Are you thinking of purchasing property in Tenerife? Our friendly team here at Viking Real Estate and Consultants are here to help! Check out our handy guide to the dos and don’ts of securing your place in the sun.
Let’s talk money!
Before you begin the search for your dream home, it is important to get to know the costs and processes involved. For example, on top of the purchase price, you will also need to pay taxes and legal fees when purchasing property in Tenerife. Generally speaking, you should be prepared this for this to amount to an additional 10% of the cost of the property.
An approximate breakdown of these fees would be:
- Lawyer’s fees: Lawyers usually charge for conveyancing at 1% of the purchase price, plus IGIC (Spanish VAT) at 7%. Lawyers here in Tenerife often have a minimum fee, which is usually around €1000-1500 euros, plus IGIC, so expect to pay this sort of amount, even if the value of the property is low. A Power of Attorney may also be necessary, depending on your circumstances, which usually costs between €150-€200, plus IGIC.
- Spanish Notary Fees and Property Registration Fees: Normally around of €2000.
- Land Registry search fees: These will be roughly €30.00
- Spanish Property Purchase Taxes: When purchasing property in Tenerife, you must pay a transfer tax of 6.5% of the declared value of the property. If the property is a new build, IGIC is payable instead at 7%, plus stamp duty of 1%.
Pro-tip! Consult a currency exchange specialist to help save yourself some cash when purchasing property in Tenerife!
Banks are not the best when it comes to offering competitive rates when converting money from pounds to Euros. Using a currency exchange specialist can save you up to 5% of the transfer value in comparison to high street banks. No small difference, when you’re dealing with large amounts of cash!
Currency exchange rates can also vary from day to day, meaning that the price you pay when your offer is accepted may not end up being the price you pay upon completion, when dealing with conversions to GBP. If you’re unlucky, this could end up costing you thousands of pounds more than you originally intended.
We suggest speaking to a currency exchange specialist as soon as possible when purchasing property in Tenerife to find out what rates they can provide and how they can help you to keep the effects of exchange rate variations to a minimum. This could potentially save you thousands!
Getting a mortgage
If you need a mortgage to to help you when purchasing property in Tenerife, you will need to know how much money you are eligible to borrow, plus the repayment terms and any extra costs that might be involved. Deposit are much higher than in the UK, with most lenders looking for around 30% of the property value. You will need to be able to cover this up front, in addition to the aforementioned taxes and fees.
The stages of purchasing property in Tenerife
Step one – Find a local, independent lawyer who is fluent in English
Hiring a lawyer is key when purchasing property in Tenerife. Unless you speak fluent Spanish, you should look for one who is fluent in English, as it is important for everyone involved in the process to be on the same page and avoid any misunderstandings. You should look for a lawyer who is experienced in working with UK clients purchasing property in Tenerife.
To avoid any potential conflicts of interest, we highly recommend that you do not use any lawyer that is recommended by your seller, developer or estate agent.
We suggest looking for legal advice before you start searching for a property, so that you have the opportunity to ask any questions you might have before you make any offers or complete any paperwork. This will also allow you to factor the cost of any legal fees into your budget early on in the process and to ensure that you have legal assistance quickly available, should you need to move fast when purchasing property in Tenerife.
If you don’t intend to reside permanently in Tenerife, you also have the option of giving your lawyer power of attorney, so that they can act on your behalf when you are not on the island.
Step two – Obtaining your TIE number
If you’re a Brit purchasing property in Tenerife, you will need to get a TIE number. This is an identity number for non-EU foreigners. You can do this in person, either at your local designated police station in Tenerife, or the Spanish Consulate in the UK. If you apply in person on the island, be prepared to bring a translator, if you speak no Spanish. Your lawyer can also make the application for you, if you are unable to attend in person.
Step three – Let the search begin!
Once you have found the right property for you, your lawyer will run a series of checks on the property with the local town hall, tax office and land registry. They will also ensure that there are no restrictions on the property that will stop you from using it in the way you want to.
An initial purchase contract will be drawn up for you to sign once these check have been satisfactorily completed. it is extremely important that you consult with your lawyer before you sign anything, as this a 10% deposit is normally paid to the seller at this stage and is usually non-refundable.
Step four – Consult your currency specialist
If you haven’t already done so, now is the time to speak with your currency specialist. Instructing a currency specialist at this stage can potentially save you a large sum of cash when purchasing property in Tenerife.
Step five – Completing your purchase
Now that all the final checks are done, your lawyer will prepare your Escritura de Compra Venta, which is your final purchase deed. They will arrange a meeting at a time convenient for both you and your seller at the local Notary’s office in Tenerife, so that you can both sign the deeds, with the Notary is a witness. The remaining balance of the cost of the property and any taxes will be paid at this stage, along with the taxes for transfer. You will now be registered as the legal owners of your new property.
Step six – Relax and enjoy!
Congratulations! You have now successfully completed purchasing property in Tenerife! Simply get your stuff moved in, set up your utilities (your lawyer will be able to help you with this if needed) and enjoy your place in the sun!