Tenerife House Finder we would like to provide you with all of our help in finding your ideal property here in Tenerife. We will work with you to find the property that most suits your individual needs both in price and location. We believe our major responsibility is to present all the facts to you honestly and accurately, and assist your in your search so that you are 100% happy with your purchase. Contained in this section is a summary of the procedures involved once you have chosen your property. Deposit - Re-Sale Properties Once you decide on a property, we will ask for a deposit, normally 10%. At this point we will also ask you to sign a pre-sale contract of purchase/sale (compra-venta). This is your receipt for the deposit which you have paid; it states that you agree to proceed with the purchase within a stipulated time period, and also binds the seller to the same agreement. Once you have signed this contract and paid your deposit and you then decide not to proceed with the contract you would lose this amount. In the same respect if the seller decides not to go ahead with the sale, then they would be obliged to return double this amount. The rest of the monies i.e. 90%, are payable upon the signing of the new title deed (Escritura) in your name. You do not have to be here for the signing, and if you cannot, we will give you instructions for preparing a Power of Attorney (Poder). This is a legal document which will allow us to proceed with the purchase in your absence. Deposit - New Build Properties Once you have chosen your property, you will be asked to sign a Contract Agreement which would require a deposit, usually 10 % of the total price. This amount must be paid when you and the promoter sign the contract. There is usually a schedule of interim payments to be made during the time of construction. The balance of the total price is paid when your property is ready. Signing of Escritura The Escritura or title deed is signed before a Notary. He is a government appointee, whose job is to oversee the signing over of the new deed, and to make sure the documents are in order. Not only does the Notary act as an independent legal advisor to the contracting parties in terms of current civil, administrative and fiscal legislation but also by way of his/her involvement as a commissioner of oaths, certifies the contents of the contract. The contract will be translated to you if you do not speak Spanish and you will be able to ask any questions of the Notary if you are not sure of anything. It is also a vital part of his job to carry out a final search at the Land Registry (Registro de la Propiedad) for the property which you are buying. Land Registrars, for their part, are responsible for providing the information contained in the entries of the Land Registry so that it is easily comprehensible. This information is essential prior to the purchase of a property and is extremely valuable since, for example, it is the only way of proving who the property belongs to and if there are any charges on it i.e. if the person selling the property is really the owner, whether the property has been mortgaged, if there are any claims or attachments on the property, if it is subject to any urban or administrative ban or any other restriction on ownership, etc,. It will also reveal if there are any debts on the property. Legal Fees Purchasing a property also involves legal costs which you will need to calculate on top of the agreed purchase price of your property. These include: • Notary Fees – Approx. €800 (depending on declared value of property) • Registry Fees – Approx. €400 (depending on declared value of property) • Purchase Taxes – This is calculated at 6.5% of the price declared in the deed. ( However, if you are buying a new property, the purchase tax is charged at 5%). • Land Value Tax (Plus Valia) – Approx. €200 – €300. There are however many factors that enter into the calculations of these fees and taxes, but generally 8 to 10% of the purchase price is normally sufficient to cover the costs. We will arrange for the notary’s office to advise you of the full costs prior to the signing and these costs together with the purchase price (less the 10% deposit) must be paid in advance of the signing of the Escritura. Setting Up A Bank Account You will need to open a Spanish “non-resident” bank account when buying a property here. This will give you complete flexibility to transfer monies of whatever currency between Tenerife and your home country. We will guide you in doing so and will help you make all the necessary arrangements. Your visits here may be sporadic, at different times of the year, and varying durations. The best way to ensure that your affairs are being managed properly is to set up standing orders with your bank to make sure that if a bill arrives while you are away it does not languish in a mail box for months on end. Foreigners Identification Number (N.I.E.) The N.I.E. is a document issued by the Spanish Home Office and should be applied for at the “Oficinas de Extranjeros” of any National police station. We can assist you in this. You need the N.I.E. for the signing of the deeds, and for the Property Register Office, the “Registro de la Propiedad” to register the purchase in your name. In order to apply, you will need to take your passport, a photocopy of the same and two passport size photos. The certificate can then be collected approximately two weeks after the application depending on their workload. If you want someone else to process your application for you, you can confer Power of Attorney, “Poder” to them, and they can then collect your identity number from the police station for you. Mortgages We would be only too happy to assist you if you would like to purchase a property with a mortgage loan. We can advise you on the best current rates with our banks here in Tenerife. It may also be appropriate for you to arrange funding against a property that you may have in the UK. We also have financial associates that can help in this matter. The best combination of funding sources will be achieved to reduce the interest rates and other costs. Maintenance and running costs of your property You will probably find that the expense of the up-keep of your property compares very favorably with what you may have experienced before. Most properties are part of a community, “communidad” of properties and owners. That is to say that they form part of a complex of apartments, of whatever size, that share a communal entrance, passageways, gardens and extra facilities such as a pool and sun terrace. Each community is composed of all the owners of the apartments, and normally meets once a year to review the maintenance and development of the complex, and to set the community charge. This is the fee which is paid by each owner to cover the general running costs of the above facilities. This fee may be divided into monthly, quarterly or six monthly payments. The community appoints a local administrator which will have an office here to manage its affairs. The administrator is responsible for collecting community charges, keeping owners informed of meetings, and may also be charged with carrying out gardening, pool maintenance and general repairs. Some communities also make their own arrangements for the billing and payment of water, electricity and rubbish collection bills. Others expect these to be paid seperatley. We will advise you of what is required in your case. If your property does not form part of a complex, then everything will be payable directly to the relevant authority or company. Each utility, with the exception of rubbish collection, is charged according to consumption. Buying as an investment For a number of reasons, owning a property in Tenerife has a sound commercial basis that argues well for future stability. Tenerife is a duty free port which means that you can buy many imported goods at lower prices than in mainland Spain. Since Spain became a member of the EEC there have been many changes and there is now a form democracy, a stable government and an expanding economy. These factors make it very attractive to foreign investors. Spains surplus of foreign currency continues to grow, and with the foreign income derived from the tourist industry, a common currency in Europe, it stands to reason there will continue to be stability. Combine this stability with Tenerife’s sun and sub tropical climate (which gives a 12 month holiday season) and you have the perfect combination for investing property in Tenerife. |
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